Restricted Spending Embroils Tire Giants in 1970s

Akron Beacon Journal

January 22, 2010

Jim Mackinnon

Akron's legacy tire makers probably would have preferred that the U.S. Supreme Court loosened federal restrictions on corporate election campaign donations three or four decades sooner than it did. A similar ruling way back then might have saved a lot of grief, if not time in prison. That's because back in the 1970s, some of the Rubber City's most prominent tire companies and executives got caught creating secret slush funds and making hundreds of thousands of dollars in illegal campaign donations to politicians.

It was high political intrigue as the executives described such things as laundering money through foreign subsidiaries in unnamed countries and returning money in Akron in clandestine lockboxes kept in a company vault. In other cases, executives got pay raises, bonuses or what were called duplicate salaries with the extra money being donated to a favorite political cause.

Take this headline from the July 22, 1977, Akron Beacon Journal — ''General Tire aide: I was the bagman.''

Or Dec. 24, 1976 — ''Political piggybank: 21 at Firestone cited in fund deal.''

That year, Firestone admitted it paid out $330,000 in illegal political contributions from 1970 to 1973 and made comparable contributions for an unspecified number of years before that. And in 1977, General Tire admitted it maintained a secret company slush fund of about $350,000 from 1965 through 1972 for illegal domestic political contributions.

Then again, Thursday's Supreme Court ruling, which threw out a 63-year-old law on free speech grounds, still keeps in place a prohibition on direct contributions to candidates from corporations and unions. The Supreme Court ruled that corporations may spend as freely as they like to support or oppose candidates for president and Congress.

Even with the 5-4 Supreme Court decision, companies and unions still cannot spend as they wish, said Elizabeth Bartz, president and chief executive officer of Akron-based State and Federal Communications Inc. The company, founded in 1993, provides compliance information to corporations, trade groups and lobbyists throughout the country.

''The floodgates are not opening,'' Bartz said. ''There still will be restrictions. This does not open the floodgates for direct corporate contributions.''

Bartz said she had been waiting two months for the Supreme Court to issue its ruling. The impact likely will mean closer federal elections since the decision will allow donations to be taken right up until election day, Bartz said.

Ohio and many other states still have contribution and spending restriction laws in place that are unaffected by the Supreme Court decision, she said. Bartz noted that a lot of companies, not just those in Akron, got in trouble in the 1970s over illegal campaign contributions. ''People should know better,'' she said. In some of those instances decades ago, employees would be reimbursed by their employer for donating to a politician, she said.

''I cannot make a personal contribution and my employer cannot reimburse me for that,'' Bartz said. ''People find that stuff out.''