For some time, the federal campaign finance law has restricted the ways that corporations can encourage or direct political action, by executives and lobbyists, intended to promote company legislative objectives or enhance its goodwill. Of particular concern to the Federal Election Commission has been what is known as "corporate facilitation."

Under the facilitation rules already in place, a corporation must observe significant restrictions in supporting fundraising efforts on behalf of federal candidates or political parties, even when these efforts are conducted primarily through the individual efforts of lobbyists and executives. These rules prohibit the company from advancing costs for fundraising events or activities, regardless of whether the costs are subsequently reimbursed, including costs for space, catering, or the use of corporate materials. Corporate employees, such as secretaries, may only assist these efforts if they freely volunteer their time, and their time, when volunteered, must be paid by the campaign in advance, at the full market equivalent for the value of their services. Moreover, corporate employees and resources may not be used for the collection and transmission of contributions received through these events.

The FEC last month fined Freddie Mac $3.8 million for "facilitating" candidate fundraising through the efforts of government relations and other executives of the company. This action represented a major turn toward more aggressive enforcement of these rules.

In the Freddie Mac case, the company's defense was that the executives in question had undertaken fundraising activities on their own individual initiative, consistent with their professional commitment to maintain strong political relationships and a prominent political profile in the community. While there was a dispute over whether the company had aided this effort, through consultants retained at company expense, it was undisputed that the core costs of these events were paid out of pocket by the executives or by the campaigns for which the money was raised.

The FEC's action against the company, resulting in the largest fine ever assessed by the agency, broke new ground by focusing on the executives' motivation for undertaking their individual fundraising efforts for candidates. The law allows for individual volunteer activity, provided that it is not subsidized by the corporate employer. In the Freddie Mac case, the FEC examined the issues through the question of whether the individuals were acting on their own, in a bona fide individual capacity, or in their capacity as representatives of the company and for its benefit. Among the facts cited by the agency was the discussion of these individual fundraising efforts at company meetings, in formal presentations, such as advising that "I am an active fundraiser for a number of key Members. . . ." Other representations made in company documents suggested more explicitly that these initiatives were conducted for the company's purposes.

It is in the light of this alleged "corporate purpose" that the FEC fashioned the liability of the company for even de minimis expenditures supporting these fundraising activities. For example, the FEC cited cab fares incurred by lobbyists, and reimbursed by the company, when those lobbyists attended the fundraising events paid personally by company executives. The Commission noted that "the total cost of these reimbursements did not exceed $500." On the basis of this and other but also limited expenses, the FEC concluded that the company was required to answer for not only these expenses, but for the total amount of monies raised through the corporate-associated fundraising. Thousands of dollars in corporate expenses became millions of dollars of liability.

Finally, the Commission concluded that even if corporate executives could lawfully solicit one another for contributions to candidates, their office resources could not, directly or indirectly, support the collection or transmission of the checks. Any use of secretaries, of the office mail system, or even the assistance of professional government relations staff in forwarding the contributions would constitute illegal "corporate facilitation."

The Freddie Mac decision represents a significant expansion of the FEC's current rules on corporate political activity, with major consequences for the activities of individual executives and lobbyists that may have been assumed to be safely acting on a "volunteer" basis.