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Business Efforts to Ban 'Soft Money' Turn Squishy

Politics: The movement to stop unregulated contributions to political parties falters. Advocates vow a renewed push after the election.


After fund-raising scandals marred the 1996 elections, a handful of business leaders vowed to put an end to one of Washington's biggest growth industries: unlimited political donations.

Four years later, the movement is faltering. A record number of companies have donated record amounts of so-called soft money. Companies that stopped giving these largely unregulated donations to political party organizations have resumed. Industry executives say there is still no corporate consensus that soft money is bad.

" . . . I'm disappointed," said Jerome Kohlberg, the former Wall Street financier in charge of one of the business-backed groups opposed to soft money. "We've gotten less than what we had hoped--I wish the CEOs had more courage."

That big business failed to rally behind campaign finance reform reflects the difficulty inherent in overhauling a system that benefits those who give as well as those who receive.

For the Record
Los Angeles Times Tuesday October 17, 2000 Home Edition Part A Part A Page 3 Metro Desk 1 inches; 30 words Type of Material: Correction
Political donations--In Monday's Times, a story on corporate political giving incorrectly reported that a political action committee run by Time Warner makes "soft money" donations to party organizations.

It is also a measure of the pressure political parties are putting on industry during one of the most competitive election cycles ever, with control of the White House and both houses of Congress up for grabs.

Leaders of the business-backed campaign reform movement have given up on this election and turned their attention to the months after Nov. 7. They point to hopeful signs: Vice President Al Gore's pledge to work to ban soft money if he is elected president, and campaign finance reform advocate Sen. John McCain's early success in challenging George W. Bush during the Republican primaries.

One of the leaders has been the Committee for Economic Development, whose members include some of America's most powerful companies. The CED gathered endorsements from top business leaders last year to reform campaign finance laws.

In response, Sen. Mitch McConnell, a Kentucky Republican who is one of the strongest defenders of soft-money donations, wrote a threatening letter urging the signatories to resign from the committee.

Charles Kolb, head of the CED, said McConnell's threat had no effect and pointed to the growing number of business leaders who have joined in the demand for reform. The huge push for cash this year has disgusted many top corporate officials, he said.

"The spectacle being created is probably going to be counterproductive for the future of soft money," Kolb said. "Soft money is basically doomed."

But an examination of the approximately 250 people who have endorsed the committee's reform plan shows that nearly one-third are retired CEOs or academics with no direct control over corporate practices. Of the remaining two-thirds, slightly more than two dozen represent Fortune 500 firms that make some of the largest soft-money donations. And many of the other companies on the list continue to give soft money despite their CEOs' objection to the practice.

The heads of MGM Mirage and Biogen Inc. endorsed the CED plan, which would ban soft money and increase the limits on donations to individual candidates. But both firms donated soft money this election, with MGM Mirage giving more than $300,000 and Biogen $15,000.

Ed Kangas, the recently retired chairman of the accounting firm Deloitte Touche Tohmatsu, was co-chairman of the CED task force that wrote the plan to abolish soft money. But he couldn't persuade his own firm to cease such donations. In the last two years, according to the Campaign Study Group, a consulting firm specializing in campaign finance research, Deloitte Touche has contributed more than $190,000 to the Republican Party.

"At this point in time, I would say there's a broad consensus that we don't want to be a big soft-money player, but there may be times where it is to our advantage," said Kangas, who still consults for the company. "At some level, we feel like we have to play."

Kangas said more and more corporate leaders are becoming tired of the endless donations. But absent some legislative effort, he said, there is little hope that big companies will give up soft-money donations of their own accord.

"There is clearly no consensus," Kangas said. "Most business today would prefer not to give. But there's not going to be unilateral disarmament. That's not going to happen."

Quite the contrary: Some businesses have withdrawn their vows to make no political contributions.

After Congress began looking into the 1996 fund-raising scandals, for instance, defense contractor Lockheed Martin suspended its soft-money donations. The company has roared back, giving $834,000 to Republicans and Democrats the past two years, according to Campaign Study Group records. Company officials declined comment.

The trend has been most noticeable among technology firms, once famous for their reluctance to get involved in politics. Sun Microsystems, which made no soft-money donations through 1996, has already given almost $50,000 this year, $40,000 of it to Democrats. Company officials could not be reached for comment.

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