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New campaign finance { July 9 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A41510-2002Jul8.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A41510-2002Jul8.html
Campaign Finance's New Face
CEO Taps Employees To Build Powerful PAC
By Jim VandeHei
Washington Post Staff Writer
Tuesday, July 9, 2002; Page A01
With the click of a key, Thomas M. Siebel transformed his technology company into a political machine.
Siebel, the brash chief executive officer of software maker Siebel Systems Inc., last year beamed e-mails to hundreds of his most fervent employees with an unmistakable message: Cough up $5,000 each for the company's new political action committee.
The response was something this town has never seen: within weeks, more than 350 workers heeded the CEO's call and built the second-largest PAC run a by a single corporation in the United States -- only UPS's is larger -- according to the latest Federal Election Commission records compiled by the nonpartisan PoliticalMoneyLine. The PAC has banked more than $2.1 million.
With a ban on eye-catching soft money contributions on the horizon, a growing number of corporations are likely to emulate Siebel and turn to employees for greater help influencing policymakers. It's all part of the next generation of fundraising.
"You are going to see companies asking employees who have a stake in the survival of the company to make sure that they give at the office," said former representative Randy J. Tate (R-Wash.), who advises a variety of corporate clients on political strategy. "With campaign finance reform, you will see more and more companies getting involved like this, because this is the only way they can give [large contributions] to candidates and parties."
After the fall elections, no longer will CEOs such as Siebel be permitted to simply write the $100,000-and-up checks that lawmakers take notice of. Campaign finance experts predict this will force corporations to more aggressively lean on employees -- and non-employees, too -- to beef up their company PACs and political muscle.
PACs -- political organizations put together by a business, labor union or ideological group to raise and spend money to elect and defeat candidates -- are legal and ubiquitous, but they will be of even greater import when the new law takes effect.
"That's where the action is going to be," said Kenneth A. Gross, a former FEC lawyer who now advises Fortune 500 companies, including Siebel, on campaign finance laws. Gross said PAC managers at many companies already are using the threat of the impending law change "to make the pitch that there is greater need" for help from employees.
National Republican Congressional Committee Chairman Thomas M. Davis III (Va.) predicted that "we'll also see a lot more bundling," whereby multiple employees at a company write checks to a candidate or party that a top executive then delivers.
Under the current law, there are no limits on the amount of soft money that Siebel -- or any other corporation, union or individual -- can give to political parties. Tom Siebel, for instance, contributed $250,000 of his own money to last month's $30 million GOP fundraising gala, according to people familiar with the event.
But the new campaign finance law is designed to purge soft money from the political system. It forbids rich donors from writing limitless checks to political parties, or underwriting "issue ads" campaigns run by Republicans and Democrats.
While the Federal Election Commission has carved out some loopholes through which donors can still dump soft money, corporations -- many of which historically shied away from donating to groups outside of the political system -- will rely more heavily on PACs and their employees to influence policymakers.
In addition to Siebel, Microsoft, Enterprise Rent-A-Car and Koch Industries Inc., among others, are already receiving many $5,000 checks from employees, according to PoliticalMoneyLine.
Republican activists are also training companies to activate their employees for more traditional political activities, such as writing and calling politicians, and helping encourage people in their neighborhoods to vote for pro-business lawmakers.
Companies are allowed to solicit "voluntary" contributions from white-collar senior executives. These employees are allowed to give $5,000 each year to the company PAC, though few currently do. The new campaign finance laws will strengthen existing prohibitions on companies reimbursing employees for their donations.
It's much harder for CEOs to hit up rank-and-file employees, especially unionized workers, many of whom give a small portion of their annual union dues to fund political activities that overwhelmingly support Democrats. Gross advises his clients to steer clear of blue-collar employees unless they have stock options in the company, which opens them up to solicitations from the CEO or top management.
Of course, it will take a forceful CEO and willing employees, particularly in upper management, to replicate the Siebel model of influence.
Siebel, whose Silicon Valley firm specializes in software that manages customer services, has shown that this approach can turn a company into a major player, virtually overnight.
When Siebel says, "go," all of the employees "get pretty enthusiastic," says Thomas Gann, vice president of the company's government affairs office here. Siebel "is setting the example" other companies should follow, said NRCC Chairman Davis.
Siebel's first real foray into politics came in late 2000, when Rep. Philip M. Crane (R-Ill.) was campaigning to become chairman of the Ways and Means Committee. Crane met with Siebel, who had managed the political campaign of his brother, Daniel B. Crane, for the House years earlier, and asked for help in what had become a fierce fundraising competition among lawmakers vying for chairmanships. Siebel's response: a $500,000 soft money contribution to the NRCC, the largest ever to that campaign committee.
After several meetings with top Republicans, Siebel, a rare conservative in the liberal bastion of Silicon Valley, decided last year to dramatically step up his efforts, as his company was looking at billions of dollars in government contracts.
He sent e-mails to hundreds of employees outlining his plans for a high-flying PAC and explained the laws that allowed them to contribute the maximum of $5,000 per year. "We simply followed the rules step by step," said Gann, who lobbied on behalf of Sun Microsystems Inc. before joining Siebel.
As $5,000 checks were flowing in, the company reworked its products to help the government track potential terrorists and communications among the intelligence agencies. Siebel wants the CIA, FBI and other intelligence organizations to buy its software to help solve the communications breakdowns that have plagued the government.
The company is lobbying for a chunk of the $38 billion-plus homeland defense budget, which is expected to grow even larger once the new Department of Homeland Security is created by Congress. Several congressional committees this week are debating the size and structure of the new department, which Siebel believes could become one of its largest customers. The company is also seeking a piece of the federal information technology budget.
Lawmakers, who stand to benefit from the PAC, play a prominent role in deciding which companies get this money. Tom Siebel often demands to meet lawmakers face-to-face to discuss his products before he writes them a check, according to several lawmakers who have talked to him.
The company also received an early boost from a friend in high places: Republican National Committee Chairman Marc F. Racicot, who still sits on Siebel's board of directors, lobbied Homeland Security Director Tom Ridge late last year on behalf of Siebel's products, shortly before becoming RNC chairman.
Siebel himself has met with Ridge, and company officials have privately demonstrated Siebel products to various members of the administration. "We see a lot of activity in a lot different parts in the government," said Gann. Company officials predict that it's biggest chunk of business will come from the government, including the Immigration and Naturalization Service, the Federal Emergency Management Agency and the Energy Department.
"There is no question that the largest vertical market for what we do will be the public sector," Siebel said last year at a conference in Aspen, Colo.
Company officials said their campaign has already paid dividends: It has been awarded several grants and is well-positioned to land others when the administration divvies up the homeland defense money.
© 2002 The Washington Post Company
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