November 2000 - VOLUME 21 - NUMBER 11
N A M E S I N T H E N E W S
Big Business for Reform
Senior executives of the nation's largest businesses overwhelmingly say the nation's campaign finance system is "broken and should be reformed," and three in five back a soft-money ban, according to the first-ever survey of business leaders' views on political fundraising.
The main reasons U.S. corporations make political contributions, the executives said, is fear of retribution and to buy access to lawmakers.
Nearly three-quarters (74 percent) say pressure is placed on business leaders to make large political donations. Half of the executives said their colleagues "fear adverse consequences for themselves or their industry if they turn down requests" for contributions.
The survey, released in October, was conducted by The Tarrance Group for the Committee for Economic Development (CED), a non-partisan research and policy group that has emerged as the business community's leading voice for campaign finance reform.
By a more than four-to-one margin, respondents said corporations make soft-money contributions to influence the legislative process rather than for more altruistic reasons. And 75 percent say political donations give them an advantage in shaping legislation.
Nearly four-in-five executives (78 percent) called the system "an arms race for cash that continues to get more and more out of control," with 43 percent strongly agreeing with that statement. Two-thirds (66 percent) said fundraising burdens are reducing competition in congressional races and the pool of good candidates. And 71 percent say stories about big-dollar contributions are hurting U.S. companies' image.
"As the chase for political dollars has exploded, the business community has increasingly called for reform," says Charles E.M. Kolb, president of CED. "More executives are saying they're tired of the shakedown and the unrelenting pressure to give ever-increasing amounts - something some say feels like extortion."
Do I Hear $45 Million?
Sotheby's Holdings Inc. - one of the world's largest auction houses - will plead guilty and pay a $45 million criminal fine for fixing the price of commission rates charged to sellers of art, antiques and other collectibles at auctions.
The company's former president and chief executive officer, Diana D. Brooks, has also agreed to plead guilty to price-fixing charges as part of an October plea agreement, and will cooperate with the Department's ongoing antitrust investigation.
In separate one-count felony charges filed in the U.S. District Court in Manhattan, Sotheby's and Brooks were charged with participating in a conspiracy lasting more than six years, from April 1993 to December 1999, to suppress and eliminate competition by fixing prices.
Sotheby's and Christie's International, its chief competitor, control more than 90 percent of the world's auction business. They provide substantially the same services to sellers and, prior to the introduction of the fixed, non-negotiable commission rates, they competed primarily on the basis of price, undercutting each other's offers to sellers.
As a result of the conspiracy, sellers lost their principal bargaining tool.
The cases, the first to arise out of a federal investigation into auction house collusion, charge that Sotheby's, Brooks and their co-conspirators carried out the conspiracy by participating in meetings and conversations in the United States and elsewhere to discuss sellers' commissions, fix rates and set up an ongoing exchange of information in order to maintain the agreement.
The Justice Department also confirmed the announcement by Christie's International, one of the world's largest auction houses, that it has been cooperating with the investigation under the Antitrust Division's Corporate Leniency Program.
Experts on the Take
More than half of the experts hired to advise the government on the safety and effectiveness of medicine have financial relationships with the pharmaceutical companies that will be helped or hurt by their decisions, USA Today reported in September.
The experts are hired to advise the Food and Drug Administration (FDA) on which medicines should be approved for sale, what warning labels should say and how drug studies should be designed, according to the report.
The experts are supposed to be independent, but USA Today found that, 54 percent of the time, they have a direct financial interest in the drug or topic they are asked to evaluate. These conflicts include helping a pharmaceutical company develop a medicine, then serving on an FDA advisory committee that judges the drug.
The conflicts typically include stock ownership, consulting fees or research grants.
Federal law generally prohibits the FDA from using experts with financial conflicts, but the FDA has waived the restriction more than 800 times since 1998.
These pharmaceutical experts, about 300 on 18 advisory committees, make decisions that affect the health of millions of people in the United States and billions of dollars in drugs sales. With few exceptions, the FDA follows the committees' advice, according to the report.
"The best experts for the FDA are often the best experts to consult with industry," FDA senior associate commissioner Linda Suydam, who is in charge of waiving conflict-of-interest restrictions, told the paper.