NY comptroller sues Qualcomm on political spending
ALBANY, N.Y. (AP) — New York's comptroller has sued Qualcomm Inc. in an attempt to compel the wireless technology company to disclose its political spending to him and other shareholders.
The lawsuit filed Wednesday in Delaware seeks a court order to inspect company records, saying prior requests for the information have been rebuffed by the San Diego-based corporation. The suit cites studies that say corporate political spending tends to hurt investor returns.
"We think the fullest possible disclosure is what we're entitled to as shareholders," Comptroller Thomas DiNapoli said. He is sole trustee of New York's pension fund for public workers, which has 6.1 million Qualcomm shares valued at almost $380 million.
According to the comptroller's office, the company spent more than $4.5 million on lobbying last year. That figure was based on data compiled by OpenSecrets.org, which showed Qualcomm spent more than $6 million on lobbying in both 2010 and 2011.
Qualcomm didn't initially respond Thursday to requests for comment.
DiNapoli said the lawsuit is a new tactic that holds promise for getting corporate transparency and accountability for shareholders. "It's just part of our continuing effort to have companies we invest in follow the best practices," he said.
The New York pension fund and other members of the Council of Institutional Investors sent letters to 430 companies in 2010 asking that they disclose political contributions made with corporate funds. In the past two years, the fund filed 27 shareholder resolutions asking for disclosures, reaching agreement with 10 companies, comptroller spokesman Eric Sumberg said.
The lawsuit says corporate political activity has risen sharply since the U.S. Supreme Court in 2010 removed restrictions on it. The suit also cites recent studies, including one from Strategic Management Journal in 2012 that indicates that spending in general "is negatively correlated with enterprise value." The abstract of that study said researchers looked at 943 companies from 1998 to 2008.
"We find that firms' political investments are negatively associated with market performance and cumulative political investments worsen both market and accounting performance," the abstract said
Firms that put former public officials on their boards also performed worse. Corporate political activity had a positive effect on market performance in regulated industries, it said.