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Junk Food Lobby Forced to Disclose Donors to its Secret "Defense of Brand Strategic Account"

October 22nd, 2013
By Michele Simon, JD, MPH, Policy Consultant with Center for Food Safety
Center for Food Safety

“This is the largest amount of money ever concealed in an election,” says Washington State Attorney General Bob Ferguson, as tobacco-style tactics by likes of PepsiCo and Nestle are revealed in Washington State’s lawsuit against the Grocery Manufacturers Association over GMO labeling fight.

Just a few weeks ago, attorneys for the No on 522 campaign were feeling rather smug when a lawsuit filed against them by a group called “Moms for Labeling” was dismissed. As I wrote last week, consumer class action attorney Knoll Lowney sued the No on 522 and the Washington DC-based Grocery Manufactures Association (lobbyists for major food corporations) for not disclosing the donors behind GMA’s $7 million-plus donation to stop I-522, which would require genetically-engineered foods to be labeled. The judge threw out that case on a technicality.

But then, Big Food’s arrogance got the best of them.

Last Wednesday, Washington State Attorney General Bob Ferguson picked up where the Moms for Labeling lawyer left off by filing his own complaint, which adds stunning detail to the allegations in the original suit. In case you’re not familiar with what the attorney general does, he or she is the state’s top law enforcer, but often has limited resources to act. So when the AG’s office decides to come after you, it’s a very big deal, far bigger than a private attorney doing so.

The new lawsuit also accuses GMA of violating the state’s campaign disclosure laws, and alleges that the trade group secretly gathered more than $7 million from its members. Not content to just collect food industry money illegally, or even discreetly, GMA had the chutzpah to a designate a special account dubbed the “Defense of Brand Strategic Account,” for a strategic, “multi-pronged approach” to fight labeling laws, including Washington’s I-522.

And this scheme didn’t just pop up recently either; rather the shady deal-making was in the works for months, soon after the narrow loss of Proposition 37 in California. The plan was hatched at a GMA board meeting this past January to fund future anti-labeling efforts with “a preference for GMA to be the funder of such efforts, rather than individual companies.” That’s because brand names like PepsiCo and General Mills took a lot of heat from upset consumers. So, as GMA CEO Pamela G. Bailey explained in a February memorandum, a plan to “better shield individual companies from attack” was quickly approved; GMA sent its first round of invoices to members by March and the second round went out in August.

The dollar figures are staggering: GMA earmarked ten million dollars to oppose I-522, meaning that when the trade group made its first contribution to No on 522 in May—a paltry $472,500—it knew it was only getting started, something the public would learn by August when it donated another $1,750,000. In September, GMA dropped $5 million in one load, which now makes sense considering how long they had been taking collections. But if the two lawsuits hadn’t stopped GMA, chances are it would have spent even more. As of October 7, GMA collected almost $13.5 million dollars but had only spent $7.2 million, meaning it still has more than $6 million left in its arsenal. That can buy a lot of TV ads.

In fact, Attorney General Ferguson said this case represents “the largest amount of money ever concealed in an election.” Way to go team.

Barely 48 hours after the attorney general filed suit, GMA waved a white flag, disclosing the list of donors it had so adamantly refused to give Moms for Labeling. Topping the list were old favorites like PepsiCo ($1.6+ million), Nestlé ($1+ million), Coca-Cola ($1+ million), and General Mills (almost $600K). But all the major food groups are also represented. Not only soda companies, but also Sunny Delight and the juice bottler Clement Pappas & Company are named. For canned foods, GMA hit up Del Monte and Hormel Foods, maker of Spam. And who knew that the Clorox Company owns Soy Vay marinades, which explains its $12K donation to the Defense of Brand Strategic Account.

Before releasing its list of donors, though, GMA put out a statement saying it was “surprised to learn that the Washington State authorities viewed the association’s actions as improper.” Maybe GMA’s lawyers (aren’t they all lawyers?) were too busy making a paper trail of its wrongdoing to read up on the state campaign finance laws they were so sloppily trying to circumvent.

Then, when GMA released the donor data (on Friday at 3pm, wonder why?), the lobbyists had the nerve to claim to be doing so “in the spirit of continuing cooperation and in an effort to provide Washington voters with full transparency.” That’s the spirit. But even more impressive was GMA’s decision to “voluntarily establish a Washington State political committee and to file reports disclosing the source of all funds used in connection with Washington State elections.” Let’s unpack that: GMA is volunteering to follow the law after the state’s top law enforcer sued them to stop violating it.

Meanwhile, Lowney and Moms for Labeling aren’t done yet. Yesterday, Lowney filed another suit, incorporating the attorney general’s allegations, and asking the judge to “sequester” the same amount No on 522 illegally concealed – more than $7 million – to pay future penalties.

In the new complaint, No on 522 is not only accused of concealing the source of its donations, but also intentionally misleading Washington voters by falsely reporting the source of the $7.2 million. Not satisfied with the disclosures made last week, this suit wants the court to order No on 522 to: 1) stop running advertisements that don’t reflect the accurate top five contributors; 2) admit that earlier disclosures were false and disseminate corrected information; 3) file corrected campaign finance reports; 4) discontinue receipt of contributions from GMA; and (my personal favorite) 5) pay a penalty in the amount of the contributions it concealed – more than $7.2 million.

GMA hasn’t responded to that suit yet, but in the meantime, Ferguson’s office isn’t backing down after the initial disclosures either. Janelle Guthrie, communications director for the Washington State attorney general’s office told me that the state’s “lawsuit continues with regard to setting penalties.”

The Moms for Labeling lawsuit highlights the important role that private litigation has in getting state officials to force Big Food’s compliance with the law and big kudos to the attorney general for doing so. Let’s hope we see more of it.

And if you’re keeping score, that makes three lawsuits filed so far against an industry that will stop at nothing to keep consumers in the dark. Washington State voters should really be asking, when they see the next ad opposing 522: if this campaign is willing to break the law, how can we trust anything they say?

Meanwhile, it’s not too late to help the Yes on 522 campaign.

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