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Boeing’s 'A' Team: Turned to Power Brokers

Never let it be said that the Boeing Co. isn’t politically savvy, or expert in the far-reaching ways in which state government is involved in economic development in South Carolina.

The degree to which that is true is witnessed in a roster of lobbyists and lawyers Boeing has employed at certain times for varying reasons. Indeed, the names of those individuals read like a proverbial who’s who of Palmetto State power brokers:

Dwight Drake, Leighton Lord, Billy Wilkins and Burnie Maybank.

Call them Boeing’s “A” Team.

Most recently, the company turned to some members of the team to negotiate for a state incentives package valued at hundreds of millions of dollars.

The General Assembly passed such a package for Boeing during a special two-day legislative session in late October. Estimated by some unofficial accounts to be worth up to $450 million or more, it is a goodie bag of state economic development bonds and income and sales tax breaks.

The package was designed to purchase an airliner plant for South Carolina. That facility is now under construction in North Charleston in the shadows of two other Boeing factories. Upon completion, potentially as soon as next year, the new plant will perform final assembly of the 787 Dreamliner, the titanic aerospace company’s next-generation passenger jet.

The incentives are tied to Boeing creating at least 3,800 new full-time jobs and investing a minimum of $750 million in a single county.

To execute the incentives deal, Boeing retained the go-to economic development law firm in South Carolina – Nexsen Pruet.

The firm employs three members of the A Team: Lord, who is its chairman, Wilkins and Maybank, who, in an ironic twist, is heading up a state panel charged with recommending reforms to a huge patchwork of South Carolina sales tax exemptions and other aspects of the state tax code.

Working the State House in another way, by making campaign contributions on both sides of the aisle, did not hurt Boeing’s efforts, either.

The company gave at least $2,000 last year to each of the House and Senate Republican and Democratic Caucus committees. The dates of the donations listed on State Ethics Commission reports were in September – the month before the Legislature approved the incentives package.

Make no mistake, though: It was all perfectly legal.

Nonetheless, in some instances the A Team paints a confusing picture of public versus private interests.

The picture comes into focus by connecting the dots, starting with Drake, who is widely considered one of the most influential lobbyists in South Carolina.

In the first five months of 2009, Boeing paid him $12,800 to lobby the Legislature for the company, Ethics Commission records show.

At the same time, Drake also was lobbying for the state, advocating for the S.C. Research Authority, which paid him $12,000 for his services during that period.

Two other State House lobbyists Boeing retained, Jennifer P. Robinson and Kathy Shannon, also were representing the Research Authority simultaneously.

From January through May of 2009, Boeing paid Robinson about $5,500; Shannon, nearly $1,200.

From the Research Authority for that time period, Robinson earned $1,500 for lobbying; Shannon, $3,500.

The totals ring up to almost $19,500 in lobbying and $8,000 in caucus committee donations by Boeing, and $17,000 in lobbying by the SCRA.

All three of the lobbyists work for Nelson Mullins Riley & Scarborough and Drake is a partner in the law firm. Headquartered in Columbia, it is perhaps the most politically connected firm in the state.

Drake says he and his two colleagues from Nelson Mullins did not do any lobbying for Boeing related to the company’s incentives package.

Rather, Drake says their work for the company centered on getting a bill passed to uphold a commitment the state had made to make two Boeing 747s tax exempt. The state had made a mistake and failed to do so, he says. “It wasn’t any negotiation with the state,” Drake says of the Nelson Mullins trio’s representation of Boeing. “It was just a piece of legislation.”

The two airliners, he says, transport parts and are essentially a part of the company’s passenger jet assembly process.

On its Web site, the Research Authority describes itself as “a non-stock, tax-exempt applied research and commercialization services company.”

What does the organization do?

“SCRA’s results-based management approach assures delivery of technology solutions to complex client challenges,” the site says.

But the Research Authority is better understood as command central in the state government-driven economic development game.

In 2008, four top-ranking members of the General Assembly – Senate President Pro Tempore Glenn McConnell, Senate Finance Committee Chairman Hugh Leatherman, House Speaker Bobby Harrell and House Ways and Means Committee Chairman Dan Cooper – released their economic development plan for South Carolina and put the SCRA squarely at the head of it.

The Research Authority executive committee consists of the presidents of the state’s three major research universities (USC, Clemson and MUSC); the governor or his or her designee; one member appointed by the Finance Committee chairman; one named by the Ways and Means head; and the SCRA board chairman.

The vast majority of Research Authority revenue consists of tax dollars, no less than 70 percent from Department of Defense contracts. The rest “comes from other federal agencies, corporations and income from research facilities,” the site says.

Roughly half of 24 people who serve on the Research Authority board of trustees represent state and federal agencies. Those board members include the presidents of the state’s major public colleges and universities, in addition to other big-name public officials such as the state secretary of commerce and the chairman of the S.C. Commission on Higher Education.

Although Drake, Robinson and Shannon were at once lobbying for state government’s major economic development entity – and a client seeking legislative action by the state – two authorities on South Carolina ethics law say that did not create conflicts of interest for the lobbyists.

The main statute relevant to the situation, the Ethics Reform Act of 1991, addresses “absolutely nothing” about conflicts of interest among lobbyists, says Cathy Hazelwood, attorney for the Ethics Commission.

Agreed, says John Crangle, an attorney and director of the nonprofit good-government group Common Cause of South Carolina. “It’s kind of up to the client and their lobbyist to determine whether or not there’s a conflict of interest,” Crangle says.

Unless lobbyists misrepresent their clients, he says, “I don’t see an ethical or legal problem with it. You know, lobbyists are kind of like lawyers, in the sense that they’re hired guns.”

Ethics Commission records show that Drake’s lobbying work for both Boeing and the SCRA ended July 31. Robinson and Shannon remain listed on the commission’s Web site as lobbyists for the Research Authority.

Drake says he doesn’t see how anyone could perceive a conflict of interest in the work that he, Robinson and Shannon did for Boeing while also representing the SCRA.

The day lawmakers signed off on the incentives package, Drake issued a statement that said in part, “I am proud to have played a leadership role earlier this year in assembling a bipartisan coalition in the Legislature to pass legislation opening the door for Boeing’s expansion.”

Asked by The Nerve about that statement, Drake says he was referring to his efforts to correct the mistake the state had made in failing to exempt the two Boeing 747s from taxes.

In any case, when it comes to brokering economic development deals between state government and companies, Nelson Mullins has nothing on Nexsen Pruet.

In its winter 2008 issue, Southern Business & Development magazine named Nexsen Pruet one of the top regional law firms “that understand economic development.”

Says a post on the Nexsen Pruet Web site headlined “Nexsen Pruet Plays Key Role in Deal to Bring Boeing to South Carolina”: “Led by Leighton Lord and Billy Wilkins, the firm’s economic development team, including Ric Tapp, Burnie Maybank and Stephanie Eames worked with Boeing officials to negotiate the incentives package approved by the South Carolina Legislature.”

Wilkins is a former chief judge of the 4th U.S. Circuit Court of Appeals. For most of the time Wilkins was on the 4th Circuit – some 20 years – Boeing’s current executive vice president and general counsel, J. Michael Luttig, also was on that federal appeals court.

Maybank, meanwhile, wrote the book – literally (or at least co-authored it) – on “South Carolina Tax Incentives for Economic Development.” At a whopping 260-plus pages, it is a Department of Revenue publication that functions as the bible of state government handouts.

“The Department of Revenue would like to thank Burnet R. Maybank III whose vision was the genesis for this project,” the acknowledgements page says.

Maybank is a former two-time director of Revenue.

Presently, his work for the state involves serving as chairman of the S.C. Tax Realignment Commission. The TRAC is a special panel created by the General Assembly to scrutinize tax exemptions and comb through almost all of the state code with a charge to recommend changes to the Legislature.

Sen. Leatherman, who played a key role in the Boeing deal, appointed Maybank to the TRAC.

Asked by The Nerve about his involvement in the deal and his chairmanship of the TRAC, Maybank says, “I don’t see where there’s a conflict at all.”

The Boeing incentives package is not within the purview of the commission because the TRAC is looking only at existing law, he says.

And with that, the roster of the A Team is complete.

Reach Ward at (803) 779-5022, ext. 117, or eric@scpolicycouncil.com.

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