President Barack Obama and Democrats broke a high-profile promise to keep corporate money out of their nominating convention last month in Charlotte, illustrating how hard it is to keep special interests from gaining influence and access with their checkbooks.
President Barack Obama has repeatedly vowed to keep corporate money out of politics and the Democrats promised they wouldn't tap big business to help pay for its nominating convention last month that launched the president on his fall campaign to re-election. But in the end, the temptation proved too great.
The Democratic National Convention reported to the Federal Election Commission late Wednesday that it accepted at least $5 million in corporate donations for its big convention in Charlotte and drew down another $8 million in a loan from Duke Energy, a big utility with more than a dozen coal-fired plants still in operation. Obama has taken strong regulatory action to rein in coal-fired plants.
Millions more came from corporations in the form of in-kind contributions, the reports show.
The special interests and corporations that donated ranged from corporate giants like Bank of America and AT&T to four Indian tribes that run casino. Numerous special interest groups also got into the act like a credit card lobby, the natural gas group ANGA and the senior citizens group AARP.
To add to the insult of a broken promise, the Democrats also allowed numerous corporate executives to pony up far more than the $100,000 limit it had set for individual donations. For instance, Thomas Steyer, the president of the San Francisco-based hedge fund Farallon Capital Management, donated $500,000 to the host committee, five times the voluntary limit, the report shows.
Likewise, real estate executive Constance Milstein donated $300,000, medical software executive Paul Egerman donated gave $200,000, and In all, the committee accepted $7.1 million in donations exceeding the $100,000 limit, according to an analysis by The Associated Press. Democratic officials say some of those donations may have come from personal foundation set up by the individuals, a distinction unlikely to matter to average Americans.
The decision marks a remarkable about-face on a populist pledge to voters.
Democratic Party Chairwoman Debbie Wasserman Schultz had pledged not to raise money from special interests and to cap individual donations at $100,000 for the convention. "This convention will be different," Wasserman Schultz said last year. "We will make this the first convention in history that does not accept any funds from lobbyists, corporations or political action committees. This will be the first modern political convention funded by the grassroots, funded by the people."
Democratic National Committee spokeswoman Melanie Roussell told The AP it is not illegal for convention host committees to raise unlimited corporate money and that the party had placed the fundraising restrictions on itself.
Republicans made no secret of raising unlimited corporate money for their convention in Tampa, Fla., which took in a reported $55.8 million.
The core convention events in the Time Warner Cable Arena and Bank of America Stadium were overseen by the Democratic National Convention Committee Inc., a Washington-based nonprofit corporation affiliated with the Democratic Party.
The DNCC's operations were funded with $18 million provided by American taxpayers who check the $3 political donation box on their federal tax returns. Security for the convention was funded by a $50-million grant from the Homeland Security Department. The Republican convention received identical government grants.
To raise money for costs beyond what taxpayers provided, the DNCC contracted with Charlotte in 2012, a North Carolina-based nonprofit corporation.
The $5 million used to rent Time Warner Arena for the convention was raised from corporate donors by New American City, a separate nonprofit corporation set up by top officials at Charlotte in 2012. The rest of the $18.8 million in corporate money raised by the entity was used to support functions organizers considered to not be in direct support of the convention, such as the salaries of the 41 full-time host committee employees and their health insurance.
As for the money raised directly by Charlotte in 2012, the Democrat's contract with the city's host committee exempted millions in donations from unions and such in-kind corporate donations as office space, computers and furniture from the self-imposed limits.
Roussell said the reported donations in excess of $100,000 were reporting errors and that the money came from the personal foundations of the listed individuals. Donations from charitable groups were not subject to the $100,000 cap, she said.
"There are several errors in the report and we are working with the host committee to clarify and fix them," Roussell said.
Donations were also accepted from foundations supported by corporations. For example, Xerox Foundation, which shares the same Connecticut address as the headquarters of the Fortune 500 copier maker, is listed as giving $100,000.
The Eastern Band of Cherokee Indians gave $100,000, as did the Chickasaw Nation, the Muckleshoot tribe and the Sycuan Band of the Kumeyaay Nation. All four tribes operate large casinos.
Also not subject to the Democrats' ban on corporate donations were law firms, such as the $100,000 donated by McGuire Woods LLP. In addition to being one of the South's largest law firms, McGuire's consulting subsidiary employs dozens of registered state and federal lobbyists.
More modest checks came from the American Financial Services Association, which represents credit card and financial companies, and the senior group AARP. Both are registered as entities that lobby the federal government.
As for the $7.9 million borrowed from the line of credit guaranteed by Duke Energy, the company's agreement with the host committee calls for that money to be repaid by Feb. 28.
Duke spokesman Tom Williams said the company also provided a total of $5.7 million in cash and in-kind contributions to Charlotte in 2012 and New American City, including providing the joint offices occupied by both entities. He said the company will work with committee organizers to help retire the $7.9 million debt by the deadline.
Roussell ruled out that the debt would be paid by the DNC or Obama campaign. She touted the roughly 32,000 donors listed in Charlotte host committee's disclosure report, up from just 450 donors for the Democrats' 2008 soirée in Denver.
A host committee is a private nonprofit entity set up by the host city of a presidential nominating convention to raise money to underwrite the event.