WASHINGTON — Sears, Roebuck & Co. may face a fine of as much as $20,000 if convicted of allegations that the retailer made an illegal $25,000 contribution in Texas to a political action committee created by House majority leader Tom DeLay (R., Tex.) that seeks to elect Republicans to state offices.
Sears was among eight companies named in the indictment returned Tuesday by a grand jury in Travis County, seat of the state capital, Austin. The department store chain will fight the third-degree felony charge, a Sears spokesman said.
“We were very surprised by that action because Sears’ contributions to that PAC followed all applicable state and federal laws,” the spokesman said. “We plan to defend the company and we have prior to yesterday been cooperating with the state authorities.”
The corporate indictments are part of a larger political investigation tied to the Texans for a Republican Majority PAC. At issue for Sears and the other companies is whether they knowingly gave money to PAC in violation of a 1904 Texas law prohibiting direct corporate political contributions. The law makes exceptions for donations tied to administrative costs and education.
DeLay, who is being investigated by the House ethics committee for improper fund-raising, was not named in the indictments and said he doesn’t have knowledge of the political action committee’s daily operations. Three political fund-raisers linked to him — James Ellis, Warren Robold and John Colyandro — were charged with soliciting and using some $190,000 in illegal corporate contributions to help elect state candidates in 2002. Their alleged activities were viewed as helping the GOP take control of the Texas Legislature. The Republican majority passed a congressional redistricting bill seen as favoring five new Republicans seeking reelection to the U.S. Congress this fall, which would boost the GOP majority in the House.
Craig McDonald, director of Texans for Public Justice, which helped to spur the grand jury investigations launched by Democratic District Attorney Ronald Earle, said more than 70 percent of the PAC’s corporate money came from out of state.
“Additional allegations continue to arise from the mass of information gathered by the grand juries that have investigated various aspects of this matter,’’ Earle said in a statement. “What has emerged is the outline of an effort to use corporate contributions to control representative democracy in Texas.”
This story first appeared in the September 23, 2004 issue of WWD. Subscribe Today.
Like many companies, including other retailers, Sears has a PAC in Washington that is legally filled with individual contributions, mostly from Sears executives. During the current two-year election cycle, Sears’ PAC has raised $444,000 and contributed $200,000 to new candidates and incumbents — 63 percent to Republicans and 36 percent to Democrats, according to the Center for Responsive Politics.
Larry Noble, CRP’s executive director, said the TRMPAC scandal will certainly catch the attention of other corporate political contributors.
The fund-raising inquiry is likely to “send a shock wave through the business community and they’ll be extra careful” in scrutinizing political solicitations, said Noble.