Investors sue Qualcomm to uncover political donations
- 04 January, 2013 01:39
New York's state pension fund sued Qualcomm on Thursday in a bid to force the chipmaker to disclose its political contributions, which the fund argued is needed to ensure the contributions are in its shareholders' interests.
The New York State Common Retirement Fund, which holds Qualcomm shares worth US$378 million[m], alleged in its lawsuit that Qualcomm has refused requests to inspect its books.
"Despite requests for increased transparency, Qualcomm continues to obscure its political spending," the lawsuit alleged. "Qualcomms website lacks meaningful disclosure regarding the Companys corporate giving."
The lawsuit said that since the Supreme Court lifted restrictions on corporate political contributions in the 2010 Citizens United case, those contributions have risen. But the ruling anticipated that companies would disclose their political contributions to shareholders, which not all companies have done, the lawsuit said.
The fund said it needed more information about Qualcomm's political contributions to determine whether the company's board and management have properly overseen the use of corporate funds for political purposes. That oversight can have implications for a company's financial success.
"Recent studies indicate that corporate political spending in general is negatively correlated with enterprise value and is indicative of more widespread control and governance deficiencies," the lawsuit argued.
The fund, which says it is the third largest public institutional investor in the U.S., with $150 billion in assets, argued that even small donations can have a significant impact on a company's reputation.
The lawsuit cited a $150,000 donation in 2010 by the retailer Target to MN Forward, a political group that supported Minnesota gubernatorial candidate Tom Emmer[cq], who opposed gay marriage. The donation was widely criticized and led to in-store protests and boycotts, with Target eventually issuing a public apology.
"The capacity for outsized harm from political spending renders this category of corporate spending unlike routine business expenses or charitable giving by corporations," the lawsuit said.
Qualcomm spent more than $4.7 million on federal lobbying efforts in 2012, the lawsuit said, citing information published by the Center for Responsive Politics.
Qualcomm officials could not immediately be reached for comment.
The suit was filed in Delaware's Court of Chancery, according to a news release.
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