'Bundling' raises ethical dilemma in campaigning

Cash flows to McCain, whose theme is reform

By Dana Wilkie
COPLEY NEWS SERVICE

September 7, 1999

WASHINGTON -- Last spring, the chairman of telecommunications giant BellSouth Corp. invited his executives to an Atlanta party. The guest of honor: John McCain, the Arizona senator who has said Americans should vote for him partly because he wants to reform the way political campaigns are paid for.

Some 60 people attended the April 19 gathering for the Republican politician. Two days later, McCain's presidential campaign reported 52 donations totaling $22,500 from BellSouth executives and their spouses, some of whom were not even at the reception. In the world of political fund raising, this big batch of contributions -- delivered all at the same time and from employees of the same company -- is known as "bundling." It is perfectly legal.

But bundling is also something that reformers have said must change because it allows corporations to buy political influence. Because he dislikes such influence himself, McCain once tried to make it illegal for corporate representatives to collect and deliver to candidates a bunch of donations from company employees.

As he piles up cash to compete for the GOP presidential nomination, however, McCain has taken other clusters of contributions from the employees of telecommunications company US West Inc., media group Viacom Inc., Wall Street investment bank Goldman, Sachs & Co., and computer company Microsoft Corp.

The senator -- believed by some analysts to have one of the best hopes of winning the GOP nomination should Texas Gov. George W. Bush stumble -- also is described as one of the campaign's top recipients of bundled contributions by the Center for Responsive Politics, a leading watchdog of political finances. In all, McCain took in more than $235,000 from the employees of only 10 companies, many of whom wrote their checks on the same date, or within a few days of one another.

Most presidential campaigns participate in some form of bundling. In fact, the center notes that Bush and Vice President Al Gore, the leading Democratic candidate, have taken in more bundled contributions than did McCain. And reformers have been far more concerned about the potential for monied interests to influence Bush -- whose campaign war chest is approaching $50 million.

Yet only McCain has made campaign-finance reform the centerpiece of his presidential platform. He tells voters that wealthy special interests are the real detriment to government reform, because their campaign gifts can sway politicians' votes.

The McCain campaign says that, because many of these employees gave money at company-arranged events, these gifts to his campaign do not even fall under the strict legal definition of "bundling" -- which is the lawful practice of having one person collect checks from a number of other people, then deliver the money to a candidate. This is the practice McCain wanted to outlaw.

"Somebody else collecting the checks is vastly different from these people coming to an event" and writing checks, said McCain campaign spokesman Howard Opinsky. "(McCain) does not like any attempts by corporations . . . to violate the spirit . . . of the law that prohibits them from giving money beyond the prescribed limits."

In the political world, however, "bundling" is a term commonly used for any practice that involves coordinated contributions from the employees of a single company or industry. This is also lawful.

"When 30 checks come in on one day, and if those (checks) represent the same economic interest or company or labor union -- whether it comes in because they held a fund-raiser or the CEO passed the hat and said 'pony up'-- that is bundling," said Sheila Krumholz, research director for the Center for Responsive Politics.

A different animal

Such events, Krumholz said, differ from the garden-variety fund-raiser because they often involve a company CEO with the clout to persuade workers to give to a candidate -- either by suggesting they write a check in the office or at an event arranged by company brass.

Kenneth Gross, former chief of enforcement for the Federal Election Commission and a campaign finance expert, sees nothing wrong with the McCain gifts.

"I reject the notion that there's something inherently evil about . . . several people working for the same company . . . making contributions at one time," said Gross, who supports full disclosure of campaign gifts, but few fund-raising limits. "We are all a collection of special interests, and this is just one form of a special interest being heard." Among other things, existing campaign finance law was designed to prevent a single industry or business from exercising too much influence over a candidate. It does this by forbidding corporate contributions and by limiting the gifts of political action committees to $5,000.

Critics argue that bundling is one way to get around those limits. And whether a CEO arranges an event where employees can write checks, or collects those checks at the office and delivers them to the candidate -- both are ways to get around the limits, said Bill Hogan of the Center for Public Integrity.

"The term 'bundling' comes from the idea that (the money is) all put in one envelope," said Hogan, the center's director of investigative projects. "But the events (held for McCain) are another way to skin the same cat."

Most presidential campaigns participate in some form of bundling. More than 150 employees of the Houston-based law firm of Vinson & Elkins, along with their relatives and friends, contributed $210,000 to Bush. Employees of the accounting firm of Ernst & Young gave $114,200 to Gore.

McCain once wrote legislation that would have outlawed the narrowest version of bundling -- multiple contributions collected and delivered to candidates by political action committees, corporations, partnerships, labor unions and registered lobbyists.

In the face of opposition, he eventually dropped the plan. But Opinsky said the senator still supports the idea so that corporations don't acquire "undue influence by giving above and beyond the (contribution) limits."

Bundling it up

According to campaign reports and the Center for Responsive Politics, McCain has benefited from the looser version of bundling -- often taking large, coordinated batches of donations from employees of the same company. Often, those companies have business before the Senate Commerce Committee, of which McCain is chairman.

US West Inc. is a Denver-based Baby Bell and McCain's second-biggest contributor. The company's employees and spouses, along with the company's political action committee, gave a collective $45,600 to McCain's White House ambitions. Almost 70 percent of that money was collected at a spring reception for McCain that US West CEO Sol Trujillo held at his Colorado home.

"Sol has supported (McCain) as a senator even before he ran for president," said US West spokesman David Fish, noting that Arizona is one of 14 states in which the company does business.

Employees at BellSouth Corp. have given McCain a combined $24,750 for his presidential race. Almost all that money was donated at the April 19 cocktail reception in Atlanta's Sheraton Colony Square Hotel. BellSouth employees attended after getting invitations from company CEO Duane Ackerman, who has longtime ties to McCain.

"We like to make sure that our people . . . understand and appreciate the political process and participate in it," explained BellSouth spokesman Bill McCloskey.

Opinsky said the Atlanta fund-raiser was not just a BellSouth event, and that AirTran Airways president Lewis Jordan also sent invitations to his employees. Campaign records, however, show only one donation from an AirTran employee to McCain in the past six months.

Because campaigns often fail to disclose key information about donors, such as their employers, there could be other AirTran employees who gave money to McCain.

Trevor Potter, a lawyer for the McCain campaign, said that if Ackerman had collected checks from BellSouth employees himself, then delivered them to McCain, that would have left a stronger impression of influence-peddling than Ackerman inviting employees to write checks at a cocktail reception.

"The principal difference is that, at a fund-raiser, people are able to deal directly with a candidate and make their own decision," Potter said.

Still, not all the BellSouth employees who wrote checks to McCain the day of the fund-raiser attended the event. Some live outside Georgia, in states such as Alabama, North Carolina, Florida, Louisiana, Kentucky and Mississippi.

"Not everyone who sent a check actually showed up," acknowledged BellSouth spokesman McCloskey.