DiNapoli Seeks Disclosure Of Political Spending At Qualcomm
January 3, 2012
New York State Comptroller Thomas P. DiNapoli announced today that the New York State Common Retirement Fund (Fund) has filed suit in a Delaware court against Qualcomm Inc. for the right to inspect the company's books and records to determine how shareholder funds are being spent for political purposes.
"As a shareholder in public corporations, the Fund has a right to be properly informed about the use of corporate funds to influence the political process," DiNapoli said. "Without disclosure, there is no way to know whether corporate funds are being used in ways that go against shareholder interests. The Fund has taken a leadership role in pressing the issue of disclosure of political spending since the Supreme Court's Citizens United decision. Shareholders have a right to know how Qualcomm spends money in the political arena."
On Wednesday, the law firm of Bernstein Litowitz Berger & Grossmann LLP, acting on behalf of the Fund, filed a Section 220 action in the Court of Chancery of the State of Delaware against Qualcomm, a Delaware corporation with headquarters in San Diego. The complaint comes after Qualcomm refused the Fund's request to inspect the company's books relating to the use of corporate resources for political activities.
Since the Citizens United v. Federal Elections Commission Supreme Court decision in 2010, the amount of corporate political spending has increased dramatically but the level of disclosure of such spending has not. The Fund has engaged in a comprehensive corporate governance initiative to urge companies in which it invests to disclose their political spending.
In 2010, the Fund, along with other members of the Council of Institutional Investors, sent letters to 430 S&P 500 companies asking them to disclose contributions made with corporate funds. In 2011 and 2012, the Fund filed 27 shareholder resolutions asking for disclosure of political spending, reaching agreement with 10 companies. In addition, DiNapoli has written to the Securities and Exchange Commission in support of a petition for rulemaking regarding disclosure of political expenditures.
"Corporate spending for political purposes should be focused solely on creating shareholder value and should be done in a completely transparent manner. Qualcomm's lack of disclosure of political spending prevents the Fund from determining if shareholder value is being furthered," DiNapoli said.
Qualcomm received a low ranking on the 2012 CPA-Zicklin Index of Corporate Political Accountability and Disclosure, a study that details how the largest U.S. companies disclose their political spending. However, the company's lack of disclosed political spending does not mean Qualcomm is not politically active. The company spent more than $4.5 million on lobbying efforts in 2012.
To read the complaint in full, please click here.