Herbalife and activist investor Bill Ackman continue to lob PR fireballs at each other, with various organizations taking either side in what’s become an all-out brawl for domination. This week it’s become apparent that one organization which has attacked Ackman publicly received a donation from Herbalife at one time. And it’s clear that the organization’s new director realizes just how much it looks like a serious conflict of interest.
Further, public disclosures reveal that Herbalife is continuing to spend more on lobbying than Ackman’s firm, Pershing Square Capital Management.
Conflict of interest for CREW?
Alexandrea Stevenson and Ben Protess of The New York Times reported on what appears to be a second conflict of interest involving Citizens for Responsibility and Ethics (CREW), a government corruption watchdog group.
ValueWalk reported in March that the organization had been receiving financial support from George Soros’ nonprofit organization, the Open Society Foundations for some time. Recently the organization began targeting short-sellers and particularly Bill Ackman, calling him “one of Wall Street’s worst.” This certainly offers up one possible conflict of interest, as Soros and Ackman have faced off in the past.
The New York Times article reports now that while CREW was speaking out against Ackman, it received a $40,000 donation from Herbalife. The organization’s founding executive director, Melanie Sloan, appears to have talked Herbalife into making the donation, which she made and then billed Herbalife.
CREW refunds Herbalife’s donation
CREW’s next executive director after Sloan left the organization, Noah Bookbinder, said they were working on refunding the $40,000 donation to Herbalife, apparently to avoid the appearance of any conflict of interest. He added that Herbalife did not influence their views and hasn’t ever “taken a position on the underlying merits of any of the allegations with regard to Herbalife,” according to the article.
Indeed, while CREW has called out short-sellers like Ackman and others, it has never said anything about the allegations made by those short-sellers.
When Sloan left CREW, she started a consulting firm, and Herbalife became one of her clients. According to the article in The New York Times, CREW reached out to Herbalife last year regarding Ackman’s campaign against the multi-level marketing company. Then Sloan reportedly began researching Ackman before quitting to form her own firm and securing Herbalife as a client.
Herbalife still outspends Ackman on lobbying
The New York Times article could imply to some that Ackman and Herbalife both spend about the same amount of money on lobbying, stating, that “each side has now spent tens of millions of dollars shaping the public narrative – and the federal investigations.”
However, if breaking down those lobbying expenses by time frame, it becomes clear that Herbalife typically outspends Pershing Square by more than double and has for some time. According to the U.S. Senate Disclosure Act Database, Herbalife spent $260,000 on federal lobbying in the first quarter of this year alone. Pershing Square spent $107,000 in the same time period, according to public disclosures.
Last year, Herbalife spent more than $1.9 million on federal lobbying while Ackman’s firm spent $444,000. And in 2014, Herbalife spent $1.27 million, compared to Pershing’s $264,000.
This isn’t the first time it’s been reported that Herbalife is outspending Ackman on lobbying, as it was reported in March 2013 as well. However, these updated numbers reveal that the multi-level marketing company continues to significantly outspend Ackman on trying to influence public and government opinion.
Herbalife and Pershing Square did not respond to a request to comment at time of publication.