September 22, 2014

Erica Smiley

How Walmart Circumvents Federal Law to Fund Political Candidates

Walmart is illegally incentivizing employees to contribute to the company’s political action committee (PAC) to fund candidates for public office, according to a new complaint filed today with the Federal Election Commission (FEC). The complaint, filed by Common Cause, Public Citizen and Walmart employees Cynthia Murray and Evelin Cruz, alleges Walmart is violating federal election law, which bars companies from using corporate funds for political campaigns.

The allegations center around a two-for-one matching program Walmart uses to encourage employees to contribute to the corporate PAC. For any contribution to the PAC, Walmart will donate twice as much to the Associates in Critical Need Trust (ACNT), a charity controlled by the company to support associates in financial distress.

The complaint alleges this program is an overt workaround of the Federal Election Campaign Act, which bars companies from using any corporate funds to contribute to PACs, political parties or candidates for public office. By doubling an employee’s donation to charity, Walmart is using corporate funds to create a powerful incentive to contribute to the company PAC.

As Craig Holman, government affairs lobbyist for Public Citizen, explained in a press release issued today:

“Federal law is clear – companies cannot fund their PACs with money from corporate coffers. Walmart is attempting to evade this law by providing a two-to-one charitable match from corporate coffers for any campaign contribution to its PAC from company managers. That flouts the law by using substantial corporate money to reward campaign contributors.”

Since an FEC decision in the late 1980s, companies have been permitted to offer one-to-one charitable matching schemes to encourage PAC contributions from employees, but Walmart goes further by offering a 200 percent matching donation. Moreover, in most cases, employees get to choose what charity receives the matching donation. In Walmart’s scheme, the matching gift may only go to the ACNT, which is directly controlled by the company.

The scheme seems to be paying off. According to FEC data reported by Bloomberg News, Walmart’s PAC is the ninth largest in the nation and raised more than $3.1 million for the 2012 election cycle. Open Secrets, an organization that monitors corporate money in politics, shows the company has spent more than $13 million in federal elections since the 2000 election cycle.

Bob Hart, former chairman of the ACNT, claimed the funds are intended to “support pro-business candidates representing both political parties” to protect “associates and customers from unnecessary or potentially harmful laws and regulation.”

Of course, many associates may not agree with Walmart’s definition of “harmful.” Walmart’s PAC contributed $2.5 million to members of the U.S. House of Representatives that opposed an increase to the federal minimum wage to $10.10 last year, but it’s hard to imagine associates earning an average of $8.81/hour would oppose a raise.

Cynthia Murray, a 15-year employee of Walmart, doesn’t trust the company’s intentions with its corporate PAC. In today’s press release, she succinctly sums up the company’s misplaced priorities:

“Our democracy is fundamentally challenged when multibillion-dollar corporations like Walmart are able skirt the rules that the rest of us follow. With the majority of Walmart workers paid less than $25,000, it’s not surprising that Walmart needs to set up a fund to help employees in need. Most of us are in need every day. With more than $16 billion in annual profits, Walmart can afford to pay us more instead of paying expensive lawyers to help them manipulate electoral laws and taxpayers.”

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