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NEW YORK, NY - Citigroup shareholders gathered today in New York City for their annual meeting and outrage over Citi’s role in the financial crisis was still palpable in the room. A major topic of interest was a shareholder proposal that would require the company to disclose its lobbying expenditures to its investors, one of over 100 resolutions on political activity filed this season.
“Citigroup came under serious scrutiny this past December for sneaking a Dodd Frank rollback into a must pass spending bill and that was still fresh on shareholders’ minds at today’s annual meeting. When a company can spend millions lobbying to repeal important reforms put in place to stop their past risky practices after their shareholders lost trillions, investors clearly need more transparency,” said Emma Boorboor, Democracy Advocate with U.S. PIRG.
The provision in the Cromnibus bill repealed derivatives swaps reform, a risky practice widely recognized as one of the causes of the financial collapse. Citi’s backroom dealing received public blowback, most notably from Senator Elizabeth Warren, raising concern among shareholders that their lobbying creates reputational risks.
The resolution would have required the company to disclose both direct and indirect lobbying expenditures. Citigroup spent over $11 million lobbying in 2013 and 2014 to influence federal policy according to the Center for Responsive Politics. This includes only their direct lobbying. Trade associations like the Securities Industry and Financial Markets Association, SIFMA, spend even more but do not have to disclose the identity of their donors. Without knowing who is behind such spending, shareholders - the owners of corporate wealth - have no way to ensure a corporation is spending its money in their best interest and therefore cannot make informed investment decisions.
Today’s disclosure proposal did not pass, as most institutional investors, who own the majority of the company’s stock, tend to vote how the company advises. Yet, in the preliminary vote count, it was the most popular among the proposals that did not pass with almost 29% of the vote.
The SEC has the authority right now to require all publicly traded corporations to disclose their political spending. President Obama could also pass an executive order requiring all government contractors to disclose, which would cover 70% of Fortune 100 companies.
Boorboor concluded, "While the popularity of these resolutions across sectors show shareholders want disclosure of political activity, we will never get the level of disclosure we need company by company. Ultimately shareholders need SEC Chair Mary Jo White to fulfill her mandate to protect investors and require all publicly traded corporations disclose their political spending."
U.S. PIRG, the federation of state PIRGs, is a non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well being. To learn more, visit www.uspirg.org.
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