Dismantling Citizens United

| June 13, 2011 | 3 Replies

Electoral politics have become the playground of billionaires and corporations bent on ruling, not governing. Identifying and getting out the voters in elections for political offices against the rich and corporate interests is noble but, under our current corrupt political fundraising system ordinary citizens don’t and won’t have the money resources now (nor will they ever) while the billionaires and corporate interests do have the influence to dominate electoral politics.

One way out is to immediately adopt a strategy to pursue structural changes at the grass roots which may, in the long run, blunt the impact of the apparent rise of corporate rule in America and perhaps turn the tide back in favor of ordinary Americans.

States have the most critical role to be played in fending off the onslaught of corporate billions to politics so as to render democracy and our republic meaningless. States are where the tires hit the road, and states can act much more efficiently and quickly to take specific actions to protect America and American citizens.

The first step is to recognize that corporations are creatures of the law. After Citizens United, it may be that corporations believe themselves to be above the law, but we now have a chance to rein the corporations in and restore a semblance of balance between real live citizens and the newly created after Citizens United super unnatural citizens. And see here.

Citizen Shareholder Suits

Delaware law generally prohibits donating corporate assets for non-charitable purposes. See, Title 8, Section 122(9) under “specific powers.” See also, Title 8, Section 124 for the power of shareholders to file suits for ultra vires actions.

If a Delaware corporation has given of corporate assets for non-charitable- i.e., political purposes, such corporation may be amenable to a suit by its shareholders. There may be an issue of whether the actual purpose of the newly created 501 (c)(4) or (c ) (6) or 527 organizations such as American Crossroads and their ilk may actually be a “charitable” organization but a review of the history of the corporate statutes of Delaware and the various states will likely show that such giving must be tax deductible to be “charitable” which political donations are not. A review of the various states within which corporations are incorporated and which have given political donations to a candidate or committee for similar restrictive donation laws might provide information for a plethora of suits by shareholders to recoup monies from the corporate managers which gave the illegal donations or from the organizations to which the money was illegally given.

Citizen Actions and Ballot Initiatives

Because corporations are creatures of the law, direct citizen action by lobbying or ballot initiatives can change the corporate statutes of the various states to resemble those of Delaware, to prohibit corporate donations of corporate assets for non-charitable purposes. Perhaps the statute will need to define “political donation” specifically as a non-charitable donation. If the various legislatures are so captive of corporate interests that they will not pass such changes to the corporations laws, citizens should use direct democracy through ballot initiatives like was done in recent efforts to pass minimum wage laws across the country, including Missouri where I live.

Citizen Shareholder Proxy Actions

Individual or institutional shareholders should consider putting forward proxy initiatives at corporate shareholder meetings to require a super-majority or unanimous shareholder vote to allow corporate political giving of corporate assets. The proxy initiative approach was recently endorsed by the SEC and suggested in the Citizens United case. Former Vanguard Funds and founder John C. Bogle suggested such an approach in a recent New York Times op-ed.

Image by Vacclav at Dreamstime (with permission)

Citizens united across America have a chance to confront the aftermath of the disastrous decision by the Citizens United court. Proposals for a US constitutional amendment to overturn the decision in Citizens United might be personally and intellectually satisfying but, the present political reality is such that even if such an amendment were introduced, it would not be passed out of the current US House of Representatives which is the captive crony of the corporate interests of America. It would only be by citizens uniting across America to apply the pressures of lawsuits, legislatures and proxy ballots that we may begin to restore our republic after Citizens United.

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Category: Corruption, Politics, populism

About the Author ()

imothy E. Hogan is a trial attorney, a husband, a father of two awesome children and a practicing Roman Catholic in St. Louis, Missouri. Mr. Hogan has done legal and political work in Jefferson City, Missouri for partisan and non-partisan social change, environmental and consumer protection groups. Mr. Hogan has also worked for consumer advocate Ralph Nader in Washington, DC and the members of the trial bar in the State of New York. Mr. Hogan’s current interests involve remaining a full time solo practitioner pioneer on the frontiers of justice in America, a good husband and a good father to his awesome children.

Comments (3)

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  1. Erich Vieth says:

    Good job, Tim. Here's a problem, though. I would like to see the shareholders tell the officers and directors that they may not contribute to any political campaign, but many savvy investor know that it's good business to slap a pile of money into the waiting hands of a politician. If you don't do it, your competitor will, and then your competitor will get some of that federal largess and you won't. Most investors want their corporation to make piles of money, and they don't care how it is done. I figure most investors know that to run a business well, part of the dirty work, a fact of life, is that you need to pay off politicians.

    Good luck getting an issue like this on the ballot. I don't expect that you'll see it from any legislature.

  2. Tim Hogan says:

    Erich, there are organizations and people already coalescing around removing the stain of the Citizens United decision from our body politic.

    http://org2.democracyinaction.org/o/7003/p/salsa/

    There are other organizations, all we need do is act.

  3. Erich Vieth says:

    Public Citizen is pushing the Shareholder Protection Act to rein in "corporate" contributions that consist of funds that the shareholders have not authorized as contributions:

    The Shareholder Protection Act proposed by Rep. Michael Capuano (D-Mass.) would empower shareholders to vote on whether to allow corporate executives to spend corporate money on political campaigns. Shareholders — not the CEO and not the board of directors — are the real owners of any publicly traded corporation, and the decision should be theirs.

    Don’t let your family’s nest egg be used to promote the corporate agenda. If a majority of shareholders tell a corporation to stay out of politics, then the corporation should do exactly that.

    Anyone with a 401(k) invested in stocks or mutual funds — nearly half of all households today — has a stake in how the corporate money in those funds is spent. Passage of the Shareholder Protection Act would help the public hold corporations accountable for their political behavior.

    Go here to take action:

    http://www.citizen.org/shareholder-protection-act

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