Potential Conflicts of Interest Lurk Behind Bond Proposal

March 11, 2015

Investigative Reports

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By RICK BRUNDRETT

 

S.C. Reps. Murrell Smith and Leon Stavrinakis had more than a passing interest in co-sponsoring a House Ways and Means Committee proposal to spend $50 million on a new children’s hospital at the Medical University of South Carolina.

Smith’s father, Dr. G. Murrell Smith Sr.;  and Stavrinakis’ brother, Michael Stavrinakis, are members of the MUSC Board of Trustees.

Ways and Means Chairman Brian White, R-Anderson, who is a co-sponsor of the children’s hospital proposal, had more than a passing interest in sponsoring another proposal with Rep. Jim Merrill, R-Berkeley, to give $50 million to the S.C. Technical College System for something called “Pathways to Workplace Infrastructure Development.”

White’s wife, Courtney White, is director of development – that is, fundraising – at the Tri-County Technical College Foundation.

Both $50 million plans are part of a $497.1 million bond package that the Ways and Means Committee approved on Feb. 19 – unveiling the debt package, which likely will cost S.C. taxpayers tens of millions of dollars in interest in addition to the principal, without allowing any prior public comment on it, as The Nerve reported Monday.

The Nerve on Tuesday obtained an internal list of 28 earmarked projects for next fiscal year, with the names of House members who sponsored the proposals. Half of the projects, ranging from $1.5 million to $60 million, are part of the 44-project bond package, which doesn’t identify any of the project sponsors.

A disclaimer on the earmarked projects list reads in capital letters: “The following constituted summary is prepared by the staff of the South Carolina House of Representatives and is not the expression of the legislation’s sponsor(s) or the House of Representatives. It is strictly for the internal use and benefit of members of the House of Representatives and is not to be construed by a court of law as an expression of legislative intent.”

The full House today is expected to debate the bond package – the reported first of its kind in 15 years – which is attached to the proposed 2015-16 state budget of approximately $24.5 billion. The fiscal year starts July 1.

Smith, Stavrinakis and White aren’t the only House members with potential conflicts of interest in the budget process. The House Monday tabled a motion by Rep. Mike Forrester, R-Spartanburg, to give $3 million to the S.C. Department of Employment and Workforce for “direct training.”

Forrester is director of economic development at Spartanburg Community College, according to the college’s website. The Department of Employment and Workforce is listed on the website as one of the college’s “collaborative partners.”

Forrester, who is not a member of Ways and Means, did not respond to a written message Tuesday fromThe Nerve seeking comment. Neither did Stavrinakis, D-Charleston, nor White, R-Anderson.

The Nerve in October reported that over the previous six years, White contributed at least $20,200 in campaign funds to the Tri-County Technical College Foundation where his wife works and to a charitable organization where she is a board member.

The Nerve in 2013 first reported about Smith’s and Stavrinakis’ family ties to MUSC. Under state law, the 16-member MUSC board is made up of the governor or her designee, one member appointed by the governor, and 14 members elected by the General Assembly. The 14 seats filled by the Legislature are divided evenly among the state’s seven congressional districts; each district has a board member with a medical background and a lay member.

State law requires the General Assembly pick college or university trustees “based on merit regardless of race, color, creed, or gender and shall strive to assure that the membership of the board is representative of all citizens of the state of South Carolina.”

Besides serving on Ways and Means, Smith and Stavrinakis, both of whom are attorneys, also are members of the House Ethics Committee. Like Smith and Stavrinakis, Ethics Committee Chairman Kenny Bingham, R-Lexington and a member of Ways and Means, also has a family member on the MUSC board – his father, William Bingham Sr.

No ‘Benefit’ to Family

Contacted Tuesday, Smith, R-Sumter, denied he has a conflict of interest in co-sponsoring the proposed $50 million for a new MUSC children’s hospital.

“This does not benefit my family members,” he told The Nerve. “This was a request by an agency.”

Smith said MUSC officials pitched their plans for a new children’s hospital in hearings before his health-care budget subcommittee and the higher-education budget panel.

When The Nerve pointed out that under House rules, an earmarked project is defined as an “appropriation for a specific program or project not originating with a written agency budget request or not included in an appropriations act from the prior fiscal year,” Smith said although the children’s hospital proposal was included on the project list, “the earmark was not necessary.”

Besides Smith, Stavrinakis and White, other sponsors of the proposed $50 million hospital project include Merrill and Rep. Chip Limehouse, R-Charleston, according to the project list.

Asked if his medical supply business, known as Reliable Medical Equipment of South Carolina, would benefit from the hospital project, Smith replied, “C’mon, seriously?” He also said he has no involvement in the telemedicine field; the bond package includes $20 million to the S.C. Department of Health and Human Services for unspecified “Statewide Telemedicine Infrastructure.”

The single-biggest proposed expenditure in the bond package is $60 million to the state Department of Commerce for unspecified “Regionalized Economic Development Infrastructure,” as The Nerve reported Monday. The earmarked project list obtained by The Nerve on Tuesday shows that proposal was made by White and Rep. Gary Simrill, R-York.

In a Nerve story last month, Smith denied he had a conflict of interest in being the main sponsor of a bill (H. 3250) that would strip a provision in state law requiring a “Certificate of Need” (CON) from the state Department of Health and Environmental Control before a medical provider could purchase medical equipment with a total project cost exceeding state limits – currently set at $600,000. Smith said then the current CON law doesn’t apply to him because he sells medical equipment that falls below the $600,000 threshold.

Asked Tuesday why the Ways and Means Committee chose to keep the total bond package secret until the Feb. 19 vote approving it, Smith replied, “I don’t necessarily agree that it was hidden.”

“There was not a contemplation of a bond package until after the presentations” to budget subcommittees,” he said. “MUSC presented in January, and there was some discussion after that about having a bond bill.”

Smith, however, couldn’t immediately provide an answer when asked why at least one public hearing on the total bond package wasn’t held before the Feb.19 vote.

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