Record Fine for Hiding Donors in Washington Election

Last week, a Washington state court imposed the largest fine ever levied for a campaign finance violation, on a group that hid the identities of its donors.

November 7, 2016

Last week, a Washington state court imposed the largest fine ever levied for a campaign finance violation. It fined the Grocery Manufacturers Association (GMA) $18 million for hiding the identity of companies that paid for a campaign to defeat a state ballot initiative that would have required labels on food made with genetically modified organisms, or GMOs.

The court found that in 2013 GMA intentionally hid the donors to a special account earmarked for the “No on 522” campaign, which may have helped block the initiative. Early polling showed strong support for the measure, but voters ultimately rejected it by a slim 51 percent majority after the opposition spent $22 million on ads. The donors to the GMA account, which provided $11 million to the “No” campaign, included major consumer brands like Coca-Cola, General Mills, Kellogg, Nestlé USA, and PepsiCo. GMA insists its actions were legal and has vowed to appeal the fine.

While the motivations of the “No on 522” funders are obviously unknown, the spending fits an apparent pattern of secret spending by special interests on elections that threaten their bottom line. As this year’s Brennan Center analysis of state spending found, transparency in state elections has plummeted since the Supreme Court deregulated much election spending in Citizens United.

The issue is at play in Arizona, too, after 2014 elections for a commission that regulates utilities saw $3.2 million in outside spending from unknown sources—more than twice what the candidates spent. The money is widely believed to have come from the state’s largest utility, Arizona Public Service Company (APS). APS has neither confirmed nor denied that it was behind the expenditures. In this year’s elections for the same commission, APS’s parent company has reportedly spent $3.5 million, and candidates have fiercely debated the role of utility spending and transparency.

Law enforcement has shown an interest as well, raising the possibility that the Arizona case may result in fines. The FBI has questioned candidates and outside spenders who were active the 2014 commission elections in Arizona, and the U.S. Attorney has spoken with the parent company of APS.

Investigations and enforcement by prosecutors are important, but elections regulators in many states need stronger rules to guarantee transparency and accountability in election spending. Currently, many political expenditures are hidden due to loopholes—loopholes that can be closed with common-sense regulation. But strong rules can make a difference: California elections, despite being targeted by massive outside spending, saw relatively little secret spending due to comprehensive disclosure rules and effective enforcement. All groups that spend a substantial amount on politics should be required to disclose their donors, so that the public knows who’s trying to influence their votes and who’s trying to cozy up to their elected representatives.