$18 million penalty puts campaigns on notice

In the run-up to Tuesday’s national election, there’s been an odor of public disgust over the role of big money in politics. And in a decision that echoes that feeling, a Thurston County Superior Court judge imposed an $18 million penalty last week in the largest campaign-finance case in state history.

Judge Ann Hirsch imposed the penalty against the national Grocery Manufacturers Association, based in Washington, D.C. For months, the more than 300-member association concealed the source of $11 million that it contributed in 2013 to a political committee working to defeat Initiative 522.

The donor names did not come out until a few weeks before the election — after state Attorney General Bob Ferguson initiated legal action.

For those who don’t recall, I-522 would have required labels on food products containing or made from genetically modified organisms. I-522 drew almost $9 million of campaign spending on the yes side, and more than $22 million on the no side, which made it one of the most expensive ballot contests in our state’s annals.

The stunningly large penalty is about 18 times the biggest previous fine. It sends a clarion message to national groups that want to cheat in Washington politics: Play by the rules or pay the price.

It’s unfortunate, but the Grocery Manufacturers Association still is treating its flagrant violations as “at most an inadvertent technical violation” of rules, which it considers “vague and complex.” The group claims Ferguson mounted a “continuing crusade” that became part of his re-election fundraising appeals.

This is a head-in-the-sand reaction, and it helps to explain the size of penalty Hirsch felt was necessary to get the group’s attention.

The judge imposed $6 million for the failure to timely register as a political action committee and for concealing the source of contributions and failing to file some 60 campaign reports until the eve of the election. Under state law, Hirsch tripled that because she found GMA’s actions were intentional. GMA must pay for further investigative and legal costs incurred by the state.

A lingering question today is how much GMA, which vows to fight the ruling, might end up paying. And if it does pay, how can the $25 million-a-year organization come up with the cash. Hirsch’s 24-page ruling notes that executives and board members were not straight with their legal team and that not all GMA members contributed to the fund.

The Grocery Manufacturers’ cynical strategy in Washington was borne after a costly fight over a similar initiative in California in 2012. That earlier Referendum 37 campaign led to a consumer backlash with threats or boycotts that targeted some of the companies contributing to the $43 million anti-labeling campaign.

So in 2013 the GMA tried a new approach. It created a “Defense of Brands” program that relied on special assessments paid by about 36 association members, who would be able to contribute under a shield of anonymity.

This generated more than $14 million to deploy in anti-GMO fights around the country. Washington’s initiative was seen as pivotal for the national campaign against mandatory labeling of genetically modified products.

Those donating against I-522 included PepsiCo, Nestle USA, The Coca-Cola Co., General Mills, Conagra Foods, Kellogg Co., Campbell Soup Co., The Hershey Co., The J.M. Smucker Co., Land O’Lakes Inc. and The Hillshire Brands Co. The $11 million from GMA was half of the $22 million that anti-522 forces raised and spent. Giving separately were Monsanto, which contributed $5.4 million, and DuPont Pioneer, which gave $3.9 million.

Whether all $18 million of the penalty was needed remains to be seen. But Hirsch sent an overdue message.

This story was originally published November 7, 2016 at 9:02 PM with the headline "$18 million penalty puts campaigns on notice."