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| | Wal-Mart beefs up federal presence
Sunday, Jan 18, 2004 By Alison Vekshin Stephens Washington Bureau WASHINGTON -- No longer able to sit on the sidelines, retail giant Wal-Mart Stores, Inc., has significantly stepped up its efforts to make its voice heard in Washington, political and business analysts say. Headquartered in Bentonville, the world's largest retailer has increased its campaign contributions to federal candidates and boosted its spending on lobbyists in recent years, federal records show. In the past two weeks, it also announced several high-profile hires of attorneys with federal connections. The company hired Tom Gean, U.S. attorney for the Western District of Arkansas, to be vice president in its legal department. John Peter Suarez, the enforcement chief of the Environmental Protection Agency, was brought on as general counsel of Sam's Club. The retailer's increasingly diverse business interests have prompted greater involvement in Washington, said Laurie Smalling, Wal-Mart's manager of corporate affairs and one of five staffers in the company's Washington office. The outpost was opened only in 1999 and expanded since then. "The increased federal presence is driven by an increase in issues that affect our everyday operations," Smalling said. Wal-Mart has hired lobbyists to monitor legislation dealing with consumer protections, ergonomics, port security and prescription drug reform, according to lobbying records. Smalling said Wal-Mart's beefed-up approach in Washington does not represent a shift in policy but rather was "an internal awareness" of the significance of federal policy. "It's become more and more apparent that they are affected deeply by federal policymaking across a vast range of issues," noted Jay Barth, an associate political science professor at Hendrix College in Conway. "They have a great interest in making sure they have a place at the table on a variety of issues." Wal-Mart will rack up $257.7 billion in revenue this year and will grow 12 percent annually over the next five years, predicted Bob Buchanan, vice president and retailing industry group leader at A.G. Edwards, a brokerage firm in St. Louis, Mo. But for all that, Wal-Mart's philosophical roots for years remained outside the Beltway, in the small towns where founder Sam Walton built his empire. Barth said Walton "had a world-view thinking in state and regional terms that only at the end of his life extended beyond that. "This new generation (of Wal-Mart management) has come of age in a company that has a national and international presence," Barth observed. The growing involvement in Washington politics "goes against their grain," Buchanan noted. "They try to keep their costs down." Buchanan noted Wal-Mart also may be heading into rough waters with the legal system and with federal regulators that might make it advantageous to hire federal expertise and build friendships in Washington. "As they get bigger, they become an easier target, whether or not a given allegation is legitimate or not," he said. Among its challenges, the company is the defendant in a sexual-discrimination lawsuit in the U.S. District Court in Northern California. The suit is being considered for class-action status, which could allow every woman Wal-Mart employed since 1998 to be eligible for benefits if plaintiffs prevail. Wal-Mart attorneys defending against the suit have said a class-action case would be unmanageable and take more than a decade to sort out. On Jan. 13, the New York Times reported on a 2000 Wal-Mart internal audit warning top executives that employee records at 128 stores showed extensive violations of child-labor laws and state regulations that require workers to be given time for breaks and meals. The audit is under court seal. The company issued a statement saying the audit was not a valid study. In October, federal agents raided 60 Wal-Mart stores and arrested about 250 illegal contract workers. Wal-Mart must play both offense and a defense when it comes to defending its legal and legislative interests, said Steve Hoch, chairman of the marketing department at the Wharton School at the University of Pennsylvania. "It seems only responsible for management to be both aware of and influential over policies which may distort the business environment in which they operate so successfully," Hoch said. Wal-Mart employs 1.53 million people at nearly 3,500 U.S. stores, supercenters, Sam's Clubs and neighborhood markets, as well as 1,343 stores overseas. With $1.26 million in contributions, Wal-Mart is the second-largest overall donor in the 2003-2004 election cycle, trailing only investment bank Goldman Sachs, according to the most recent data available from the Center for Responsive Politics, a non-partisan research group that tracks money in politics. Wal-Mart is the top political action committee (PAC) donor to federal candidates so far in the current cycle. It gave $1.028 million, with 84 percent flowing to Republican candidates. A PAC is a committee that represents business, labor or ideological interests. Of the 435 members of Congress, 191 received PAC contributions from Wal-Mart in 2003. The list includes Rep. Don Young, R-Alaska, chairman of the House Transportation and Infrastructure Committee, and Rep. Bob Goodlatte, R-Va., chairman of the House Agriculture Committee, who each received $10,000. Wal-Mart's No. 1 ranking among PAC contributions contrasts with previous years when the retailer did not even make the top 20. In the 2002 cycle, Wal-Mart ranked 44th, with $1.1 million in contributions, according to Sheila Krumholz, the center's research director. Wal-Mart ranked 128th with $457,050 in 2000 and 356th with $135,750 in 1998. "It does seem like an unprecedented shift for them to ramp up their PAC so fast," Krumholz said. The role of PACs has increased since a ban on soft-money contributions went into effect as a result of a new campaign finance law enacted in 2002, Krumholz said. "PACs are at a premium now to influence federal candidates and national party committees," she said. "They are in a very large growth mode in lobbying and (political action committee) activity," said Kent Cooper, co-founder of Political Money Line, an online database that tracks campaign finance and lobbying activity. Wal-Mart spent $440,000 on lobbying in the first six months of 2003, according to Cooper. In addition to its in-house lobbying shop, Wal-Mart spent $240,000 on law firms Patton Boggs, Sandler, Travis & Rosenberg, and Miller & Chevalier, Cooper said. That figure is up from the last six months of 2002, when Wal-Mart spent $320,000 on lobbying, with $160,000 going to outside firms. Rep. John Boozman, R-Rogers, whose district includes Bentonville, observed that Wal-Mart makes an effort to stay involved in the issues that affect the company and their customers in Congress. "They've really geared up (their Washington presence) a lot in the last three or four years," said Boozman, who received a $10,000 contribution from Wal-Mart last year. "They realize that the federal government is so intrusive and affects so much that they feel like it's vital that their views are known when policies form," he said. -- 30 -- |
