Opinion Editorial on Pensions
New York's Pension MusclseEditorial
When the United States Supreme Court issued its flawed 2010 decision in the Citizens United case, unleashing millions of dollars in corporate spending on political campaigns, there seemed to be one small prescription for relief. Justice Anthony Kennedy, writing for the majority, noted that prompt disclosure of political expenditures would allow stockholders and citizens to hold corporations accountable. Shareholders, he said, could determine whether the corporation’s financing of campaigns “advances the corporation’s interest in making profits."
New York State’s comptroller, Thomas DiNapoli, is attempting to do just that. As sole guardian of investments for New York’s $150 billion pension fund, he wants to use his considerable financial clout to get a major company to open its books to shareholders, including New York State.
Last week, Mr. DiNapoli sued Qualcomm, a computer chip business, demanding to see the company’s internal records on political spending. The suit, filed in Delaware, where the company is incorporated, argues that the records are necessary to help Mr. DiNapoli determine whether the state’s pension funds are protected. “Without disclosure, there is no way to know whether corporate funds are being used in ways that go against shareholder interests,” he said.
The pension fund owns almost $380 million in Qualcomm stock, and Mr. DiNapoli contends that this should give him a voice in the company’s business. Delaware law gives shareholders the right to inspect books and records of a corporation for “a proper purpose.” Determining whether political spending is a wise use of corporate money, Mr. DiNapoli argues, meets that test. If the courts agree, governments and stockholders will have acquired a valuable new tool for holding corporations accountable for political spending.
Mr. DiNapoli’s suit is one of many efforts nationwide by pension funds and other institutional investors to force corporations to disclose or limit their political contributions. The New York attorney general, Eric Schneiderman, is also seeking greater transparency on political spending from many nonprofit groups.
It is bad enough that the flow of political money into American campaigns grows bigger by the year — the 2012 elections were the costliest ever. It’s even worse when the public is to be kept in the dark about who’s doing the spending. Big stockholders like New York’s pension funds can bring much-needed openness to a murky process.