Walter Mencken 11 a.m., May 24
Exec's race for mayor casts light on Qualcomm bribery charges
Newly minted Democrat and Qualcomm development director Nathan Fletcher could shoulder increasing burden of corporation's concealed political and legal baggage as campaign unfolds
As the size and quality of San Diego's reporting corps has fallen due to layoffs and budget cuts resulting from the new Internet media economy, inside observers note that some of the city's biggest stories have increasingly gone unreported.
The city by the bay and border has long had a shady national reputation as an overgrown company town, run by modern day versions of plantation owners, a compliant sheriff, pay to play newspaper publisher, and corrupt complement of over sexed politicos.
These days, students of that caricature say, the role of the plantation owner is played by San Diego's richest man, billionaire Democrat Irwin Jacobs, whose taxpayer-funded UCSD born-and-bred Qualcomm stands as a monument to the merger of technology and the industrial and political clout of California taxpayers and the United States government.
As the last Daddy Warbucks standing in San Diego's increasingly multi-national-based industrial economy, Jacobs has put big money into all manner of local causes, from a non-profit online news and commentary website to San Diego State's public broadcasting operation, KPBS.
Even in the media he doesn't fund, namely Republican real estate titan Douglas Manchester's U-T San Diego, Jacobs and Qualcomm receive the hushed deference reserved for a multi-billion dollar corporation that isn't reluctant to use its cash powered influence to get its way in everything from local planning decisions to a big Balboa Park road, parking, and traffic makeover.
With the emergence of Qualcomm's senior director of corporate development and newly-minted Democrat Nathan Fletcher as a putative front runner for mayor, the corporation’s would-be plans to dominate city hall seem closer than ever to fruition.
But Fletcher’s prominence in the race may prove to be a two-edged sword, drawing possibly unwelcome attention to Qualcomm and unfavorable stories that the company might not want to appear in national media.
An example is the ongoing investigation of the company by the U.S. government for allegedly violating the Federal Corrupt Practices Act. More than a year ago, U-T briefly reported the matter, but quickly dropped the story.
Today, according to subsequent company disclosures, the investigation has ramped up and threatens to blossom into a tale of international interest and intrigue.
Except, perhaps, in Qualcomm's hometown.
The latest word on the government's investigation came this July 24 in a quarterly disclosure filed by the company with the Securities and Exchange Commission:
On September 8, 2010, the Company was notified by the SEC’s Los Angeles Regional office of a formal order of private investigation. The Company understands that the investigation arose from a “whistleblower’s” allegations made in December 2009 to the audit committee of the Company’s Board of Directors and to the SEC.
On January 27, 2012, the Company learned that the U.S. Attorney’s Office for the Southern District of California/Department of Justice (collectively, DOJ) had begun a preliminary investigation regarding the Company’s compliance with the Foreign Corrupt Practices Act (FCPA).
The Company believes that FCPA compliance had also become a focus of the SEC investigation.
The Company has discovered, and as a part of its ongoing cooperation with these investigations has informed the SEC and the DOJ of, instances in which special hiring consideration, gifts or other benefits (collectively, benefits) were provided to several individuals associated with Chinese state-owned companies or agencies.
Based on the facts currently known, the Company believes the aggregate monetary value of the benefits in question to be less than $250,000, excluding employment compensation.
The Company is continuing to cooperate with the SEC and the DOJ, but is unable to predict the outcome of their investigations.
The alleged China bribery case hasn't been the only legal problem on Qualcomm's horizon within the last year.
As reported here in January, New York State Comptroller Thomas P. Napoli filed suit against the company, alleging that Qualcomm refused to open its books "relating to the use of corporate resources for political activities."
Despite requests for increased transparency, Qualcomm continues to obscure its political spending. Qualcomm’s website lacks meaningful disclosure regarding the Company’s corporate giving.
In fact, Qualcomm’s public disclosure of its political spending is so deficient that the Company received a score of fifteen out of 72 on the 2012 CPA-Zicklin Index of Corporate Political Accountability and Disclosure (the “CPA-Zicklin Index”).
Qualcomm’s refusal to provide disclosure and its most recent denial of Plaintiff’s request for access to relevant books and records pursuant to Section 220 only enhances the Fund’s concerns about the way the company spends shareholder funds in the political arena.
DiNapoli’s lawsuit ultimately forced the San Diego corporate giant to divulge seven figure influence peddling cash it had spent but failed to disclosed, as reported in February by the New York Daily News.
Good-government groups called it a landmark development in the battle to force corporations to come clean about their political spending — one that likely will be copied around the country.
The contributions revealed Friday included $1 million to the Committee for a Responsible Federal Budget and $1.8 million to trade associations, including $385,000 to the U.S. Chamber of Commerce.
At the conclusion of the settlement arrangement, Qualcomm president and CEO Paul Jacobs, son of founder Irwin Jacobs, issued a statement:
Qualcomm agrees with the New York State Common Retirement Fund that increased transparency for election-related activities by corporations is very beneficial.
The company has been a major donor this year to both congressional Democrats and Republicans.
In a speech announcing the endeavor in March, Fletcher said:
The problem affects us all:
You see it here at Qualcomm.
We have good paying, local jobs that are open today, and there are American educated workers who are qualified to fill those jobs, but each year, almost 20,000 American-educated degree holders are forced to leave our country to take jobs elsewhere.
You can get a student visa to use our education system, but then can’t stay with a work visa to contribute to our economy after you graduate.
The company depends heavily on a supply of foreign engineers and has had a busy lobbying agenda in the House and Senate this year.
More like this:
- Qualcomm spent millions on political clout — Dec. 11, 2013
- Qualcomm opens coffers for Fletcher's cause — Nov. 13, 2013
- Not all Fletcher's campaign support is from Irwin — Nov. 11, 2013
- Democrat Jacobs rips GOP's Lincoln Club in mega-millionaires' political war — Oct. 9, 2013
- New York hits Qualcomm with political money disclosure suit — Jan. 3, 2013