State: Food industry lobby engaged in 'egregious' money laundering in 2013 vote

Trudy Bialic, co-author of initiative 522, which required labeling of genetically engineered foods, speaks to 2013 election night rally. I-522 lost narrowly, but Attorney General Bob Ferguson has sued the Grocery Manufacturers Assn. for allegedly concealing the source of $11.3 million in food industry donations to the No on I-522 campaign. less Trudy Bialic, co-author of initiative 522, which required labeling of genetically engineered foods, speaks to 2013 election night rally. I-522 lost narrowly, but Attorney General Bob Ferguson has sued the ... more Photo: SOFIA JARAMILLO, SEATTLEPI.COM Photo: SOFIA JARAMILLO, SEATTLEPI.COM Image 1 of / 1 Caption Close State: Food industry lobby engaged in 'egregious' money laundering in 2013 vote 1 / 1 Back to Gallery

The Grocery Manufacturers Association concealed the source of $11 million spent to fight a 2013 ballot initiative, and internal documents reveal how it was done, state Attorney General Bob Ferguson charged in a court motion disclosed Wednesday.

Ferguson is suing the Washington, D.C.-based lobby over a fund it set up to conceal food companies donating to the defeat of Initiative 522. I-522 would have required labeling of all genetically engineered foods and seeds sold in Washington.

"GMA's conduct was so egregious that it ranks among the worst in state history," said the AG's motion for summary judgment.

"GMA worked to 'shield' the actions of major food companies from the very public entitled to know who was trying to influence their vote on Initiative 522."

The initiative was narrowly defeated after a TV ad blitz paid for by millions of dollars from the food industry and such agribusiness giants as Monsanto.

Ferguson filed a suit against the GMA late in the campaign, after which the GMA agreed to register with the Public Disclosure Commission and provide information on donors.

The donors turned out to be a "who's who" of big food companies.

PepsiCo gave $1.6 million to defeat Initiative 522, while more than $1 million each came from Coca-Cola and Nestle, and more than $500,000 from General Mills.

The Grocery Manufacturers Association has brought on top-flight talent.

Its "No on I-522" campaign was masterminded by Winner & Mandabach, a California firm that has done battle for corporations against ballot initiatives for decades. (One TV pitchman was Dan Newhouse, now Washington's newest member of the U.S. House of Representatives.)

The food industry lobby is being defended against Ferguson's lawsuit by the big K & L Gates law firm.

The AG and the Grocery Manufacturers Association announced Wednesday that they have reached agreement to unseal documents related to the suit.

"GMA has no interest in concealing documents from the public," it said in a statement. "These documents simply confirm GMA's efforts to exercise its First Amendment right to act as a single spokesperson for the common interest of its members."

The association decried what it called Washington's "hopelessly vague disclosure law" and charged that it "improperly burdens" the constitutional right of trade associations to participate in the state's political process.

The attorney general's brief lays out how the GMA went about serving as a "single spokesperson" for food industry opponents of I-522. Its main points:

-- The food industry and agribusiness spent $43 million to defeat a 2012 California ballot measure that would have required labeling of genetically modified or engineered food.

Afterwards, food industry giants faced "significant criticism" for heavy funding of the "No on Proposition 37" campaign. The GMA responded by researching a fund "that would cover all of these projects, which would include a ballot initiative in Washington state."

-- A GMA staff member named Louis Finkel came up with plans for a "strategic account," into which food companies would put their political money, called "Defense of Brands."

"This account would allow for greater predictability to the membership on funding needs while shielding individual companies from being disclosed and ultimately criticized for opposing ballot measures," said internal GMA meeting minutes.

-- The GMA began sending out invoices to food companies, budgeting $10 million to fight the ballot measure as well as $1 million for a legal challenge if I-522 passed. The GMA would ultimately collect $14.23 million and contribute $11 million to "No on 522," airing all those Dan Newhouse TV spots.

As contributions rolled in, a GMA staff memo stated: "Virtually all of the financial support for 'No on I-522' will come from GMA, not individual companies, and under Washington state law, the campaign will not have to report GMA's members on campaign finance reports or in any campaign advertising."

The Grocery Manufacturers Association even provided talking points to food companies. A sampling:

"Q. Is your company providing funding to the 'No on I-522' campaign in Washington state?"

A: "No. Company X is a member of the Grocery Manufacturers Association and supports the work the association does on product safety, health and well-being, sustainability and a host of other issues."

The talking points acknowledged that GMA was offering financial support to "No on I-522," with no indication where it came from.

The GMA's campaign to conceal the source of donations came apart when Ferguson filed suit in October 2013.

"GMA engaged in an elaborate scheme to unlawfully shield its members' contributions from public scrutiny. They need to be held accountable," Ferguson said Wednesday.

Ferguson is suing under a landmark 1972 voter-passed measure, Initiative 276, which gave Washington one of the nation's first and toughest public-disclosure laws.

It requires disclosure and reporting by "political committees," defined as "any person ... having the expectation of receiving contributions or making expenditures in support of, or opposition to, any candidate or ballot proposition."

The law requires that political committees register with the Public Disclosure Commission and publicly report contributions and expenditures on a fixed schedule throughout the election cycle.

The AG's suit charges that the GMA "failed to timely file over 58 reports (the reports ranged from nine to 218 days late)." Ferguson still wants the industry lobby to file "complete reports."

Last month, both the state and GMA filed motions for summary judgment.

A hearing on both motions will be held Friday in Thurston County Superior Court.