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Corporate Lobbying Case Study

Transparency Case Study: Lobbying disclosure in Canada

We are proud to release the fourth case in our ongoing research project studying technology-enabled transparency policies around the world. We have chosen to focus on lobbying disclosure policies and online lobbying registries for our second set of cases. Read our previous cases, and find out what is next here.

Introduction

By international standards, Canada has a fairly comprehensive and well-implemented lobbying registry. The data is machine and human readable, and it is easily accessible as bulk downloads or through a search interface that serves the needs of its primary users. Journalists and advocates, as well as those within the influence industry, all use the lobbying registry. In many ways it is a picture of how lobbying disclosure is supposed to work. At least that appears to be the case until one looks closer. While there are many admirable features of Canadian lobbying regulation, current disclosure thresholds and requirements actually create a subtly perverse incentive structure that drives activity into the shadows.

Our look at Canadian lobbying offers a few interesting lessons both for lobbying regulation and disclosure, and for technology enabled transparency policies more generally:

  • Incentives matter greatly, and disclosure requirements can shape those incentives and subsequent regulated activity. In an environment where there is a presumptive advantage to non-disclosure and two substitute forms of activity with differing transparency environments, disclosed activity will decrease in favor of the more opaque.
  • Both public officials and lobbyists play a role in shaping the lobbying environment and subsequent disclosure. Effective regulation and transparency requires active participation from both groups, and the law should be constructed to align their incentives to produce appropriate disclosure.
  • No matter how good the tool or data release scheme, it can only be as useful as what the data itself represents. Effective transparency requires the data to be both accurate and accessible.

With the notable exception that Canada does not require the disclosure of the monetary value of lobbying contracts, the Canadian Lobbying Act requires fairly comprehensive disclosure about consultant lobbying. However, in-house lobbying by corporations and other organizations, as well as direct meetings with clients, must pass a certain threshold of activity before registration is triggered. Absent this threshold being met, disclosure of meetings or other influence activity is not required for these outside groups. This is complicated by the fact that this threshold is not strictly policed. The resulting two-tiered disclosure regime drives activity away from the types of meetings and interactions that will show up in lobbying registry records, and toward less transparent and more informal interaction between the public and private sector.

Major lobbying regulation first passed in Canada in 1989. Since then, it has been amended and strengthened successively in 1995 and 2005. The last major overhaul of Canadian lobbying registration and disclosure was in 2008, with The Lobbying Act of 2008 (R.S.C., 1985, c. 44 (4th Supp.). Among other things, this act mandated electronic filing of lobbying reports, and established the Office of the Commissioner of Lobbying, an independent regulatory commission, to oversee and manage the public lobbying registry.

According to the Office of the Commissioner of Lobbying, the act is based on four key principles:

  • Free and open access to government is an important matter of public interest.
  • Lobbying public office holders is a legitimate activity.
  • It is desirable that public office holders and the general public be able to know who is engaged in lobbying activities.
  • The system of registration of paid lobbyists should not impede free and open access to government.

Here we are concerned primarily with the ability of public office holders and the general public to “know who is engaged in lobbying activities” under the current disclosure regime. This ability is dependent on who is counted as a lobbyist, and what kind of activity is classified as lobbying. These definitions vary widely across countries. The Canadian definition, detailed below, is quite comprehensive. However, it leaves some notable loopholes that highlight the difficulties of capturing all relevant activity even within a well-designed system.

Defining lobbying

In Canada there are three classes of lobbyist, each of which is treated slightly differently. These are: consultant, corporate and organizational lobbyists. Consultant lobbyists are those who are hired by clients to either communicate directly with public office holders or set up meetings between the client and public office holders. An individual paid to communicate on behalf of a client with public office holders about any policy, rulemaking, amendment or grant/contract awarding process is classified as a consultant lobbyist and is required to register their activity under the law. Corporate and organizational lobbyists are those who are on staff at corporations or organizations and are paid to engage in lobbying activity. They can be thought of as “in-house” lobbyists, in contrast to consultant lobbyists whose work is contracted out. Organization lobbyists work in-house at non-profits, while corporate lobbyists work at corporations.

According to Katlyn Harrison, a lobbyist at the consultant-lobbying firm Summa Strategies, the law’s definition of which activities trigger registration is appropriately inclusive. She commented, “I have never tried to register for a client and not known where I could slot them in, be it policy or program, grant or contribution, legislative proposal. I have never not known where my lobbying activity would fall” (24:45).

Corporation and organization (nonprofit) lobbyists are those who work within an organization but engage in the same communication activities as those that trigger registration for consultant lobbyists. Significantly, consultant lobbyists must register if they engage in any of the above activities on behalf of a client, while lobbyists on behalf of corporations or organizations are only required to register as in-house lobbyists only if those activities “constitute a significant part of the duties” of one full-time employee equivalent. By regulation, “significant part” means 20 percent of an employee’s time.

What do lobbyists disclose?

Katlyn Harrison describes her registration process as a consultant lobbyist as follows:

There is an initial registration and then there are ongoing things that you have to do. So you register initially on the client’s behalf. You let the government know essentially who you are going to be lobbying, what the primary issues are. Once that registration is approved – and that is a general registration which more or less covers your activities – if you do arrange formal communication that requires a monthly communication report where you are asked to name specifically who it was that you spoke to about the subject on which you are lobbying.

… if we are going to be arranging meetings on the client’s behalf we are required to register. So even if we are not attending the meetings ourselves we are still required to register for that purpose (3:45).

This is essentially a three-step registration process, in which differing levels of activity trigger different reporting requirements.

First, a lobbyist must register if they intend to engage in the aforementioned activity in either a consulting capacity or as an in-house lobbyist that will cross the 20 percent activity threshold. This registration is good for as long as they are active lobbyists.

Second, lobbyists file registrations when they undertake a new lobbying campaign. The chart above shows the companies that have had the most active registrations filed in this manner between 1996 and 2013. Essentially, these registrations are a signal of intent to lobby a given set of government institutions on a given subject matter. Consultant lobbyists, who must register their intended activity each time they sign a contract with a new client, file the majority of these records. However, in-house lobbyists must register their intent to lobby as well. These filings provide a mapping from client (usually a company) to the firm they have hired, and which lobbyist within that firm is the primary consultant on the account. For both consultant and in house lobbyists, these filings include information on what communication methods the lobbyists intend to use (e.g. email, meetings), what institutions they intend to lobby, what topics the intend to focus on and whether the lobbyist on the account held a prior government position (above a specific seniority threshold).

We looked at the active registrations of consultant lobbyists from 1996 to 2013, and noticed a few interesting patterns. Once the first law requiring registration of active campaigns was enacted in 1995, registration was quickly adopted and the number of active filings increased steadily until the act was amended in 2005. It appears, at this time, that a large number of lobbyists and organizations allowed their registrations to expire as the new regulations came into force. Presumably once they re-evaluated the need to register under these new conditions, most of them re-registered; the number of active registrations returned to previous levels of the next year. In the summer of 2008, we see a similar — albeit smaller — mass deregistration, again when revised regulations were implemented. However, the stricter requirements of the 2008 regulations appear to have acted as a disincentive to either hire consultants or register activity, as active registrations do not return to pre-2008 levels.

The third, and perhaps richest, form of data that are captured by the lobbying registration system are the monthly communication reports that lobbyists on active campaigns are required to file. Every month lobbyists are required to file a report that lists which government institutions and which specific designated public office holders they have contacted, when they communicated with them and the topic(s) that were discussed.

When filing communication reports, lobbyists are allowed to opt-in to a delay before those reports are made public. These reports are then published in the registry on the 15th of the following month (e.g. a communication in July would be published on the 15th of August). Some lobbyists file immediately and opt-in to this delay within the registry system, while others file delay their filing themselves until the 15th of the following month but have it go live immediately.

The communication report bulk data includes three separate dates for each filing: the date of the communication, the date it was submitted to the registry and the date the communication went public on the registry. The option delay means a theoretical maximum of 45 days between the date of the communication and the date it should go public on the registry (i.e. if the communication was on the first of the month). We looked at the lag between communications and their posting, shown above. The vast majority of communication filings appear to make use of the optional lag. Importantly, a substantial portion of communications are posted well after the maximum theoretical lag, and appear to be in violation of existing regulation.

What doesn’t the registry tell us?

The disclosure system detailed above is fairly comprehensive by international standards. Lobbyists disclose whom they work for, what the scope of that work is and who they specifically speak to as they do that work. Unlike the U.S., disclosures do not include the value of lobbying contracts or the amount of money spent on in-house lobbying. There is no monetary value assigned to lobbying activity. The Office of the Commissioner of Lobbying has indicated that they do not believe this information to be of necessary to their mission, and in general, interviewees did not feel that this was a huge shortcoming (Doyle 31:20). Several, however, agreed that dollar values could be useful as a proxy for the intensity of a client or companies interest in some specific target. Additionally, some specifics of the implementation appear to limit the influence activity that actually makes it in to the system despite rigorous requirements.

Simon Doyle, editor of the Lobby Monitor, a specialty news outlet that focuses on lobbying, noted that there is no way to tell the type of interaction which is listed in a communication report. When lobbyists register a specific lobbying campaign, they are required to list the types of communications they intend to use. Generally they indicate all or most of the available options (e.g. phone calls, written communications, meetings, presentations, etc.). When the lobbyists then file monthly communication reports associated with that campaign, they will say which designated public office holders they communicated with but are not required to specify the manner in which they communicated with them. According to Mr. Doyle, it is impossible to tell whether it is a “meeting or a phone call or an email, they just call it a communication” (7:00). Different communication types imply different levels of access to the public official in question, and would be useful from an accountability perspective.

Another notable limitation of communication reporting is that these reports only list the government officials who attended the meeting. The registration makes clear that the meeting was on behalf of the a specific client, but Mr. Doyle notes that if Microsoft were lobbying, “it will tell you the company name, [… but] you don’t know who from Microsoft is meeting with those government officials. The CEO is the responsible officer for the report, but that does not mean that they are the person who met” (8:00).

This can be quite misleading, and obscures useful data, as the seniority of the person representing the client is an important signal of the intensity of that client’s interest. Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, pointed out how this is limiting:

[It] is far less useful than it could be because it matters whether or not it was the president or CEO of an organization or whether it’s just a policy person. You know, what level do you have to be to get that meeting with the minister and is it someone at that very high level or is it people who are seen as somewhat lower down in the organization and their ability to get meetings, are themselves, they get people who are a bit lower in the pecking order as well. The fact that, it’s not quite shrouded, the meeting itself is not shrouded in secrecy, who, the specific people who were in attendance sometimes can be (12:45).

Essentially, a meeting with the CEO means more than one with a junior VP.

Mr. Geist noted that despite the fact that It’s not as useful as it could be because you don’t know all the specifics: “There is a bit of tea leaf reading, I guess, around some of the entries but that information [in communication reports] can be really useful” (9:28). He continued by offering an example:

In the copyright context, you have an instance where the MPAA (Motion Picture Association of America) will come up to Ottawa essentially for a day of lobbying and you can trace their movements. It’s a month later, but a month later you can see exactly how they went from office to office to office so you get a sense of who they think is influential and who they are trying to influence and then you can also file access to information requests for any information related to those meetings (11:00).

These above aspects of the registration system leave some important information unrecorded. However, the more serious problems with the lobbying act come from how disclosure interacts with the 20 percent activity threshold for registering as an in-house lobbyist. For public office holders there is a five-year ban on lobbying after they leave their government position. Jim Patrick, president of the Government Relations Institute of Canada, pointed out that technically this moratorium is on registering as a lobbyist, not on engaging in any lobbying activity. He observed that the fact that an individual must spend at least 20 percent of their time lobbying at a corporation or organization to trigger registration creates a sort of loophole in this moratorium for former office holders: “You can lobby as long as you: a) work for a corporation, not a consulting firm, not an organization; and b) only do it 19 percent of the time” (Patrick 1:30).

Concern over how this threshold can be used as a loophole to allow former government officials to engage in lobbying activity without registration for corporations or organizations was shared widely among our interviewees (Doyle 13:30; Harrison 12:00).

As Mr. Doyle described it:

There are definitely cases where former government officials will go work in-house as a government relations official. […] We don’t really know what they are doing, but they will say that they are giving advice. One recently actually, there was a guy who left – there was a story in the hill times, a guy went from government to work for Barrick Gold (15:00).

Katlyn Harrison described how the 20 percent registration threshold for organization and corporate lobbying can leave a lot of activity unaccounted for.

For example, the executive director of an association, they may spend 3 days a month looking on how to improve their government relations. That executive director, even though they have interface with government, would not be required to register because it is less than 20% of their time. So how much is 20% of someone’s time? It’s a little bit flexible and it can be bent on either side to make someone choose to register or choose not to register (12:00).

Activity of this kind will not show up in anywhere in the registry. She continued by pointing out that “there is a perceived advantage to not registering if you are dealing with something that is particularly sensitive that will be less than 20 percent of your time” (Harrison 13:00). It is certainly worth noting that according to current regulations, organizations and corporations must register if the collective efforts of the entire organization’s staff comprise the equivalent of 20 percent of one person’s time. However, this provision seems to be largely misunderstood, and the data does not seem to bear this out.

Disclosure is additionally complicated by a fact about how lobbying is conducted in Canada that was pointed out by several interviewees. According to Ms. Harrison, “it is far less common [than in the U.S.] for consultant lobbyists, at least in Ottawa, to do a lot of lobbying” (8:40). A lot of the work that they do is, rather, to work their networks to organize meetings for their clients, and advise their clients on how they should appeal to the government officials they speak to. She added that, “if they get a meeting for their client, they are going to let their client do the actual talking. They are not going to be doing the lobbying for them” (9:30).

Apparently, public officials often share this preference as well. Ms. Harrison described the attitude of some of the public officials as follows:

[T]here is a perception sometimes from MPs and staff […] to avoid dealing with registered lobbyists because if they are not following all the rules or if they think that they’re not following the rules they don’t want to get into any trouble. [It is] self protection involved on their part. It’s not uncommon that we have certain MP offices or staff come back [to us] and say: ‘Yeah, got your meeting request but I would really like to get this from the client directly.‘ Because they just prefer to interface directly with the client and I believe that that’s mainly as a result of just wanting to be exceptionally careful about the rules (31:20).

Jim Patrick offered a similar summary of the position of many in government with regard to contract lobbyists as, one in which they think “if your client has an issue with government they want to discuss they should come discuss it” (4:00). He suggested that — perhaps because of some risk aversion following scandals years ago — government officials are wary of contract lobbyists:

[The] view of government goes, you are never really sure on whose behalf they are talking, maybe they have got another client with an interest, but they are telling you they have got a charity they are advocating for but really they have got a corporation they are not telling you about. It is that kind of suspicion from the governments point of view, rightly or wrongly, that has led to that practice [of preferring to speak to the client directly] (5:00).

Furthermore, if the government initiates contact with a company or organization – whether they are contacting a registered lobbyist or not – the ensuing interaction does not need to be disclosed. The idea behind this is that there should not be any constraint on the government’s ability to seek out relevant information. However, this creates more opportunities for undisclosed lobbying activity, particularly when the interests of both public office holders and private interest align. Mr. Patrick noted that this can be a particularly problematic provision.

It is often misunderstood. People try to game the system […] they will send an email to someone in government to say please call me and then the government calls them and they say: ‘Oh, they called me so I don’t have to report it.’ It is not who calls who, it is who initiates the call (or communication). [In this example] it is the email that initiates the communication (10:10).

This behavior, if systemic, can lead to significant unreported lobbying activity. If a client takes a meeting with a public official, and the client representative spends less than 20 percent of their time interfacing with government, they will never show up anywhere on a communication report. Officially, calls made by a consultant lobbyist to set up those direct client-to-government official meetings should be reported, but apparently this does not always happen. There seemed to be some confusion among our interviewees about how this is handled, which did not inspire confidence in high rates of reporting for this type of activity. Jim Patrick also noted that even if that consultant lobbyist’s call does show up on a communication report, it may not indicate on which client’s behalf it was made. The consultant lobbyist call to book the meeting may show up on a report. He called this “one of the gray areas” of the reporting requirements (7:25).

Enforcement

According to our lobbyist interviewees the rate of registration among career lobbyists is high, and enforcement by the Office of the Commissioner of Lobbying feels like a credible threat.

Ms. Harrison offered that, as a consultant lobbyist who began work after the Federal Accountability Act was implemented, proper registration and compliance has “been something that has been drilled into me as something that is exceptionally important to follow and I can say that for the other – my colleagues here – that it’s something we take very seriously” (49:50). According to Mr. Doyle, “the default for most lobbyists is that if they talk to government at all is that they just register,” but “You can get away with being pretty vague about what you are talking to government about” (16:40). Nonetheless, he concluded that “aside from the 20 percent rule, the registry captures a lot.”

The Officer of the Commissioner of Lobbying, has investigative powers but not powers to lay charges or arrest anyone. If the Commissioner finds lobbyists of firms to be in violation she can then refer the case to the Royal Canadian Mounted Police. This is quite rare. In fact, the first charges ever were filed last year. However, according to Jim Patrick, “The commissioner does have pretty heavy moral suasion power and being named in a report to parliament saying that you are a bad lobbyist is kind of a death sentence to a lobbying business” (11:00). Ms. Harrison confirmed that being named in such a report has strong professional implications: “It makes its way around the lobbying and the government relations community pretty quickly who those people are” (51:00).

In general, interviewees believed that registration rates are high and people tend to disclose, particularly among consultant lobbyists where there is no “significant time” test on lobbying activity. However, Sean Holman, journalism professor at Mount Royal University, noted that it is quite hard to know this for sure, as “it is difficult to comment on the absence of something, and what that means.” Especially in the context of the 20% registration threshold for corporate and organizational lobbyists, the regulation depends in large part on a presumption of good faith and compliance (11:00 – 14:00).

Data use

According to interviewees, in recent years the registry has been made quite usable for its key audiences of journalists and public affairs professionals. New registrations and communication reports are easy to view online through the registry, and the search function is simple and effective. Sean Holman and Simon Doyle both described their routines when covering the lobbying beat:

My morning routines would be to wake up and check a variety of different disclosure websites to see whether or not there had been anything interesting that had been posted over the last day. Two of those websites were the BC lobbying registry as well as Canada’s lobbying registry. […] They led to a fair number of stories (Holman 6:30).

Two of the most regular things that we do are the new registrations – which are posted every day. So we just check those every day and based on if there is enough for a story we will do something on it. And that is as simple as going into the registry and there is a thing you click on” ‘new registrations.’ […] And for communications reports […] we also do those, but those are only released each month. So January’s communications will be released the 15th of the next month […] that is one of those competitive information issues. [Communications reports] are just another part of the website you click through (Doyle 26:00 – 28:00).

The level of information captured allows journalists to look at multiple different aspects of a filing, Mr. Doyle expanded on his description of his reporting practice, noting that after using the search function he would usually delve deeper into the data.

[I]f there was anyone that I found particularly interesting or any company or organization I would check that file out and see what was actually in the file. And I would also take a look at the bulk data — how many lobbyists were registering, who they were targeting etc. etc. So, I looked at it from a variety of various different angles (Doyle 28:00).

For more data intensive stories, like year-end reports on lobbying activity, Mr. Doyle said that they might download the bulk data and conduct a more systematic analysis. However, using the bulk data can present a significant hurdle for those less experienced in data work:

[I]f you want to export all of the communications reports they don’t allow you to, you know, conduct a search and then export that search. What you have to do is that there is one bulk data export that goes from now back to when the registry was created in the 90s. At the end of every month they update that bulk one, so you have to export that whole thing, which is everything that has ever been registered, and then try and do something with that (Doyle 5:45).

Bulk data is released as a download of machine-readable tables (CSVs) and is fairly well documented in a data dictionary that is included with the download.

The bulk download is a set of relational tables, tied together through a variety of entity and transaction/report IDs. Using these IDs to filter the filings is certainly possible, but requires some degree of facility with a statistical computing language like R or high level programming language like Python or Ruby.

Lobbyists also use the registry, viewing it as “a strategic resource for companies.” This is especially true in among consultant lobbyists, where lobbyists “pay attention to who just signed up which client” (Patrick 14:00). Mr. Patrick offered a recent example from the telecommunications industry, in which he works. He saw in the new registry that a “few months ago Verizon engaged a consultant lobbyist after months of denying they had any interest in expanding into the Canadian market.” He noted that the registry doesn’t tell him “exactly what Verizon’s ask of government is, but it certainly seems that they have an interest in the Canadian market – we can draw at least that conclusion” (Patrick 15:00).

Impacts

The view of our interviewees was generally positive of the lobbying law and the effectiveness of the registry. Mr. Doyle summarized his view of the law’s impact:

I think it has made Canada’s lobbying a lot more transparent. We are still a very, very secretive country when it comes to government, but I definitely sense that lobbyists are more open about their work now than they were say in 2004 (12:00).

He added that the five-year ban on being a lobbyist after working in the government has “definitely changed the so called ‘revolving door’” (12:30).

The successful implementation of the online registry, its search functions and bulk data have altered the ecosystem of lobbying registry data use. The registry has lowered the barriers to use significantly.

Improvements to the registry have made accessing lobbying data much easier for journalists to use. Now the “registry is way, way more user friendly than it used to be. It used to be really clunky and really, really difficult to understand and to use […] We can do most of our work just online searching it, we don’t have to export stuff,” said Mr. Doyle. Before these improvements there was “a little bit of an industry in export and data manipulation of the registry because it was so not user friendly,” which has since disappeared because it is easier to use the system (Doyle 33:40).

Mr. Holman agreed on the usefulness of the registry, with the important caveat that it still leaves a lot unknown. He summarized:

Government in this country to a certain extent […] is somewhat of a black box. So in order to actually figure out what exactly is going into that black box, what is actually going on in that black box, it is helpful to know what is going into it and what is going out of it. And a big part of that is the lobbying that goes on. So I suppose that is why it was part of a regular check for me every morning (Holman 6:30).

Conclusion

Despite the generally positive reviews of the current system, concerns over who registers, under what circumstances and what communication they have to disclose clearly create a perverse system of incentives. The mutually beneficial incentives of clients and public officials drives lobbying activity away from meetings by consultant lobbyists which require reporting and towards more informal meetings directly with the client, which may not be disclosed. Because of apparent risk-aversion over running afoul of registration requirements, activity is made more, rather than less, opaque. This is not the intent of the law.

To maximize disclosure, a few relatively small changes to the registration and reporting requirements would make a big difference. The 20 percent time threshold for triggering registration as organization/corporation lobbyists should be removed. Any representative from a corporation or organization who takes meetings with members of government should file a communication report. Furthermore, all individuals in attendance of these meetings should be listed in communication reports, rather than appearing under the client CEO’s name.

Under the current system of two-tiered system of disclosure, the incentives of both those who would like to influence the government and those within the government is to engage directly without consultant lobbyists as intermediaries. Beyond the qualitative description we received from interviewees, there is no good way to know the extent to which this is actually taking place, precisely because this sort of activity is not reported. Normalizing registration between consultant and in-house lobbyists would remove this incentive to avoid disclosure by having clients to lobby directly instead of consultant lobbyists. Ultimately, this would strengthen the lobbying law and reveal more about how the government and private sector interact without increasing penalties, enforcement costs or creating an undue burden on the legitimate interests of the private sector.

Supporting materials

Katlyn Harrison – Consultant Lobbyist at Summa Strategies

Simon Doyle – Editor of the Lobby Monitor

Michael Geist – Law Professor and Canada Research Chair in Internet and E-commerce Law at the University of Ottawa

Sean Holman – Journalism Professor at Mount Royal University

Jim Patrick – President of the Government Relations Institute of Canada

Tom Marshall – Board Member, Transparency International Canada

After reaching out to the Office of the Commissioner of Lobbying, and submitting questions in written form at their request, we did not receive any response. Multiple follow ups did not yield results. We will provide an update if answers are forthcoming in the future.

Thanks to all of the interviewees, those who offered advice and expertise, Tom Lee and Lee Drutman for comments and editing, and especially Liz Dubois who was instrumental in finding people to speak with.

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1 January 2011

Getting politicians to bend policy to your company’s will is a fine art – requiring a combination of charm, dogged persistence, threats and bushels of cash. But corporate lobbyists know just which buttons to press in order to get politicians to stuff human rights, public health and the dear old environment – and put business interests first.

Much as they shrink from the limelight, we feel they deserve a bit of exposure. So here’s why we think these 10 lobby groups have earned their place in the hall of shame.

Brewing denial: Big oil

Koch Industries likes to describe itself as the biggest company you’ve never heard of – but the US oil corp couldn’t escape the headlines in 2010 after revelations that it was funding the Tea Party movement that swept through America ahead of the mid-term elections in November. The media largely reported on it as a mass grassroots uprising. But behind the local meetings and cries of outrage, the freemarket thinktank Americans for Prosperity was playing the role of puppeteer – funded by the oil wealth of Koch Industries’ David Koch.

The power of the oil lobby is well documented. Big oil spent a reported $169 million lobbying in the US in 2009, and millions more on political support. BP alone made $500,000 worth of political donations, including $71,000 to Obama’s presidential campaign.1 (Its total lobbying spend was far higher – $16 million.)

But these figures only tell half the story. Undeclared and undercover, big oil is involved in funding a range of PR initiatives designed to manipulate public opinion and block action to tackle climate change. The Tea Party movement – unmasked after David Koch was filmed speaking at an Americans for Prosperity event – is an Astroturf (or fake grassroots) campaign on a scale not seen before.

Americans for Prosperity have used the Tea Party movement to tap into public concern over the state of the economy and direct it towards an anti-government, anti-regulation, anti-intervention agenda – which suits oil interests very well.

Koch also funds the Competitive Enterprise Institute, American Council for Capital Formation, Heartland and other US thinktanks with a record of sowing doubt about climate change.

European oil companies, including BP, have jumped on the bandwagon, providing funding for Tea Party candidates standing in the US mid-term election – who all deny that human behaviour has an impact on climate change.

Take it further: Sign up for updates at priceofoil.org

Financial Fiddlers: Goldman Sachs and the International Swaps and Derivatives Association

Investment tycoon Warren Buffet described them as ‘financial weapons of mass destruction’, the Nobel Prize-winning economist Joseph Stiglitz called for a ban on their trading. But despite wreaking financial havoc, the international trade in derivatives continues virtually unregulated – and banking lobbyists are working hard to make sure it stays that way.

Derivatives are financial instruments, devised by traders to protect investments by hedging their bets. They create price volatility and played a key role in the bubble economy which led to the 2008 financial crisis.1 There is no transparency – so banks can merrily sell on bad debts without disclosing their true nature. Thus US banks sold 40 per cent of their toxic mortgage debts to banks in Europe. Big investment banks, like Goldman Sachs which trades in everything from the price of food to sub-prime loans, are key players in the derivatives trade.

When such trading came under scrutiny following the 2008 crash, the big guns and their lobby group, the International Swaps and Derivatives Association (ISDA) swung into action. They had one clear message for regulators: tighter rules are not needed – let the market regulate.2

The banking lobby has been actively pushing to get rid of regulation since the 1990s – with disastrous consequences. Between 1998 and 2008 the banking industry spent $3.4 billion on lobbying the US government. The result? Measures to prevent banks taking high risks with ordinary people’s money were swept away and proposals to regulate the burgeoning trade in derivatives effectively blocked.3

ISDA then set its sights on the EU, becoming an active member of the European Commission’s Working Party on Derivatives, an advisory group made up almost entirely of industry lobbyists, including Goldman Sachs and other big banks.4

Goldman Sachs has plenty of previous form. In the US, when it was hauled before a Congressional committee, it emerged the bank had made donations to 10 of the committee members.5 There’s also the revolving door. Former Treasury Secretary Henry Paulson was previously chief executive of Goldman Sachs. And current Treasury Secretary Timothy Geithner’s chief of staff, Mark Patterson, was Vice-President of the bank.6

Take it further: Check out the response to the World Development Movement’s campaign to stop food speculation: www.wdm.org.uk/stop-bankers-betting-food/what-problem Tax the banks: robinhoodtax.org/

Saving the world: Monsanto

Why lobby the government when you can be part of it? Former Monsanto vice-president Michael Taylor is now a senior adviser to the US Food and Drug Administration – going from a corporation that aggressively promotes its genetically modified crops to a body that advises on food safety.

The Obama administration is littered with former Monsanto employees who are now in positions of power. Islam Siddiqui, vice-president of Monsanto-funded lobby group CropLife is now a negotiator for the US Trade Representative on agriculture. Roger Beachy, a former director of a Monsanto-funded plant science centre has become the director of the National Institute of Food and Agriculture.1

Regardless of these insiders, biotech giant Monsanto still feels the need to be heard, investing more than $6.5 million on lobbying the US administration in 2010.2

At the UN climate talks in Copenhagen in 2009, Monsanto lobbyists promoted GM crops as a solution to climate change, earning themselves the dubious distinction of the Angry Mermaid Award.3 Monsanto argues that GM crops, such as Round-up Ready soy, minimize the loss of CO2 from the soil – conveniently ignoring the impacts on water, soil and the climate of their chemical-dependent growing methods. Chemicals which Monsanto also conveniently manufactures.

The biotech company is pushing the case for its crops being grown with ‘no till’ farming methods which don’t disturb carbon in the soil. Thus it can hope to pocket carbon credits and further its ongoing campaign to make its products an indispensable part of saving the world.4

Monsanto is also an active member of the Roundtable on Responsible Soy which is pushing its own ‘sustainability’ agenda in the EU – which includes allowing GM soy to be used for biofuels.

Take it further: www.gmwatch.euwww.responsibletechnology.org

A guiding hand: The tobacco lobby

The tobacco industry knows it’s on its last wheeze but won’t give up without a fight.

Each year more than five million people die from tobacco use worldwide,1 and in Britain cigarette smoking is the greatest single cause of illness and premature death, killing 106,000 people a year.2

Desperate to escape more restrictions, British American Tobacco (BAT) joined forces with the pharmaceuticals industry in 1995 to persuade the European Union to take a novel approach to risk.

Key to their campaign was the European Policy Centre – a Brussels-based thinktank which served as an apparently ‘neutral’ front group – with whom BAT lobbyists worked to make their case.

The secret lobbyists argued that the EU was failing to assess adequately the economic impacts of new legislation – and that assessing the risk of costs to business should come over and above an assessment of health impacts.3

They executed nothing less than a paradigm shift in impact assessment for lawmaking. Defying common sense, the European Commission agreed to put the interests of business first.

The tobacco industry and the chemical industry have since been able to use economic impact assessments to delay and/or weaken EU legislation intended to protect public health.4

Take it further: Network for Accountability of Tobacco Transnationals www.stopcorporateabuse.org/natt

Bull’s-eye: The biofuel lobby

They lobbied aggressively and they won themselves a target: 10 per cent of Europe’s transport fuel will need be sourced from ‘renewable resources’ (read biofuels) by 2020. It’s all meant to sound clean and green – except that research shows that the way countries plan to go about meeting the EU target would require an area more than twice the size of Belgium to be converted to plantations.

The target signals a major expansion for the biofuel industry – and flies in the face of a growing body of evidence showing that using crops for fuel would increase the cost of food for some of the world’s poorest people, force small farmers off the land and destroy biodiversity.

And if land use changes are factored in, carbon emissions will actually increase – equivalent to putting an extra 12-26 million cars on Europe’s roads by 2020.1

Brazilian sugar cane industry interests, represented by lobby consultancies Weber Shandwick and Cabinet DN, launched a lobbying offensive to persuade EU politicians to increase the market for ethanol from Brazilian sugarcane. They were supported by Spanish energy firm Abengoa.

Not to be left behind, the palm oil industry, keen to promote the use of palm oil for biodiesel, targeted Brussels, with lobby consultancy Gplus acting on behalf of the Malaysian Palm Oil Council (MPOC).

Using misleading information, the lobbyists claimed that research showed that the EU could grow enough biofuel crops to meet demand without the need for imports. However, figures released by EU countries show that most plan to import much of the biofuel they will need.2

The outcome was a major success for the biofuel lobby, guaranteeing a growing market for biofuels for at least the next decade. With clear targets established in the EU, other countries are likely to follow suit.

Take it further: www.biofuelwatch.org.uk/alerts.php; www.rainforest-rescue.org

Allergic to the law: The mining industry

Mining is a mucky old business for sure, but the mining lobby can also play dirty in politics. The industry loves its filth – why, it even threatened to sue Canadian MP John McKay after he introduced a private member’s bill designed to clean up Canadian mining operations overseas.1

Here’s the fun bit: the environmental and human rights standards the bill was seeking to make legal had already been endorsed by the mining industry’s main lobby vehicle, the Prospectors and Developers Association of Canada (PDAC). So why the hissy fit? Well, it seems that such standards, which must make for good PR, are fine and dandy with the PDAC as long as they are voluntary. But turn them into law? They launched a venomous lobbying campaign, condemning the bill as an attack on the nation’s mining industry.2

Mining is big business domestically, but Canadian companies including Barrick Gold, Pacific Rim Mining and Blackfire Exploration have empires around the world. They face a string of allegations over human rights abuses and environmental damage in Latin America, Asia and Africa.3

Canada’s mining industry is used to an easy ride with the government. After all, didn’t they agree to the appointment of an independent corporate social responsibility investigator in 2009? It was a post designed to investigate allegations of abuse – with the accused company’s consent.

But the threat of legislative powers sent them into overdrive – MPs with mining interests in their constituencies were particularly targeted. The bill originally had the support of three opposition parties, but was ‘killed’ by intense lobbying of Parliament.4

There were howls of outrage in Australia, too, home of mining giants BHP Billiton and Rio Tinto, at proposals for a mining tax. The Minerals Council of Australia moaned that the ‘tax grab’ would drive investment overseas.5 The tax became an election issue following a proposed deal between the then Labor candidate now Prime Minister Julia Gillard and the big players in the mining industry.6

Take it further: www.protestbarrick.net

Stuffing its face: The food lobby

Obesity is the Western world’s ticking time bomb. Obesity-related conditions including heart disease, diabetes and stroke are already soaring.

Health experts blame poor diet, but the food industry, which makes millions from the sale of processed junk foods, is desperate not to see its hungry market disappear.

When the EU made a modest proposal to introduce ‘traffic light’ food labelling in order to signal foods high in sugars and fats, food industry lobbyists quickly persuaded politicians of the error of their ways.

The Confederation of the Food and Drink Industries (CIAA) – which in 2008 had launched its own voluntary food-labelling scheme – estimated it spent €1 ($1.3) billion successfully opposing the change,1 vastly outnumbering and outspending consumer and health campaigners.

The CIAA represents some big hitters – Cadbury, Cargill, Coca-Cola, Danone, Kraft, Nestlé, Procter and Gamble, Tate and Lyle, and Unilever are all members.2

In the United States – where statistically one in three people are obese3 – the US Food and Drug Administration announced in 2009 that it would be issuing new front-of-pack labelling guidance. But industry appears to have stepped in first, with the Grocery Manufacturers Association (GMA) and the Food Marketing Institute launching a voluntary front-of-pack labelling scheme in October 2010 to ‘fight against obesity’. Just how manufacturers like Cadbury, Coca-Cola and PepsiCo (all members of the GMA4) plan to fight obesity without ditching the products on which their brands were built is unclear. In Australia and New Zealand, it has been estimated that up to 460 lives could be saved each year with the introduction of mandatory nutrition labelling.5

The icing on the cake? British health minister Andrew Lansley’s invitation to the industry to help him develop public health policy. McDonald’s, KFC and Mars proudly take their places alongside health policy experts on the government’s new ‘responsibility deal’ networks drafting priorities for tackling obesity and alcohol- and diet-related disease.6

Take it further: The Children's Food Campaign http://www.sustainweb.org/childrensfoodcampaign

Down and dirty: The EU and US business lobby against labour rights in China

The charade of concern for human rights in China hasn’t stopped Western transnational corporations from relocating production there at the double. Not just that, they are actively using their economic and political clout to lobby against improvements in Chinese labour laws.

So while Chinese citizens are denied freedom of speech and the right to organize, EU and US corporations are able to influence Chinese legislation. A 2010 report from the Hong Kong-based NGO Globalization Monitor revealed how lobbying tactics have been adapted to Chinese circumstances and the concept of guanxi (connections or personal ties). Developing the personal touch with government agencies is of crucial importance, building trust and offering favours, which often crosses the line into full-blown corruption.

Lobby coalitions such as the American Chamber of Commerce (ACC) and the European Union Chamber of Commerce in China (EUCCC) play a key role. The EUCCC has over 1,400 member firms, including TOTAL, Deutsche Bank and Nokia. These two coalitions sprang into action when the Chinese government reviewed its Labour Law in 2006 and was thinking of introducing the right for workers to have a written contract. In practice, the scant existing protections are rarely enforced, making the law worth little and allowing both Chinese companies and foreign transnationals to mistreat employees.

The EUCCC and ACC lobbied against any improvements in labour protection, using their usual strategy – threatening that improved standards would lead to higher costs and force companies to bail out of China. The British Chamber of Commerce echoed this scaremongering by mentioning India, Pakistan and South-East Asia as investment locations where regulations offered more ‘flexibility’. International unions blasted such irresponsible lobbying and, following media attention, the EUCCC backtracked, issuing a public statement supporting the new Labour Law. But by then the damage was done and the law had been watered down.

Source: ‘Complicity, Campaigns, Collaboration and Corruption: Strategies and Responses to European Corporations and Lobbyists in China’, Globalization Monitor, 2010. Take it further: www.globalmon.org.hk/en/

Smoking guns: The carbon trading lobby

Carbon trading has been described as the fastest growing commodities market – there have been a staggering $300 billion worth of carbon transactions since 2005, with a boom predicted that could see the market expanding to between $2 and $3 trillion.1

The carbon trading lobby have ensured that emissions’ trading is at the heart of EU and UN approaches to cutting carbon. Meanwhile big polluters, such as heavy industry and power generators, lobby for exemptions – which in the EU come in the form of free pollution permits, allowing them to profit without cutting emissions at source.

Set up under the Kyoto Protocol, carbon trading allows rich countries and corporations to buy the right to pollute – and traders (big banks and specialists) to speculate on the cost of pollution.

Industry has played a key role in setting up the carbon markets. The EU unveiled its emissions trading scheme in 2001 only after lengthy consultation with industry. In fact the idea was based on a British pilot, originally cooked up in-house by oil giant BP.2

During the first phase of the EU scheme, big emitters including BP, Shell, RWE and E.ON lobbied governments for more free permits than they would actually need.3 The result was a vast over-allocation of permits – followed by windfall profits. Germany’s top four power generators were estimated to have made a cool €8 ($10.4) billion from the scheme.4

The third phase of the scheme (due to start in 2013) proposed auctioning permits so that industry would have a stronger financial incentive to cut emissions. But the lobbyists got to it first.

Big emitters including steel giant Arcelor Mittal and cement manufacturer Lafarge, backed up by industry groups such as BusinessEurope, whined that auctioning would force heavy industry out of Europe – resulting in ‘carbon leakage’ or increased carbon emissions elsewhere. Studies show the threat is unlikely, but the EU caved in. Industry sectors considered vulnerable to carbon leakage will receive free permits in 2013.

Another get-out clause that’s in the bag is the ‘right’ to offset emissions by investing in projects abroad. The next phase of this scandalous lobby campaign aims to allow trading of credits from biofuels, monoculture forest plantations, GM crops and other offset projects that harm local communities and the environment while doing little to reduce greenhouse gas emissions.

Take it further: www.carbontradewatch.org

Deadly charm: The arms industry

When you’re in the killing, sorry, defence business it pays to grease some wheels. The arms industry spent a staggering $101,907,368 on lobbying the US government in 2010. But the true power of the arms lobby is not just in the size of its spending, it’s in how cosy it can get to governments. It loves to play on the riffs of protecting jobs and defending shores – traditionally that goes down well.

In the US, Boeing is the biggest spender, followed by Lockheed Martin, United Technologies, and a number of companies specializing in electronic systems for defence.1 Some 428 lobbyists are registered as working for the defence industry in the US – and of these, 309 have gone through the revolving door, having previously worked inside government.2

The British arms firm BAE Systems, which in 2010 became the world’s biggest arms manufacturer,3 spent just under $3.5 million on lobbying in the US in 2010. A trifle compared to the $400 million it had to shell out to US authorities in penalties for wrongdoing, following an investigation by the US Department of Justice into allegations of kickback payments in arms deals.

BAE Systems also lobbies in Europe, in its own right, and through arms industry associations and thinktanks. A particularly fruitful area is research spending, as arms firms can effectively obtain taxpayer-funded subsidies through the EU’s research programme to develop new technologies for their own profit.4

The European Union has become more interesting to the arms industry since the introduction of a joint security policy in 2003 and a joint security research programme. Described as an example of ‘Big Brother meets market fundamentalism’ and set up by the European Commission, without consultation of the Parliament or member states, the Security Research Programme drew instead on the wisdom of representatives from the industry brought together in what was called a ‘Group of Personalities’.5 This group naturally recommended increased spending on research, ostensibly to help EU arms companies compete with their counterparts in the US, but also ensuring further lining of pockets.

Take it further: Campaign Against Arms Trade www.caat.org.uk; www.controlarms.org/en

This article is from the January/February 2011 issue of New Internationalist.
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