An extensive program designed to ascertain the extent of efforts by 23 corporations in lobbying Congress on behalf of the Reagan Administration for the sale of the $8.5 billion AWACS arms package to Saudi Arabia, was announced here by the American Jewish Congress. Congress approved the arms package in November, 1981.
In making the announcement today Howard Squadron, AJCongress president, pointed out that lobbying by corporations on behalf of policies it determines to be in its best interests are not illegal. He suggested, however, that actions on behalf of the corporation taken without consent of the Board of Directors of major corporations or without notification to its shareholders is “improper.”
According to Squadron, the program, which will work through shareholders resolutions asking management to report on the nature and cost of the lobbying efforts, seeks an agreement “that they will not in the future spend corporate funds for efforts of this kind.” This reference, Squadron noted, was for a possible Administration effort to have corporations lobby on behalf of an arms package sale for Jordan, which is expected to be introduced in the 98th Congress when it takes office in January.
TARGETS OF THE LOBBYING INQUIRY
The AJCongress said the lobbying inquiry will cover corporations that have been identified as actively lobbying in favor of the sale of AWACS and other sophisticated American weaponry in 1981. The lobbying efforts by many of these corporations whose business ties to Saudi Arabia were clear, became a significant concern to the American Jewish community.
Among those corporations involved in the share-holders resolution campaign is Boeing, which according to one report, had “flooded Capital Hill with telegrams and information packets to support” the arms sale. Another is United Technologies which makes the engines for the AWACS aircraft. The Saudis are scheduled to receive five AWACS beginning in 1985.
The shareholders project will be carried out by leaders of the AJCongress who are shareholders of substantial amounts of stock in the 23 corporations that have been targeted. Originally 25 were announced as targets in the campaign but two — Whit taker Corporation and Owens-Illinois were dropped prior to today’s announcement.
ELEMENTS OF THE RESOLUTION
According to the AJCongress, the resolution, which is identical for each corporation, will ask management to report to stockholders on the following: what concrete steps were taken to influence congressional debate and public opinion on AWACS; the estimated amount of company funds spent on AWACS lobbying during 1981 and lobbying on general Mideast issues during the past year; what part of these lobbying expenses will be claimed as tax deductible because they are legitimate business expenses; projected management plans for additional lobbying activities on Mideast matters in the next 12 months; and how lobbying on Mideast issues has advanced the interests of the corporation?
“What we are questioning is an unusual lobbying effort that ultimately resulted in approval of the proposed AWACS sale,” William Maslow, general counsel for the AJCongress, explained. “It now appears that the AWACS sale was saved from Senate defeat by massive, unprecedented corporate lobbying.”
He contended that many of the corporations involved had no stake in the sale of the AWACS or had no business links to Saudi Arabia. They involved themselves in the lobbying, he explained, “because they were led to believe by the Administration and others that appeasing the Saudis on the sale was critical to the U.S. economy. This resulted in the most far reaching effort by American companies to influence foreign policy since World War II.”
Maslow said corporate efforts to influence public opinion on foreign policy issues “usually constitute a waste of corporate funds,” especially since the Internal Revenue Code does not allow the deduction of such expenditures as ordinary business expense. “What is worse,” he said, “corporations take positions on controversial issues without consulting their shareholders and often in contradiction to their views.”
According to the AJCongress “Boycott Report,” under the proxy rules of the Securities and Exchange Commission (SEC), a corporation receiving a timely resolution from a shareholder is required to include the text of the proxy statement it distributes to its shareholders in advance of the annual meeting.
The corporation is also required to allow the shareholders to vote on such resolution by marking appropriate proxy cards. SEC rules, according to the report, also require the corporation to allow the originator of the resolution to argue in its behalf at the annual meeting.
The shareholder resolution will be submitted to, among the 23, the following companies: AMR Corporation (American Airlines), Boeing Co., Eastern Airlines, Ford Motor Co., Mobil Corporation and Westinghouse Electric Corporation.
A similar campaign was initiated by the AJCongress in 1976-77 designed to reveal company policy toward participation in the Arab boycott of Israel. Fifty companies were involved in the AJCongress effort at that time which helped toward the establishment of anti-boycott regulations by Congress.
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