Contractors That Defraud the Government the Most Also Spend the Most on Lobbying

The big government contractors with the most instances of misconduct spend a lot of money keeping Congress on their side.

--FILE--Models of Boeing passenger jets are on display during the 16th Beijing International Aviation Expo in Beijing, China, 16 September 2015.Boeing said Wednesday (23 September 2015) that Chinese companies have agreed to buy 300 jets and build an aircraft assembly plant in China. The deals, worth about $38 billion, were signed during Chinese President Xi Jinping's visit to the United States. China Aviation Supplies Holding Company, ICBC Financial Leasing and China Development Bank Leasing inked the jet purchase agreement after Xi's arrival in Seattle. Boeing said the orders were mostly for its 737 models. The state-owned Commercial Aircraft Corporation of China on Tuesday also inked a deal with Boeing to set up a "completion centre" for its 737 airliners.
Models of Boeing passenger jets are on display during the 16th Beijing International Aviation Expo in Beijing, China, 16 September 2015. Photo: Song Fan/Imaginechina/AP

A relatively small handful of federal contractors are responsible for the lion’s share of the $92 billion in fines, settlements, and court judgements assessed  for defrauding taxpayers and other forms of contractor misconduct since 1995, according to a newly updated database published by the Project on Government Oversight (POGO).

An analysis by The Intercept finds that the companies responsible for the most instances of misconduct are also at the top of another list: They are among the biggest spenders on money in politics.

Boeing, an aircraft manufacturing firm that supplies the government with military equipment, has paid over $1.4 billion in penalties since 1995, according to POGO. Boeing’s misdeeds include overbilling the government on the KC-10 aerial refueling tanker, falsifying invoices, and an assortment of environmental crimes such as contaminating local waterways and spilling jet fuel. POGO has identified over 60 resolved instances of Boeing committing fraud or violating the law, topped only by Exxon Mobil, Lockheed Martin and BP.

But that doesn’t mean Boeing has fallen out of favor with lawmakers. Boeing spends a lot of money to make sure that doesn’t happen.

The firm ranks as the second biggest spender on lobbying Congress this year among individual companies — over $16 million for just the first nine months of 2015. Boeing also spent $1.9 million on campaign contributions to local and federal candidates last year. In addition, the company spends an undisclosed sum on trade associations, think tanks, television commercials, and billboards; public relations efforts; and political groups that use “dark money,” 501(c)(6) tax entities that influence elections without disclosing donor information.

The other firms that top the contractor misconduct rankings and the lobbying list:

  • ExxonMobil has 84 resolved instances of misconduct and paid $2.8 billion in penalties since 1995. ExxonMobil is the ninth biggest spender on lobbying this year among individual firms.
  • Lockheed Martin has 79 resolved instances of misconduct and paid $751 million in penalties since 1995. Lockheed Martin is the seventh biggest spender on lobbying this year among individual firms.
  • General Electric has 59 instances of resolved misconduct and paid $638 million in penalties since 1995. GE has spent more than any other individual company on lobbying this year.

Other government contractors high on POGO’s various misconduct rankings — including BP, FedEx, Chevron, Shell, Honeywell, Pfizer, GlaxoSmithKline, Merk, General Motors, and Halliburton — also rank high in lobbying, according to data compiled by the Center for Responsive Politics.

The new data from POGO reveals that despite repeated violations of the law, contractors rarely face criminal action and often enjoy continued access to business with the government. Neil Gordon, an investigator with POGO, found that less than 7 percent of the enforcement actions included criminal prosecutions. As Gordon notes, these findings are in line with a recent study by the Transaction Records Access Clearinghouse, which reported that “federal criminal prosecutions of corporations declined by nearly one-third over the past 10 years.”

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