Title How the Cambridge Analytica numbers don't stack up

Publication Date 2018-03-26

Text The difference between what FEC records show and what SCL Elections declared as earned from Cambridge Analytica LLC per filed accounts raises important questions.

In my last story about Cambridge Analytica, I suggested that where there are doubts, those charged with due diligence should “dig, dig and dig again.” That’s what I’ve been doing, piecing together the numbers as best I can from official sources.

Last time out, I quoted from SCL Elections Ltd accounts, (PDF) where I noted:

The Company owns a 19.0% share in Cambridge Analytica LLC, a US entity in which Alexander Nix is a board member. £24.2m (2015: £12.4m) income was received from this entity during the year and no costs were due by the Company in respect of losses incurred by the entity. There was no cost of this investment. At the year-end, the Company was owed £869,595 (2015: £922,440) by this entity.

Those numbers have been bugging me, largely because the mainstream media has been quoting very different figures in respect of campaign expenditures to the U.S. business Cambridge Analytica LLC. Remember that we are told Cambridge Analytica is largely a data research business but that it also provides some media work, presumably digital consulting and advertising.

Financial discrepancies

Federal Election Commission Filings show that between 1st January 2015 and 31st December 2016 Cambridge Analytica LLC received a total of $15.4 million. That’s split as to $5.6 million in 2015 and $9.8 million in 2016. There are no receipts recorded for 2017 and beyond.

The 2015 figure refers to various campaigns, notably that of Ted Cruz and John Bolton Super PAC. The 2016 figures include receipts from Donald J. Trump For President Inc. amounting to $5.9 million, all of which refer to ‘data management’ services but which includes a single figure of $5 million, paid 1st September 2016. There are references to media activity totaling just shy of $2 million with the remainder referenced as ‘campaign management consulting’ of $903,000 and a variety of other research activities making up the balance.

So where did the rest of the money SCL Elections received from Cambridge Analytica LLC come from and how much are we talking about? The total dollar value is hard to estimate with precision since exchange rates varied in those years but an average rate for each year implies total of $19 million (2015) and $32 million (2016.)

The Giles-Parscale connection

The best guess for sources in 2016 is via Giles-Parscale, the digital media vendor that led the Trump campaign’s digital media outreach in 2016.

The reason I conclude this is because reports talk about a close relationship between Parscale and Matt Oczkowski, then Cambridge’s head of product. According to the Washington Post, that company earned $94 million but FEC filings say it was closer to $87.8 million, a discrepancy of $6.2 million that I believe is made up of payments recorded as between early November 2016 and the end of the year.

The amounts paid to Giles-Parscale represent website development of $24,000, digital consulting of $2.5 million and $85.2 million in ‘digital consulting and online advertising.’

There is little doubt that Cambridge and Parscale worked hand in hand for at least some of the 2016 period but the financial extent is unknown and the extent to which Cambridge was a subcontractor is equally unknown. This from Wired provides the best available clues:

Parscale describes the firm’s work this way: “As I’ve said multiple times over prior statements, Matt Oczkowski and his team created a daily tracker of polling, so that I could see how Trump was doing in key swing states. They provided that to me daily.” Parscale says Cambridge also helped the campaign with what he calls “persuasion online media buying. They also helped us identify potential donors. And they created a visualization tool that showed in each state which areas were most persuadable and what those voters care about.”

But then the report goes on to confuse matters saying:

Cambridge Analytica was paid $5.9 million by the Trump campaign, according to Federal Election Commission filings, $5 million of which went toward buying television ads, with the remainder going to pay Oczkowski and his team.

That’s not what the FEC says, referring to all monies paid as for ‘data management’ services.

Other sources?

Could there be other sources for both 2015 and 2016 that were funneled through the American organization?

We know from reports that Alexander Nix, the (then) CEO of Cambridge Analytica LLC and the owner of 70% of SCL Elections was touting all manner of government and election-related contracts in early 2017. But there have been plenty of doubts placed on those claims, despite Nix claiming:

…the push (towards winning government work) is an extension of the work the company has done as a subcontractor on a variety of government projects during the last 14 years — and that SCL would have sought the new work no matter who had won the election.

If that is true, then it seems odd that U.S. government offices would contemplate commercial arrangements with a U.S. business, ostensibly run by a non-U.S. national who controls 70% of the non-U.S. based company that received so much from the U.S. operation.

That brings us back to the earnings gap.

How does Facebook figure?

According to The Guardian:

Parscale said the campaign constantly tested minute variations in the design, color, background and phrasing of Facebook ads, in order to maximize their impact. Typically 50,000 to 60,000 variations were tested each day, he said, and sometimes as many as 100,000.

Parscale said that much of this work was done with the help of Facebook employees ’embedded’ in his business. For its part, Facebook said it showed Parscale how to use the Facebook ad platform alongside voter registration data but that was about all they did.

Testing of ads is certainly the purview of the digital marketing agency. But that can only be successfully achieved when you have data and data models that allow for this level of experimentation. That could have come from a variety of sources including that which fueled the original Cambridge/SCL models that are at the heart of the original controversy about the use of Facebook data. If correct, then it’s not unreasonable that Cambridge/SCL would expect fees for that data/model usage, even though Cambridge had already been paid by the Donal J.Trump For President organization.

Where to now?

We are told that Robert Mercer invested $5 million in Cambridge Analytica in 2016. Was that a direct investment as in cash to bank or routed via a PAC? We don’t know. We also know Mercer bankrolled Breitbart, the media business controlled by former Trump strategist Steve Bannon who was also a Cambridge Analytica board member until his August 2016. It’s not inconceivable that Breitbart paid Cambridge Analytica for data services.

Investigations are ongoing into Cambridge Analytica on both sides of the Atlantic. We will eventually learn how the story of the 2016 election was won played out and whether, among other things, the work Nix performed was in violation of U.S. election law.

Today, we can only speculate but it is reasonable to assume that Cambridge Analytica LLC was the recipient of far more by way of campaign funds than appears on the surface, most likely via Giles-Parscale. The only question remaining is confirmation of quantum and where those funds came from.

By the way – did I mention the need to dig, dig and dig again in the context of due diligence? Yeah – I thought so 🙂

Updated for additional information lgeaned from Wired.

Image credit - via Cambridge Analytica

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