The Watchdog

By Corey Hutchins
Wednesday, February 27, 2013

On the cover: John Crangle of South Carolina Common Cause. Photo by Sean Rayford.

In a 1990 interview, John Crangle, state director of the government watchdog group Common Cause, told WIS-TV explicitly that bribes and kickbacks were being handed out at the State House. Already, Crangle had been ringing alarm bells around the halls of power for years: In legislative hearings in the late ‘80s, he cautioned lawmakers about conflicts of interest. By 1990, he’d become more outspoken.

In one committee hearing, a state senator from Spartanburg County named Rick Lee really gave Crangle an earful. He shouted Crangle down about his dark prophecies and told him he was bringing dishonor to the august body by leveling such allegations. Not much later, Lee’s name would be first on an FBI list of indictments. Crangle’s public warnings had come just prior to the revelations of an FBI sting called Operation Lost Trust, which brought down 17 lawmakers later that year and is remembered as the largest legislative vote-buying and bribery scandal in U.S. history.

More than two decades later, Crangle is sounding similar alarms, telling lawmakers on TV and in legislative hearings that — again — something is rotten under the State House dome. Years ago, it was bags of cash being passed around the lobby.

This time, it’s special interest consulting gigs and donations from political action committees called leadership PACs. It’s lawmakers finding new ways to skirt campaign spending rules and live off politics. Technology has not kept up with the state’s 22-year-old ethics law, Crangle says, and politicians are exploiting legal loopholes and gorging themselves on greed.

This time, Crangle isn’t all alone.

“I’m glad to have some allies with me today,” he told a panel of S.C. House members during a Nov. 1 hearing of a committee set up to study ethics reform. “It was a lonely task back then.”

Right now, South Carolina’s most powerful politician, Republican House Speaker Bobby Harrell, is staring down the barrel of a State Law Enforcement Division investigation into a battery of public corruption allegations. Meanwhile, the man who asked for that criminal probe, GOP Attorney General Alan Wilson, is facing his own questions related to several campaign donations he failed to disclose in 2011.

These high-profile cases come just under a year after a judge sentenced ex-Republican Lt. Gov. Ken Ard last March to five years’ probation and fines related to a complex campaign finance scheme he orchestrated to defraud the public. That same month, a report by the Center for Public Integrity graded the 50 states on their risk for corruption, and South Carolina earned an “F”.

Meanwhile, in a few weeks the state Supreme Court is set to hear arguments in what could be a landmark case that will determine whether citizens have the right to take to court public officials they accuse of violating the State Ethics Act. The case stems from an ethics complaint by conservative activist John Rainey against Republican Gov. Nikki Haley. (The House Ethics Committee cleared Haley last year, but Rainey has continued to press his case elsewhere.)

Last Thursday, Common Cause’s national director Bob Edgar came down from Washington, D.C., and presented Crangle with a certificate for his work on ethics reform.

“South Carolina is in the dark ages,” said Edgar, a plainspoken Methodist minister and former Democratic congressman from Pennsylvania.

It hadn’t taken the group’s national leader long in Columbia to realize just where the Palmetto State stands when it comes to public corruption scandals: It’s basically ground zero. Even before Harrell and Wilson found themselves under the ethics microscope, 2013 was shaping up to be an important year for reform. But with a host of potential scandals swirling around the Capital City, the stench of wrongdoing could prove a tipping point in the fight for overhauling the state’s ethics laws.

The Watchdog

The laundry list of alleged misdeeds currently being leveled at the state’s political elite sits just fine with Crangle, a retired attorney and Limestone College political science professor.

“You don’t get meaningful reform without scandal,” Crangle said outside the State House on Feb. 21, dressed in a garnet fedora, big thick glasses and a trench coat, a sheaf of papers stuffed under one arm. For almost three decades, this skeptical septuagenarian has prowled through the state’s power structure, exposing politicians at every level in their chronic lust for swindling the public.

“There’s just massive evidence the state is rotted out with the cancer of corruption, and the political process is rotted out by the cancer of political campaign money,” he said.

It was 22 years ago when South Carolina last passed meaningful ethics reform. It came in the wake of the federal Operation Lost Trust sting, an embarrassing wakeup call for politicians and a complacent public. In 1990, the feds came in and busted 17 lawmakers for selling their votes under the State House dome — and under the nose of state authorities who apparently weren’t all that eager to do anything about such ongoing corruption. 

Crangle was the only lobbyist on the Ethics, Government Accountability, and Campaign Reform Act of 1991, a bill drafted and passed to address the humiliating scandal. South Carolina has not significantly updated its ethics laws since. This legislative session, there are several bills aimed at doing so, and several different committees have been set up to hash them out. One of them includes an 11-member committee created by Gov. Nikki Haley; it released a sweeping list of recommendations last month.

Walking through the State House grounds last Thursday, Crangle reflected on the difference between recent days and the ones leading up to Operation Lost trust.
“The thing about governmental ethics is it’s like trying to cure the flu: Just when you get a vaccine that works on one mutation of the virus, you get another mutation,” he said. “For example, 25 years ago I was not talking about leadership PACs. There weren’t any leadership PACs. Now leadership PACs are a big problem.
Now, campaign money is a chronic problem. As long as you have campaign accounts where the money comes from private sources, the candidates will be tempted to misuse it.”

House Speaker Under Fire

What Crangle is talking about is perhaps best exemplified by the situation surrounding Republican House Speaker Bobby Harrell of Charleston. 

A Charleston Post & Courier report last September rocked the State House and once again drew national attention to South Carolina’s ethics laws. The story, by Renee Dudley, reported how Harrell, arguably the state’s most powerful politician, had reimbursed himself roughly $300,000 from his campaign account over a span of a few years.

House Speaker Bobby Harrell, R-Charleston (left), presiding on Feb. 21 at the State House. Photo by Sean Rayford

A State Farm insurance agent who also runs a pharmaceutical company, Harrell has been House Speaker since 2005. Prior to that, he was House Majority Leader and chaired the House Ways and Means Committee.

“State politicians must maintain such documentation for four years to prove they are using campaign money for political rather than personal spending,” the paper reported. “Harrell told the newspaper that all his expenses are legitimate. But the State Ethics Commission said that without the required documentation, it is impossible to confirm that Harrell spent the money properly.”

Much of the money, which wasn’t itemized on his ethics reports, went to pay for trips and maintenance of a private plane Harrell pilots, according to Harrell. Harrell, who declined through a spokesman to be interviewed for this story, has maintained he is in compliance with the State Ethics Act. However, after the story ran, he gave back $23,000 to his campaign for receipts he could not account for. 

The Post & Courier report also revealed disturbing details about Harrell’s influence over government ethics regulators. Officials at the State Ethics Commission initially expressed concern to the paper about Harrell’s spending, but backed off after Harrell contacted them. The agency has since been wary of mentioning Harrell by name; the powerful lawmaker essentially has control over the agency’s budget, one that’s been cut several times over the past few years. (Although the State Ethics Commission enforces the State Ethics Act, the agency does not have jurisdiction over lawmakers; they are regulated by separate ethics panels made up by their peers in the House and Senate.)

In the months after the story’s publication, House members remained largely quiet about Harrell’s situation. Even Democrats, who under chairman Dick Harpootlian had gained something of an attack-dog reputation in recent years, wouldn’t go on the record questioning their Speaker. He has too much power over who sits on coveted committees, reporters would be told through spokespeople. House members worried about retribution.

Meanwhile, reporters also began looking into a political action committee tied to Harrell called the Palmetto Leadership Council. The PAC has amassed more than $1 million since it was created in 2004 and has given money to nearly every Republican in the S.C. House, as well as giving large private payouts to powerful lawmakers through consulting contracts. (The practice is banned in the Senate.)

Supporters of such PACs say they are a legitimate mechanism by which like-minded people can contribute to a common agenda. Common Cause’s Crangle says such groups, called leadership PACs, are legal ways for House leaders to bribe their colleagues into playing along on legislation, among other things.

Strange Bedfellows

In September, a Democratic Party functionary and law school student attempted to file a formal complaint against Harrell with the House Ethics Committee, but because it was 50 days before an election, rules prohibited the panel from accepting it.

In the following months, after Harrell was re-elected, no one stepped forward to try again.

With the Democratic Party on the sidelines, opposition to Harrell’s behavior as House Speaker created strange bedfellows. Ashley Landess, president of the limited-government South Carolina Policy Council, a Columbia-based think tank, began meeting with Crangle of Common Cause. The two groups are hardly ideologically simpatico. Later, Brett Bursey, director of the South Carolina Progressive Network, would get involved.

“There’s no question we don’t agree on several fronts,” Landess said in one meeting with Crangle and Bursey. “[But] one area where we have started to come together ... is on this issue of the corruption in our state.”

Ashley Landess, president of the limited-government South Carolina Policy Council.
Photo by Sean Rayford

The Policy Council had also received emails from a source that Landess says appears to show Harrell using his influence as House Speaker in an effort to obtain a permit through the state pharmacy board for his pharmaceutical company. He wanted to establish a pharmaceutical dispensing business to repackage drugs in hospital emergency rooms.

“Bobby Harrell has been told that this type of practice is not in the best interest of the patients and the (S.C.) Board of Pharmacy said it was against the law since no physician was actually overseeing the dispensing,” Don Ray, then a member of South Carolina Pharmacy Association’s board of directors, wrote to fellow board members and association staff on Nov. 8, 2010, reported The Nerve, an investigative newsroom operated out of the Policy Council. “Mr. Harrell said if that was the case then he would change the law ... For the most part, that ended the

Harrell has denied ever saying he would change the law. Landess said the emails showed Harrell was using his public office for personal financial profit.

As Landess, Crangle and others continued to receive information about Harrell, the coalition became convinced he couldn’t be held accountable through the traditional means by which the ethical behavior of House members is regulated — the House Ethics Committee. It turned out all five Republicans on the 10-member bipartisan panel had taken money from the Harrell-affiliated Palmetto Leadership Council.

Further, House members serve on their committee assignments at the Speaker’s pleasure, and the Speaker oversees the House Ethics Committee staff.

Edwin Bender, director of the Montana-based National Institute of Money in State Politics, said the situation was a classic example of the fox guarding the henhouse.

“Any time you have someone who wields this kind of power and is able to manipulate that oversight process, I think it speaks to both their credibility in the public’s eye to do the public’s work and what’s in the public’s best interest,” Bender said.

So Crangle and Landess began meeting with South Carolina’s Republican attorney general, Alan Wilson, and requested Wilson’s office handle any complaint against Harrell. At first Wilson balked, writing in a statement to media that he felt the House Ethics Committee was the appropriate place for any complaint against the House Speaker.

“Should the House Ethics Committee not act, this office is then prepared to do what is in the public’s best interest,” Wilson wrote in October 2012.

On Valentine’s Day 2013, Wilson changed his tune. After another meeting with Landess, Chief Deputy Attorney General John McIntosh sent out this statement to media: “We met today with Ashley Landess, who delivered information to this office alleging possible criminal violations by Speaker Bobby Harrell … Consistent with our long-standing policy, we are requesting that SLED [the State Law Enforcement Division] assign an agent to conduct this inquiry.”

It wasn’t long after the attorney general asked state law enforcement to investigate the House Speaker that Alan Wilson’s own campaign finance’s came under scrutiny.

On Feb. 20, Free Times reported in an online story that Wilson had failed to disclose a $3,500 campaign contribution he received from Harrell in 2011 that helped finance a party Wilson threw for his inauguration. A day later, the story would get worse for Wilson. It turned out the contribution from Harrell wasn’t the only campaign donation the attorney general failed to report — there were at least a dozen more. Wilson’s 2010 campaign chairman, Thad Westbrook, chalked it up to a clerical error and said Wilson would have to amend his reports, according to a Feb. 20 report in the Post & Courier.

What happened was this: Once Free Times reported on the $3,500 from Harrell’s campaign to Alan Wilson’s campaign to pay for the inaugural party, Wilson said he would refund the money out of an abundance of caution so as not to appear conflicted in investigating Harrell. But it is against the State Ethics Act for one campaign to give to another — so not only was the original donation from Harrell improper, so would be any attempt by Wilson to return it to Harrell’s campaign from his own. (Both Harrell’s and Wilson’s offices maintain they believed at the time the transaction was proper.)

The episode was an embarrassing black eye for the man in charge of enforcing violations of the State Ethics Act. If nothing else, it shows how easy it is for politicians to slip through the cracks of the state’s campaign finance laws, willingly or not.

Thriving on Corruption

The morning of his visit to South Carolina, national Common Cause director Bob Edgar was introduced on the floor of the state Senate by Senate President Pro Tem John Courson, a Columbia Republican. Edgar’s stop in Columbia was part of a two-state tour checking up on ethics reform in the Palmetto State and North Carolina.

Common Cause is one of the nation’s foremost nonpartisan government-reform groups, advocating for clean elections, campaign finance reform and public ethics.
Founded in 1970 by moderate Republicans, the organization has seen a surge in support since the 2010 Citizens United Supreme Court decision, which ruled that the First Amendment gives corporations and unions the right to spend as much as they want to on political speech (though not on direct campaign contributions, which are still limited).

In the past four years, Common Cause has been in the black and pulling in more than $10 million annually. Two years ago, it brought national attention to the wealthy libertarian industrialist Koch brothers — now a household name. It discovered Supreme Court Justices Clarence Thomas and Antonin Scalia attended Koch events and exposed Thomas for not filling out proper ethics forms.

“Since I became president of Common Cause, we’ve been thriving on corruption and bad Supreme Court decisions,” Edgar said in an interview after a radio show stop in Columbia. “We’d like to thrive less nationally and we’d like to thrive less here in South Carolina. But while these events are occurring, it is a good opportunity to fix what’s broken.” 

Fair Warning

Two decades after Operation Lost Trust, John Crangle was back at a podium in a committee hearing at the State House last fall. Wearing a coat and tie, his trademark fedora left on a pile of newspapers on a chair behind him, he begins his testimony. Starting with a brief description of that 1990 scandal and the adoption of the State Ethics Act passed to address it, Crangle runs down a list of new ways lawmakers are abusing and exploiting the law.

He warns that leadership PACs are ways for lobbyists to funnel funds to campaigns, and that shell corporations are being set up to evade contribution limits. He warns that busting public fraudsters is a low priority for law enforcement, and that the State Ethics Commission is understaffed and underfunded. He warns that lawmakers and local government officials are benefiting from private sources of undisclosed income, and that “office related” campaign expenses have become increasingly troublesome. He warns of how politicians are living off politics. 

Crangle warns that some lawmakers are amassing a majority of their campaign funding not from people like the man who runs the tire shop or the woman who runs the shoe store in their district, but from big corporations and special interest PACs. Maybe they’re even raising enough money to pay for a self-piloted plane.

“Embezzlement and fraudulent use of campaign funds has reached epidemic proportions in South Carolina,” Crangle warns. And if it sounds like repetition, it should. He’s warned this state before.

The Reforms

The one thing everyone is talking about this legislative session is ethics reform. What will pass — and whether it will fix the problems — remains to be seen. But here is a look at some of the ideas being proposed.

Appointed last October by Gov. Nikki Haley, the South Carolina Commission on Ethics Reform includes two former state attorneys general (one Democrat, one Republican), as well as representatives from the media, law enforcement, academia and business, none of them public officials.

Among its 23 recommendations:

  • Give the State Ethics Commission the power to investigate House and Senate members instead of each body’s members policing themselves

  • Mandate that elected officials disclose all private sources of income

  • Abolish leadership PACs

  • Increase penalties for violating ethics laws

  • Tighten up language in the law about conflicts of interest
    Make those who lobby local governments have to register

  • Create a Public Integrity Unit

  • Strengthen penalties for violating the State Ethics Act

  • Stop allowing candidates and public officials to pay ethics fines with campaign funds

  • Strengthen the state’s Whistleblower Law

  • Revise the state’s Freedom of Information Act to handle requests faster and help enforce a redress for citizens blocked public access to information

Governor Nikki Haley and Attorney General Alan Wilson also have their own ideas for ethics reform:

  • Report all income

  • Create a Public Integrity Unit

  • Require all candidates for public office to file the same forms of candidacy

  • Tighten up recusal requirements for lawmakers who are lawyers representing clients before boards and commissions

  • Apply the state’s FOI law to every branch of government (lawmakers currently can claim certain exemptions)

Some bills in the General Assembly have been filed to address some of these concerns. Others are likely on their way. The S.C. House has two ethics reform study committees, one a group of Democrats, the other Republicans. The Senate has a bipartisan group of lawmakers working on an ethics reform package. Each panel has been holding public hearings for months.

“Whether you have strict ethics laws or no ethics laws it’s always been illegal to lie, cheat and steal,” says former U.S. Attorney Bart Daniel, who in 1990 prosecuted the federal Operation Lost Trust sting. “I’ve always looked at it this way: sun is always the best antiseptic. The more disclosure the better.”

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