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AT&T’s Merger Sleight of Hand to Gain Political Favor?

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AT&T logoAs the old adage goes, “there’s more than one way to skin a cat.”  Why anyone would want to skin a cat to begin with is beyond me, but regardless, the concept is far reaching and used for many purposes.  It could be said as encouragement in college labs to aspiring students, or delivered with a smirk and a wink in business and political offices when someone finds a legal loophole.  The latter may be true regarding AT&T’s $39 billion merger with T-Mobile, and how companies can try to draw favor from politicians with pull when they can’t directly financially contribute to them.  The merger is under scrutiny by the Federal Communications Commission (FCC) and the Department of Justice (DOJ).

So let’s talk about this cat.  The FEC (Federal Election Commission) prohibits corporations from contributing directly to political candidates from business accounts or using business funds.  The best they can do is write a check from personal accounts to candidates and political action committees (PACs), in which case there are limits imposed as outlined by the FEC.  So how else can influence be, shall we say, financially suggested?  They can donate to charities closely associated with said politicians.  Watchdog groups like Citizens for Responsibility and Ethics in Washington have been seeing a definite uptick in this kind of activity in the last few years.  “It’s another way to curry favor when you’ve maxed out in your political contributions,” said Melanie Sloan, CREW’s executive director. “We’re seeing it more and more.” 

In the case of AT&T, they have given almost $1.25 million to charities affiliated with lawmakers from 2008 to 2010.  One such contribution was made to Alzheimer’s Association and the Blanchette Neurosciences Institute, which are charities affiliated with Sen. Jay Rockefeller (D-WV), a member of the Senate Commerce, Science and Transportation Committee.  The Senate Commerce, Science and Transportation Committee has direct jurisdiction over the FCC, which means that their approval is required for the merger to go through.  Contributions were also made to charities associated with Sen. Thad Cochran (R-MS), a member of the Senate Appropriations Committee, and Rep. Jim Clyburn (D-SC), a high-ranking house Democrat.

All of these contributions are 100% legal and the American public is given full disclosure, so who’s really being hurt?  The problem is that not many have really put the pieces together here to see the full picture.  This isn’t the first time the telecom giant has acted in this manner.  Around the time they needed legislative approval from Governor Bobby Jindal (R-LA) to sell cable television services, they pledged at least $250,000 to a charity run by Governor Jindal’s wife.

Sen. Rockefeller’s spokesman Vince Morris said in a statement to Politico, “The senator’s interest in supporting Alzheimer’s research is separate and long term and never touches on his evaluation of the AT&T merger.”  Further, “Even the idea that donating to a charity would influence him is ridiculous.”

And that may be the case.  Against everything else that says otherwise, there may not be any impropriety here.  I can’t tell you with 100% certainty that these donations on the part of AT&T were driven by financial and political motives.  I’m just a technology nerd.  But the timing on them does seem strangely coincidental when there’s a big merger they’re trying to push through that is facing a lot of scrutiny and opposition.  Arguments against it include less consumer choice, potential hikes in prices and rates, and the elimination of jobs to reduce post-merger redundancy.  Then there are potential anti-trust issues – this deal would turn the mobile industry into pretty much a duopoly, with AT&T and Verizon holding a combined 80% of the market.  All potential reasons to try and grease some wheels, if you’re picking up what i’m putting down.

Interestingly enough, Sprint Nextel Corp and their CEO Dan Hesse, who has been the most vocal opponent of this merger, reported no donations to any charities with ties to American lawmakers.

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