2009 U.S. Chamber Credibility Scorecard

Bad Year for Donohue and the U.S. Chamber of Commerce

Over the past year the U.S. Chamber of Commerce and its CEO, Tom Donohue, have been battered from all sides and their credibility as a voice for American business has hit an all time low.  The U.S. Chamber has seen its extreme positions split the organization and lead to high-profile defections and criticism from members both over the group's issue positions and the policies that led to their adoption.  Meanwhile, CEOs and corporations close to Donohue and the Chamber have been ensnared in legal scandals involving insider trading and accounting fraud.  The following scorecard recaps the string of events that seriously compromised the credibility of Donohue and the U.S. Chamber in 2009.

  • October 2009:  U.S. Chamber admits to overstating membership by 900%.  The U.S. Chamber was forced to revise its published membership numbers from 3 million to 300,000 after an investigation by Mother Jones magazine uncovered that it was playing games with its numbers.  [MotherJones.com, 10/13/2009]

  • November 2009:  Tax filings reveal that just 19 donors contributed one-third of the Chamber's 2008 income.  In November, Greenwire reported that "The U.S. Chamber of Commerce often says it speaks for 3 million members, businesses both large and small. What it doesn't promote as readily is that 19 supporters last year provided a third of the trade group's total revenue."  One contributor gave the Chamber $15.3 million in 2008.  The Chamber has not disclosed any of the contributors' names. [NYTimes.com Greenwire, 11/23/2009]

  • Fall 2009:  Major companies and local chambers break from U.S. Chamber over its extremism.  Apple, Exelon, Mohawk Paper, PG&E, PNM Resources, and the San Francisco and Santa Barbara Chambers of Commerce quit the Chamber over its climate change stance.  "Extreme rhetoric and obstructionist tactics seem to increasingly mark the Chamber's public stance on this issue," said PG&E.  Alcoa, Cisco Systems, Comcast, Dow, Duke Energy, Entergy, General Electric, Johnson & Johnson, Microsoft, PEPCO, Royal Dutch Shell and Seventh Generation are among the other companies that broke with the Chamber on specific policy issues in 2009.  Local chambers for Greater New York, San Jose, Eastern Connecticut, Greater Seattle, and the Chapel Hill-Carrboro Aspen also distanced themselves.  The CEO of the Greater New York Chamber of Commerce bluntly stated: "They don't represent me."  [Mother Jones, 10/14/2009]

  • October 2009:  Board members cry foul when U.S. Chamber adopts policy positions they opposed without even consulting board.   After Nike quit the U.S. Chamber board in September, its director of government relations said the Chamber's climate change policy was "not being made at the board-of-director level, because we're a member of the board of directors.  We were not consulted."  Several committee members apparently raised the issue of how they could influence or change the Chamber's climate policy, according to a representative of one of them, but "were told that basically this was not the forum to do it.  There's basically no outlet for changing the policy." [Mother Jones, 10/7/2009]

  • October-December 2009:  U.S. Chamber's attacks on Obama administration backfire as White House and Congress bypass Chamber.  After the Chamber launched its $100 million free enterprise campaign in October, Valerie Jarrett, the President's liaison to the corporate world, said, "Our strategy is to reach out directly to the business community. This is a shift. Previously, the chamber had served as the sole intermediary for business. That's not our approach." [LATimes, 10/25/2009] The same month a prominent Democratic lobbyist told Politico the U.S. Chamber had "taken a real hit this year.  In the White House and on the Hill, among the people who run things, they are radioactive." [Politico, 10/19/2009]  After President Obama in December cited the "disconnect" between what big banks said about financial reform and what their lobbyists have actually done, a Congressional aide suggested the big banks drop out of the U.S. Chamber of Commerce, according to the Wall Street Journal.  House Financial Services Committee Chairman Barney Frank (D., Mass.) echoed this sentiment saying, "maybe they should fire the lobbyists who apparently have so misrepresented their position." [WSJ, 12/14/2009]

  • September - October 2009:  Leading editorial boards challenge U.S. Chamber's credibility.  "So not only is the Chamber of Commerce indifferent to the truth," wrote the Washington Post in October in response to Chamber ads attacking the Democratic candidate for governor in Virginia, "It's also hostile to the business community in the most populous and economically dynamic part of the state. In positioning itself as an arm for the Republican Party, the Chamber has cast doubt on its own credibility." [Washington Post, 10/27/2009] In a September editorial, the New York Times said, "The United States Chamber of Commerce's Web site says the group supports 'a comprehensive legislative solution' to global warming. Yet no organization in this country has done more to undermine such legislation." [NYTimes, 9/29/2009]

  • November 2009:  Corporate watchdog Nell Minow calls for Donohue's ouster after "three strikes" in corporate scandals.  As Minow told the Motley Fool, "[Donohue] has hijacked capitalism on behalf of executives rather than investors. He's a terrible director on all of the companies on which he serves. He's a director for Sunrise Senior Living, which had accounting fraud. He was a director for Qwest, which had accounting fraud. He's a director for Union Pacific, where they supported the bonuses of the executives by attributing revenue from the IPO of a division as operating revenue. So three strikes and I think he should be out."  [Motley Fool, 11/12/2009]

  • August 2009:  AIG ex-CEO and former U.S. Chamber insider Hank Greenberg pays $15 million to settle SEC lawsuit.  Donohue spoke in defense of Greenberg shortly after he resigned from AIG in 2005 amid investigations of AIG's accounting.  According to the Financial Times, "Donohue insist[ed] prosecutors are at risk of 'killing the goose that laid the golden egg' by taking executives to task over accounting methods that are a 'series of guidelines.'"  Greenberg sat on the Chamber board until his ouster from AIG and, with AIG, controlled a foundation that had contributed $19 million to the Chamber in 2003 and 2004.  [Financial Times, 4/3/2005]

  • February 2009:  February 2009:  Sunrise Senior Living, where U.S. Chamber CEO Tom Donohue is a longtime director, pays $13.5 million to settle lawsuit alleging insiders received backdated stock options and traded shares improperly.  Sunrise also agreed to adopt governance reforms to settle two similar lawsuits alleging that insiders, including Donahue, received backdated options and engaged in improper trading.  In each of the settlements the defendants did not admit liability, but the $13.5 million settlement exhausted Sunrise's directors' and officers' primary insurance and triggered its supplemental coverage.  Sunrise, which overstated its 1996 to 2005 earnings by 94% due to improper accounting, remains the target of a two-year SEC investigation into its accounting, insider stock sales and stock option grants.

  • April 2009:  U.S. Chamber urges Supreme Court to overturn insider trading conviction of Qwest ex-CEO Joe Nacchio.  Nacchio is serving six years for selling $52 million of Qwest stock in 2001 based on inside information.  Donohue was on the Qwest board and its compensation committee that paid Nacchio $81 million in 2001, one of the worst years in the company's history.  It was the eighth time the Chamber intervened in a lawsuit on behalf of billionaire Philip Anschutz, companies he owns or their executives.  Donohue once called Anschutz "a potential $1 million contributor" to the Chamber.

  • November 2009:  U.S. Chamber solicits "respected economist" to issue a study saying that health care reform would "kill jobs and hurt the economy."  According to the email from Randy Johnson, the Chamber's senior vice president for health policy, "The economist will then circulate a sign-on letter to hundreds of other economists saying that the bill will kill jobs and hurt the economy. We will then be able to use this open letter to produce advertisements, and as a powerful lobbying and grass-roots document."

  • 2009:   U.S. Chamber runs false ads on health care, financial reform and lawsuit abuse.  In September, Lawrence Summers, Director of the President's National Economic Council, called Chamber ads claiming, falsely, that proposed Consumer Financial Protection Agency would regulate any small business that offers credit, even the local butcher, "the financial regulatory equivalent to the death panel ads being run with respect to health care."  [CNN.com, 9/19/2009]  In October, President Obama himself called the ads "completely false." [ABC.com, 10/9/2009] In November, Factcheck.org exposed the Chamber's misleading health care ads which claimed health care reform would cause massive job loss and lead to "crushing" tax increases.  [FactCheck.org, 11/17/2009]   And FactCheck.org recently called Chamber ads run in December that claimed "52 percent of all lawsuits" target small businesses were "false" and "malarkey."  [Factcheck.org, 1/7/2010]

  • July 2009:  U.S. Chamber defends Wall Street pay practices that contributed to the financial crisis.  The Chamber in July lobbied against the Corporate and Financial Institution Fairness Act of 2009, ignoring the role that Wall Street pay practices played in contributing to the financial crisis by incentivizing short-term profiteering and excessive risk-taking. The Chamber claimed that Congressional attempts to rein in such payouts amounted to an "unprecedented governmental intrusion into matters that have historically been addressed by the private sector."  [Chamber letter, 7/30/2009]