Controversial DOT commissioner paid by trade group for ‘consulting’ work with public agencies

February 14, 2018

Investigative Reports

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By RICK BRUNDRETT

A state transportation commissioner with ties to an advertising company that has a lucrative Department of Transportation contract also is a paid consultant with a lobbying trade group that receives thousands of dollars annually from other public agencies.

Public and private entities eligible for public service announcements (PSAs) have paid the Outdoor Advertising Association of South Carolina (OAASC), which represents large and smaller outdoor advertising companies, for PSA billboards and signs statewide, records show.

But a large chunk of that revenue also has been used by the nonprofit organization to cover consulting fees paid to longtime DOT commissioner John Hardee, as well as for lobbying expenses and campaign donations to state lawmakers and political groups, according to the association’s federal income-tax filings and state campaign records.

Since fiscal 2008, 15 state agencies other than DOT collectively have paid at least $1 million to the OAASC, state comptroller general records show. Outdoor advertising is regulated primarily by the state DOT, according to the OAASC’s website.

Hardee, of Columbia, the son-in-law of one of the state’s most powerful lawmakers, Sen. Hugh Leatherman, R-Florence, was paid $25,000 to $28,416 annually from 2014 through 2016 for consulting work with the OAASC, the group’s income-tax records show – amounts confirmed by OAASC president Doug McFarland.

McFarland on Wednesday told The Nerve that Hardee, an executive with Lamar Outdoor Advertising, a national billboard and outdoor advertising company that is a member of the OAASC, has been a consultant for the OAASC since 2003, the year Hardee left his longtime position as the association’s president.

McFarland said Hardee’s consulting job involves coordinating the PSA program between public and private agencies and billboard companies – including Lamar – that are OAASC members.

“Everything is coordinated through him,” said McFarland, president of MAC Advertising Inc. of Charleston.

Hardee typically negotiates a fee with public and private agencies that covers the production costs of the PSAs, adding that the participating billboard companies provide billboard space for free, McFarland said.

But the fees arranged by Hardee also largely cover Hardee’s consulting salary, as well as the OAASC’s lobbying expenses, campaign contributions and other costs, given that association membership fees are a small part of the organization’s total revenues, McFarland acknowledged. The association has no regular paid staff, he said.

Where the money goes

From 2014 through 2016, OAASC total revenues grew from $263,865 to $384,101, though membership dues during those years collectively ranged from $9,100 to $12,520, federal income-tax filings show. Public service advertising revenue for the period increased from $247,116 in 2014 to $353,924.

The base costs of PSA billboards and signs for 2014-16 ranged from $107,652 to $177,999, which represented less than half of the organization’s total revenues for the period, the tax filings show. At the same time, lobbying expenses fluctuated between $57,600 and $91,344, while campaign donations totaled $29,250 and $48,750 in 2014 and 2016, respectively. No campaign donation amounts were listed on the 2015 tax form.

The 2015 and 2016 forms also list $33,357 and $31,210, respectively, in unexplained “public service commissions.”

Asked whether taxpayer money should be used to cover the association’s lobbying and consulting expenses, as well as campaign contributions, McFarland struggled for a clear answer, though he added later, “There’s nothing going on here bad, believe me.”

The OAASC’s website says the association “donates thousands of dollars worth of free advertising space to many deserving and qualified organizations throughout the state,” and that groups seeking public service announcements must “spend NO MONEY for advertising except production.”

Since fiscal 2008, the five state agencies that have spent the most money with the OAASC for public service announcements are as follows, with the amounts spent in parentheses, S.C. Comptroller General records show: Department of Natural Resources ($269,665), Museum Commission ($236,350), Department of Social Services ($160,337), Wil Lou Gray Opportunity School ($137,072) and the Department of Insurance ($114,470).

The Nerve on Wednesday left phone and email messages for Hardee but did not receive an immediate response.

Governor silent on Hardee

Hardee listed his employment with Lamar, as well as an unspecified “consulting fee” with the OAASC, on his 2017 state income-disclosure form filed with the State Ethics Commission. Under a change in state law that took effect last year, public officials in South Carolina are required to report their private sources of income, though not amounts, in addition to any government salary or contracts.

Hardee’s four-year DOT Commission term expires Thursday along with the terms of two other commissioners, as The Nerve reported last week. Gov. Henry McMaster’s office has not responded to multiple requests by The Nerve over the past week about whether the Republican governor intends to reappoint Hardee, who was on the commission from 1998 to 2007 before being regaining his seat in 2014.

Hardee’s father-in-law, Leatherman, the Senate president pro tempore, exerts tremendous control over transportation spending in the state and sat on a former state screening committee that nominated Hardee to his current commission seat, The Nerve reported in 2015.

State comptroller general records show that the former state Budget and Control Board, a powerful five-member panel that included Leatherman and the governor, paid more than $13,000 over a three fiscal-year period to the OAASC. The Nerve this week asked officials with the BCB’s successor agency and other state agencies that paid the OAASC for PSAs for more specifics on their respective expenditures, but did not receive any details by publication of this story.

Hardee, whose DOT Commission seat covers all or parts of Richland, Lexington, Orangeburg, Aiken and Barnwell counties, came under scrutiny in 2015 when The Nerve revealed his ties to South Carolina Logos Inc., a Lamar subsidiary that has a 12-year contract with the DOT for highway business-logo signs statewide – a multimillion-dollar operation.

The firm charges businesses – typically restaurants, gas stations and hotels – to advertise on blue highway signs near exits, and pays DOT annual fees of at least $2.85 million under the contract.

Hardee told The Nerve in 2015 that he wasn’t on the DOT Commission when the contract was approved and wasn’t part of contract negotiations with the state procurement services office, though he was reinstated to the commission the year after the contract was awarded.

South Carolina Logos shares a Columbia office with Lamar. In February 2015, the OAASC and Logos hosted a reception at the Atlas Road office for DOT commissioners, including Hardee, The Nerve reported that year, though his consulting work with the OAASC was not publicly known then.

Hardee served as the OAASC president from 1989 to 2003, according to a 2007 state legislative resolution honoring him.

Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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