House Ethics Chairman Did Not Disclose Contracts from Several State Agencies

October 13, 2014

Investigative Reports

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By RICK BRUNDRETT

bingham

“I report what the law requires.”

In March 2011, Pat Smith, director of the Wil Lou Gray Opportunity School, told The Nerve that a proposed $2.3 million budget increase for his school was “quite a surprise for us.”

Smith said then the proposed 92 percent general-fund hike for the public West Columbia school, which provides a military-style education for at-risk youth, was presented at a House Ways and Means subcommittee meeting after a subcommittee staffer asked him, “What would it take to fully fund us for full enrollment?”

Rep. Kenny Bingham, R-Lexington, is chairman of the House Ways and Means Public Education and Special Schools Subcommittee that pushed through the huge budget increase, which eventually became part of the fiscal 2012 total state budget.

The next fiscal year, Cayce-based American Engineering Consultants Inc., an engineering firm co-owned by Bingham, was paid $11,907 for work done at the school,The Nerve found last week in a review of state comptroller general records.

Bingham, a former House majority leader who took over as chairman of the House Ethics Committee in 2013, didn’t report that amount of government income on his required annual income-disclosure statement, known as a statement of economic interests (SEI), filed with the State Ethics Commission.

Bingham also didn’t report on his SEIs another collective $43,550 in income paid to American Engineering by the state Adjutant General’s Office over the past two fiscal years, plus $6,600 paid by the state Department of Corrections to the company last fiscal year, The Nerve’s review found.

However, Bingham did report other state contracts during that period including those from the University of South Carolina.

SEIs, which require the reporting of earned government income, allow the public to monitor potential conflicts of interest, though under current law, officials generally are not required to report private sources of income. The South Carolina Policy Council, the parent organization of The Nerve, in April 2013 launched “Project Conflict Watch” to encourage state officials to voluntarily report their private income sources, though not amounts of their private income.

Bingham participated in the Policy Council’s project this year and last. Besides American Engineering Consultants, Bingham listed himself as a partner in three real estate investment businesses and the owner of a separate consulting firm.

Contacted Friday by The Nerve, Bingham said he had “absolutely no idea that our company had done any work for Wil Lou Gray.” He said he typically doesn’t get involve with smaller projects done by the company, which he noted has about 20 employees and does approximately $2 million to $3 million in billable work annually.

“I don’t have a clue because I’m not here,” Bingham said. “I’m always at the General Assembly.”

Smith told The Nerve when asked Friday the fact that his school received a big budget hike in fiscal 2012 had nothing to do with the selection of Bingham’s company to do work at the school.

“His specialty is utilities and site work,” Smith said.

Smith said American Engineering designed “erosion solutions” to fix a serious erosion problem, which had exposed utility lines, at the school, adding the project was bid out and that there haven’t been any problems since it was completed.

Bingham said relatively large budget increases were proposed for fiscal 2012 for other special state schools.

The Nerve on Friday was unable to reach officials at the Adjutant General’s Office or Department of Corrections for comment on their respective agency’s work with American Engineering.

State ethics law (Section 8-13-700 of the S.C. Code of Laws) bans 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.” No one has accused Bingham, who was first elected to the House in 2000, of violating that provision or any other wrongdoing.

But the standard upon which lawmakers rely to decide what to report is often unclear, and so is the process by which the House and Senate Ethics committees issues clarifying opinions.

Landlord to Amazon

While Bingham said he believes he isn’t required to report the business income from the Wil Lou Gray school, he did report income from internet retail giant Amazon to another of his companies, a real estate investment firm called Bingham Properties.

His SEI filed in 2012 shows that Seattle-based Amazon, a registered lobbyist principal in South Carolina, paid Bingham Properties $7,500 to rent office space in 2011 – the same year Bingham was the main sponsor of a House bill exempting Amazon from collecting state sales taxes from S.C. residents up to Jan. 1, 2016, in exchange for the company locating a distribution center near Cayce.

Bingham’s proposal and a similar bill by state Sen. Nikki Setzler, D-Lexington, both of which drew opposition from small retailers who contended that Amazon would have an unfair competitive advantage with the tax break, eventually were incorporated into another Senate bill that became law in June 2011.

Bingham told The Nerve he was not involved with any lease negotiations with Amazon during the legislative debate on the tax break. He said after the final bill was passed, he was contacted by Lexington County officials about quickly finding temporary office space for Amazon so that the company could conduct “hiring camps.” He said he rented out about 4,000 square feet of his 33,000-square-foot office building on 12th Street in Cayce near the Amazon site.

“They were begging for space because they had nowhere to go,” Bingham said, noting he provided desks, phones, copiers and internet access to Amazon.

“All I did was lose money,” he added.

Bingham said he does not believe a conflict of interest exists between his sponsorship of the Amazon legislation and the subsequent lease agreement with the company.

He further pointed out his SEIs include, as required by the Ethics Act, all business income earned by American Engineering from companies or government agencies that lobby the Legislature, including Amazon; and that he also lists every business in which he is a partner.

Besides American Engineering, Bingham is listed as a partner in Bingham Properties LLC, Bingham Investments LLC and Brookland Enterprises LLC – all real estate investment businesses; and as owner of a consulting firm, KAB Enterprises Inc., according to his most recent SEI filed on March 16.

That SEI shows that American Engineering received a total of nearly $685,000 from lobbyist principals last year, including the University of South Carolina, city of Columbia, Richland County, town of Lexington, SCANA and Lexington Medical Center.

Most of last year’s total – $215,709 – came from USC. Bingham told The Nerve that American Engineering had multiple contracts with USC for various projects, including surveying work for the Rocky Branch Creek and property in downtown Columbia. He said his company received no special treatment in getting the contracts, noting it had to compete for the jobs through the state procurement process.

“We had to fight tooth and nail,” he said.

Efforts Friday by The Nerve to reach USC officials were unsuccessful.

Loose Interpretations of Reporting Requirements

Bingham said he wasn’t required under the state Ethics Act to report income on his SEIs from his company’s contracts with the Wil Lou Gray Opportunity School, Adjutant General’s Office and Department of Corrections, citing Section 8-13-1120 (8) of the S.C. Code of Laws.

Under that section, a public official must report the amount of compensation paid to the official by a business that contracts with the government agency at which the official “serves or is employed.” Bingham said because he serves in the S.C. House and is not employed by either the Wil Lou Gray school, Adjutant General’s Office or Department of Corrections, he doesn’t have to report that income on his SEIs.

“I think I report what the law requires,” said Bingham.

“The intent of the statute (state Ethics Act) is to require disclosure,” John Crangle, attorney-director of the government watchdog organization Common Cause of South Carolina, told The Nerve when contacted Friday about Bingham’s interpretation of the law. “The guy seems to be insensitive to ethics issues even though he is chairman of the Ethics Committee.”

Bingham said information about income earned by American Engineering from contracts with the Wil Lou Gray school, Adjutant General’s Office and Department of Corrections already is publicly available from other sources.

Crangle and other reform advocates, including the South Carolina Policy Council, have long argued that laws governing income disclosure are weak and leave the public in the dark regarding potential conflicts of interest, and that the lack of independent oversight leaves the interpretation of the Ethics Act up to the discretion of lawmakers themselves.

Crangle also said Bingham’s situations involving the Wil Lou Gray school and Amazon are “symptomatic of conflicts when you become a part-time legislator.” But Bingham doesn’t see his lawmaker job as a part-time position.

“That’s the problem with serving in the General Assembly, because it’s a full-time job,” he said.

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

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