Taking the Lead in Adopting Political Transparency in the COVID-19 Crisis

As the country seeks to recover from the worst economic crisis since the Great Depression sparked by the Covid-19 virus, it’s time for companies to put the nation’s interest above their own bottom line. A company’s individual pursuit of profit cannot impede the collective recovery of our national economy. Our nation’s financial commitment to restoring our country’s economic health should not fall victim to private rent seeking or short-term profits. There are basic commitments our public companies need to make.

Transparency in seeking and receipt of public funds and accountability in the use of those funds must be the hallmark of acceptance of assistance. Corporations have a responsibility to their shareholders and to the public at-large to forego the immediate advantage that they may enjoy from an absence of governmental oversight in favor of a long-term commitment to responsible corporate stewardship, including complete transparency in interacting with government and government officials.

Securities and Exchange Commission Chairman Jay Clayton has taken the lead in promoting transparency by recently advising publicly traded companies to fully disclose their intention to seek government assistance and the purposes that the assistance will be put.

His suggestion serves the dual purposes of maintaining the integrity of financial markets and creating public accountability in the use of the public funds. The impact on the price of the company’s securities cannot be the driving concern. He is to be commended for his early and forthright leadership. The concerns that he addressed are, however, not the only concerns that need to be considered

Of equal importance is to take steps to assure that the competition for public funds by companies does not become an opportunity for corruption. Public assistance should not be dispensed based on political favor. The integrity and effectiveness of government assistance to a private company depends on it being free of the appearance of political or personal considerations.

It necessarily follows that companies that seek government assistance must refrain from direct or indirect political contributions or, at a minimum, fully disclosing any contributions. These include donations to 501(c)(4) organizations, “dark money” groups that are not required to disclose their contributors.

To do otherwise will undermine the public’s faith not only in its government but also in our nation’s leading businesses. The government indeed should require such disclosure. In the absence of a government requirement it falls to companies to voluntarily assume the responsibility.

Fortunately, many leading companies have already committed themselves to disclosure and accountability. Among those companies are American International Group Inc., Exelon Corp., Intel Corp., Union Pacific Corp. and United Technologies Corp., United Parcel Service Inc. and Prudential Financial Inc. Other major companies have chosen not to spend corporate funds on politics, including Accenture PLC, Schlumberger Limited, and Public Storage. Many public companies will undoubtedly follow their example. Those who don’t will fail in a duty that they owe to the country.

The receipt of public assistance creates a reciprocal obligation to those who have provided that assistance. Failure to recognize that obligation is a failure of leadership in a time of crisis. Much will be asked of our corporate leaders in the coming months and how they respond will determine whether the nation emerges as a better country.