Lawmakers Spend Campaign Funds on Their Businesses

January 12, 2015

Investigative Reports

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By RICK BRUNDRETT

Thomas AlexanderIn the 2008 and 2012 elections, S.C. Sen. Thomas Alexander faced little or no formal opposition.

Yet from December 2008 through May last year, the Oconee County Republican and chairman of the Senate Labor, Commerce and Industry Committee reported spending a total of $36,657 in campaign funds on labeled printing, mailings and office supplies from a business he owns, called Alexander’s Office Supply, The Nerve found in a review of his quarterly campaign reports filed with the State Ethics Commission. Of the total, $11,310 was listed as having been spent for the 2016 election period, records show.

Alexander, who was first elected to the Senate in 1994 and previously served in the S.C. House from 1987-94, isn’t the only legislative leader in recent years who has spent campaign funds on his own business, The Nerve’s review found.

Rep. David “Davey” Hiott, R-Pickens and chairman of the House Agriculture, Natural Resources and Environmental Affairs Committee, reported spending a total of $6,500 in 2012 and last year on his business – the Hiott Printing Company – for what he labeled as “printing materials” and “printing for campaign.” He faced opposition in both the 2012 and 2014 Republican primaries, though he had no formal opponents in the general elections in those years.

And other lawmakers have spent campaign funds on Hiott’s business, The Nerve’s review found. Sen. Larry Martin, R-Pickens and the Senate Judiciary Committee chairman, for example, reported spending a total of $6,905 from November 2008 through December last year, mainly for what he listed as “Christmas cards.” Rep. Bill Whitmire, R-Oconee, reported spending a collective $4,135 in 2012 for what he labeled as “campaign cards” and a “mailer.”

State ethics law (Section 8-13-1348 of the S.C. Code of Laws) bans campaign funds from being “converted to personal use,” or used to “defray personal expenses which are unrelated to the campaign or the office if the candidate is an officeholder.” Another law (Section 8-13-700) prohibits a public official from using his office to “obtain an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.”

Alexander’s campaign reports don’t specify whether the amounts spent from his campaign account on his business were for his campaign or legislative office. Neither Alexander nor the Senate’s leader – Senate President Pro Tempore Hugh Leatherman, R-Florence – responded last week to phone or written messages from The Nerve seeking comment on Alexander’s spending of campaign funds on his office supply business.

The Nerve in February last year reported that over the prior six years, Leatherman, who also is the Senate Finance Committee chairman, spent a total of more than $600,000 from his campaign account, though he faced no opposition in either the 2008 and 2012 elections, including more than $90,000 for ornaments and gifts for unnamed constituents.

Ethics Committee ‘Pre-Approval’

Contacted last week by The Nerve, Hiott, who was first elected to the House in 2004, confirmed that he has spent campaign funds on his business, and that other lawmakers have used their campaign accounts to pay his company. Besides Martin and Whitmire, other lawmakers who have made purchases from his business include Reps. Carl Anderson, D-Georgetown, and Samuel Rivers, R-Berkeley; and former Rep. Don Bowen, R-Anderson, he said.

“I did some printing for myself, and I paid the company what it would cost,” Hiott said, adding that for other lawmakers, “It’s the same price I would give them what I would give to anyone else.”

Hiott said a House Ethics Committee staffer verbally told him other lawmakers could spend their campaign funds on his business for allowable purposes under the law so long as he wasn’t giving them any special deals.

Asked by The Nerve if he made a profit by spending campaign funds on his business, Hiott said he was advised by the Ethics Committee staffer that “you charge yourself the same thing you would charge anyone else.”

Hiott couldn’t identify the Ethics Committee staffer when asked by The Nerve, adding that he “didn’t have anything in writing” from the committee. Rep. Kenny  Bingham, R-Lexington and the House Ethics Committee chairman, told The Nerve for a story last month on Rep. Alan Clemmons, R-Horry, who spent $29,297 from January 2008 through January 2014 on ties and scarves for House members, staffs and others, that informal opinions generally are secret, citing “attorney-client privilege.”

The 124-member House and 46-member Senate police themselves for ethical violations through their respective ethics committees. Critics, including the South Carolina Policy Council – The Nerve’s parent organization – have called for an end to the Legislature’s self-policing powers, citing, among other things, repeated abuses of campaign spending laws.

The Policy Council in February 2013 filed a public corruption complaint against then-House Speaker Bobby Harrell, R-Charleston, who resigned in October after pleading guilty to six counts of misspending campaign funds in connection to the use of his private airplane. The charges included one count of reimbursing himself a total of $93,958 from his campaign account from Jan. 1, 2009, through Jan. 10, 2013, for expenses related to the use of his plane, which, according to an indictment, were “neither related to his campaign nor his office in the House of Representatives of the State of South Carolina.”

Besides Harrell and Clemmons, The Nerve recently has examined campaign fund spending by other lawmakers, including:

Rep. Bill Sandifer, R-Oconee and the House Labor, Commerce and Industry Committee chairman, who spent nearly $18,000 over three years on credit card payments for unspecified conference expenses – on top of about $9,500 that the sponsors of 12 mostly in-state conferences spent on him;

Rep. Brian White, R-Anderson and the House Ways and Means Committee chairman, who has contributed at least $20,200 since 2008 to a technical college foundation where his wife works as a fundraiser and a charitable organization where she is a board member; and

Former Rep. Kris Crawford, R-Florence, who resigned last month amid a Nerve investigation into, among other things, the payment of a collective $24,215 in the 2008, 2010 and 2012 elections to his wife and a business registered with the state by his wife.

Multiple Income Sources

Contacted last week by The Nerve, John Crangle, attorney-director of the government watchdog organization Common Cause of South Carolina, said he believes there are ethical problems with lawmakers spending campaign funds on their own businesses or each others’ businesses.

“You have an obvious conflict of interest when you’re buying from your own company, and secondly, you have incestuous (business) relationships when you’re buying from each other,” he said.

Crangle questioned whether Alexander was spending campaign funds on his office supply business to cover legislative expenses at the same time he received monthly $1,000 taxpayer-funded payments for “in-district” expenses. Senate records obtained earlier by The Nerve under the S.C. Freedom of Information Act show, for example, that Alexander received $12,000 in in-district payments in 2013.

The Nerve in 2010 first examined the various pots of taxpayer funds that lawmakers annually tap, including in-district payments, reporting then that legislators received an average of about $32,000 annually in combined salary, expenses and reimbursements.

“Every dollar that he (Alexander) spends from his campaign account rather than from his in-district account is more money that he can put in his own pocket,” Crangle said.

The Nerve reported last year that Leatherman was behind a push to double lawmaker’s monthly in-district payments to $2,000. Gov. Nikki Haley vetoed the proposed pay raise; the House overrode the veto, though the Senate sustained it, killing the pay hike for this fiscal year, which ends June 30.

Alexander’s most recently filed annual income-disclosure report shows that he received a collective $28,947 in Senate income, expenses and reimbursements in 2013, though he didn’t provide a specific breakdown of that section. Although not specified in the report, Alexander did not receive a base $10,400 legislative salary in 2013, according to Senate records provided earlier to The Nerve; Senate Clerk Jeffrey Gossett told The Nerve in 2010 that senators who receive no base salaries are “most likely retired” and receive legislative pensions.

State law bans lawmakers from receiving a base annual salary and legislative pension while serving in office, though they can receive other types of taxpayer-funded payments along with their pensions.

In addition to state income sources, Alexander’s income-disclosure report filed with the State Ethics Commission shows that Alexander’s Office Supply was paid a total of nearly $80,000 in 2013 by the counties of Oconee and Anderson; the Oconee County School District; and the cities of Salem, Seneca, Westminster and Walhalla. Besides that business, he also listed ownership of Oconee Office Supply and Cleveland Gospel Supply, though he didn’t specify those businesses as receiving any government contracts that year.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenerve.org.