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Breaking vow, Democrats used corporate cash to pay for convention

Democratic National Convention organizers used money from a committee financed by Bank of America and other companies to rent the venue, filings show.

October 18, 2012|By Matea Gold, Washington Bureau
  • The Democratic National Convention was held in Charlotte, N.C., in September.
The Democratic National Convention was held in Charlotte, N.C., in September. (Joe Raedle, Getty Images )

WASHINGTON — Democratic convention organizers broke their pledge to put on their quadrennial gathering in Charlotte, N.C., this year without corporate donations, using $5 million from a committee financed by companies such as Bank of America, Duke Energy and AT&T to rent the Time Warner Arena for the three-day event.

The payments, revealed in reports filed Wednesday evening with the Federal Election Commission, came after party officials said they would produce the convention without corporate money, a self-imposed ban set by the Democratic National Committee.

The limits were part of President Obama's vow to curtail the role of big money in politics, a goal he has struggled to meet. He railed against the influence of outside groups in elections, but gave his blessing earlier this year to a "super PAC" supporting his reelection after GOP-allied groups began to spend millions of dollars to defeat him.

In the run-up to the September convention, organizers said the ban on direct contributions from corporations, lobbyists or political action committees had not hurt their fundraising efforts.

And during an interview in Charlotte last month as the festivities were in full swing, DNC Chairwoman Debbie Wasserman Schultz insisted that organizers had "exceeded that bar," financing the event without special-interest money.

"Even though it was quite challenging … we are so proud that we made sure that this was the most open and accessible and inclusive community-oriented convention in history," she said.

But FEC reports show that convention organizers failed to reach their $36.7-million goal, raising just $24.1 million.

That led them to cover the rental fee for the arena with $5 million from New American City, a civic committee set up by the host committee that was allowed to accept corporate cash. Officials had said the nonprofit would not be used to pay for the convention itself but rather would cover the costs of overhead, welcome parties and community projects.

Using the fund to pay for the arena did not technically violate their rules: A little-noticed clause in the master contract allowed the maneuver. But it conflicted with promises made by Wasserman Schultz and other Democratic officials that the convention would be free of corporate money.

DNC spokeswoman Melanie Roussell declined to comment on the fact that New American City paid for the arena. But she said this year's Democratic National Convention still represented a sharp break from past events, noting that the donor base had expanded 32,000, up from 450 in 2008.

"We fundamentally changed the way political conventions are done by giving more Americans than ever a voice in our party's convention," she said.

Advocates of campaign finance reform said the party's promise to bar corporate money proved hollow.

"While it's admirable to pledge to refuse corporate donations, when push came to shove and the Democrats had to choose between their pledge or cutting back on the excessive extravagance of modern-day conventions, they chose extravagance," said David Donnelly, executive director of the Public Campaign Action Fund.

In the end, organizers leaned heavily on corporations to put on the convention. Faced with fundraising difficulties, the host committee drew nearly $8 million of a $10-million line of credit provided by Duke Energy, whose chief executive, Jim Rogers, served as co-chairman of the host committee. It has until Feb. 28 to repay the loan.

Duke also gave $5.7 million in in-kind contributions and cash donations to New American City and the Committee for Charlotte, the arm of the host committee that produced the convention.

New American City, which paid for hospitality and administrative costs, raised $19 million — nearly all from corporations. Bank of America, headquartered in Charlotte, gave $5 million. AT&T donated $1 million, and Time Warner Cable contributed $600,000. Steven Spielberg's DreamWorks Studios donated $2 million to the nonprofit fund Sept. 4, the first day of the convention.

Although corporations could not contribute cash to the Committee for Charlotte, they could donate goods and services, as Microsoft, Coca-Cola and Adobe did. The committee accepted donations from unions, which gave at least $2.65 million. And wealthy individuals, such as San Francisco hedge fund manager Thomas Steyer, real estate executive Constance Milstein and Slim-Fast founder S. Daniel Abraham together gave millions more.

The host committee still has more fundraising to do: It ended September $8.7 million in debt, with just $1 million in the bank. Contributing to the hole was nearly $900,000 the committee paid to rent the Bank of America Stadium for the final night of the convention — only to scrap that plan and remain at the arena when the weather turned ominous.

Organizers of the Republican National Convention, which had no restrictions on their fundraising, raised $55.9 million for their August event in Tampa, Fla. Among the corporations and wealthy individuals who gave were casino developer Sheldon Adelson ($5 million), Florida-based Marketing Solution Publications ($4 million), the American Petroleum Institute ($2 million) and Bank of America ($1 million).

matea.gold@latimes.com

Melanie Mason in the Washington bureau contributed to this report.

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