Common Filing Errors Obscure Lobby Reports

Posted March 23, 2010 at 6:29pm

On its Web site, Florida Citrus Mutual, a cooperative association, boasts how it has successfully lobbied Congress to secure nearly a billion dollars in federal funding while protecting its farmers from international trade threats.

But on its lobbying disclosure forms submitted to Congress, it has not disclosed at least $6.2 million that it appears to have spent with five outside consulting firms, according to forms filed by those firms.

Instead, Florida Citrus Mutual checked boxes acknowledging only the minimum disclosure amounts of less than $5,000 or $10,000 per period — obscuring almost all of the group’s actual lobbying spending from its in-house reports.

“If our filings with the House and the Senate happen to be incomplete, we will immediately notify each body and rectify the situation in an expeditious fashion,” said Florida Citrus Mutual Executive Vice President and CEO Michael Sparks, who added that his group is “looking into the situation.”

Florida Citrus Mutual appears to have made the common mistake of reporting only its in-house expenses on its lobbying disclosure reports. But the Lobbying Disclosure Act requires that lobbying entities with in-house lobbying operations disclose all lobbying costs on their in-house filings, including money spent on outside firms, even though the outside firms must also separately disclose the revenue they receive from the clients.

Companies, unions and other groups that seem to have made a similar error have underreported at least $338 million worth of lobbying during the past 12 years, according to a CQ MoneyLine study.

Some of the 1,200 lobbying entities that have potentially misreported their spending include the Motion Picture Association of America, which seems to have omitted more than $2.8 million from its disclosures through 2008. From 1998 to 2004, Anheuser-Busch reported almost $1.4 million less on its in-house lobbying disclosure forms than its outside K Street firms disclosed for the company. Neither provided comment by press time.

Many of the lobbying entities that have misreported their in-house lobbying figures say they are planning to refile.

An employee with payday lender Cash America first said her company was “very familiar with what the rules are” even though it seemed the company neglected to disclose at least $360,000 that it paid to outside firms.

“I don’t think we misfile because the lobbying firms file their own lobbying reports. We file our own lobbying reports based on what we have internally,” said Rene Knox, who was listed as the company’s contact for its lobbying forms.

However, Knox later called back to say that her company did not file properly and would be amending its reports. “It is absolutely one of the most confusing areas that we deal with,” she said. “The rules are continuing to be rewritten and change.”

But government officials and lobbying watchdogs say the law is not murky.

“The law and the guidance are clear, and the burden is on those who file the reports to file them accurately,” said Beth Provenzano, deputy chief of staff for the Secretary of the Senate, who collects the lobbying disclosure forms.

Craig Holman, who specializes in lobbying rules and compliance for Public Citizen, said he would expect some lobbying entities, especially new ones, to make some mistakes. “But when you have companies that have been around for a while doing lobbying, they should be very clear on the guidelines and the requirements for disclosure,” he said.

As some K Street clients claimed ignorance of lobbying disclosure rules, others said they were aware of the rule. Yet somehow their organizations inadvertently filed inaccurate reports.

“Line 13 is for inside and outside [lobbying], and I would say that we are definitely aware” of the rules, said Jason Giles, deputy executive director of the National Indian Gaming Association, which underreported its lobbying on 16 of 22 filings since 2001. The group’s lobbying reports totaled more than $1 million less than those submitted by the dozen contract lobbying firms it hired during the last decade.

“It was just accounting and not coordinating closely enough with our counsel,” Giles explained. “We will file any amendments if necessary in the future, and we will look at this much more closely.”

The Girl Scouts of the United States of America has reported less spending on 25 of its 26 in-house lobbying forms than it reportedly spent with outside lobbying firms.

“Girl Scouts has made every effort to provide timely, accurate information regarding our advocacy expenses,” said Sharon Scribner Pearce, director of public policy for Girl Scouts of the USA. “We are committed to working with Congress to ensure that we follow the rules.”

During the past 12 years, the amount being underreported by in-house lobbying entities has averaged $28 million. Last year marked the low point in underreporting, with at least $12.5 million unreported.

Jan Baran, a lobbying expert and partner at law firm Wiley Rein, said the recent drop in underreporting by in-house lobbyists is largely due to the passage of the recent lobbying overhaul and the subsequent efforts to educate those on K Street about the new laws, which can carry criminal penalties.

“The good news is that the Honest Leadership and Open Government Act has helped filers clean up their act,” Baran said. The act “made it more important for companies and other filers to pay attention to the rules and improve their reporting, which they have done.”

If companies underreport their lobbying spending, there are few governmental mechanisms in place to catch it. Many of the groups lobbying said Congressional records offices did not contact them after years of misfiling their forms.

Provenzano of the Secretary of the Senate’s office said that beyond the office’s “human review” of filings, there is no real structure to catch companies and groups that are underreporting their lobbying.

Over the years, the Senate Office of Public Records has submitted 8,281 cases of potential noncompliance to the U.S. Attorney for the District of Columbia. It is unknown how many, if any, of these cases involve apparent underreporting of in-house lobbying expenses.