House Speaker’s Drug Company Dropped from Income-Disclosure Form

May 21, 2013

Investigative Reports

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Bobby HarrellA Charleston-based  pharmaceutical company led by S.C. House Speaker Bobby Harrell filed official paperwork with the state in April to dissolve, then reversed that decision this month for unexplained reasons, according to records obtained Monday by The Nerve.

The Charleston Republican signed the “articles of revocation of dissolution” for Palmetto State Pharmaceuticals on May 13; the document was filed the next day with the S.C. Secretary of State’s Office, records show. Harrell listed himself as president of the company.

Less than six weeks earlier, David Grimm, who, according to records, is Harrell’s nephew and the company’s vice-president, signed paperwork with the Secretary of State’s Office to dissolve the company.

Under state law, a “revocation of dissolution” means a company “resumes carrying on its business as if dissolution had never occurred.” In contrast, a dissolved company “may not carry on any business except that (is) appropriate to wind up and liquidate its business and affairs,” according to the law.

The Nerve reported in February that high-ranking officials with two state pharmacy organizations in 2010 expressed concerns then that Harrell was using his legislative position to help Palmetto State Pharmaceuticals, which also goes by the name PrimaryRX.

Meanwhile, a review by The Nerve of state income-disclosure forms filed by Harrell from 2008 through this year show that he quit listing his ownership of the company starting last year.

State ethics law requires public officials to report their ownership in companies if they own at least 5 percent of outstanding stock and if the shares are collectively valued at $100,000 or more. The stock ownership doesn’t depend on whether the official earned any money on that stock in the previous year, according to Cathy Hazelwood, the State Ethics Commission’s chief lawyer and deputy director.

Generally, public officials don’t have to report their private sources of income under state law. South Carolina is the only state that requires public officials to list just their government-income sources, according to a January report by the governor-appointed S.C. Commission on Ethics Reform.

A House bill (H. 3945) pending in the Senate would require state lawmakers and their immediate family members to report their private-income sources.

On his most recent statement of economic interests, which was filed with the State Ethics Commission on April 15 and covered the previous calendar year, Harrell is listed as the owner of the Robert Harrell Insurance Co. and the president of and sole stockholder in another business called Charlestowne Development Corp. He reported no business ownerships on his income-disclosure form filed last year, which covered the 2011 calendar year.

Harrell, the House’s top leader since June 2005, listed his annual legislative salary and expense payments for last year at $46,113, a nearly $12,000, or 35 percent, increase since 2007, Ethics Commission records show. Adjusted for inflation, his reported legislative compensation jumped 21 percent during the period.

As has been his practice with The Nerve, Harrell, who was elected to the House in 1992, did not respond Monday to a phone message from The Nerve seeking comment on the recent filings involving Palmetto State Pharmaceuticals.

The concerns expressed in 2010 by officials with the South Carolina Pharmacy Association and South Carolina Society of Health-System Pharmacists stemmed from an Oct. 20, 2010, letter that Harrell sent to hospitals in the state seeking to establish his pharmaceutical-dispensing business in their emergency rooms, The Nerve reported on Feb. 8 after obtaining documents from the state licensing department under the S.C. Freedom of Information Act.

“I am writing you today not in the capacity as Speaker of the House of South Carolina, but as a business owner,” Harrell said in the first line of his 2010 letter.

In a November 2010 email to Wayne Weart, then the state pharmacy association president, Lewis McKelvey, then-president of the Society of Health-System Pharmacists, said he wanted to share Harrell’s letter with the leadership of Weart’s group to, among other things, “consider an ethics complaint against Mr. Harrell for the blatant abuse of his ‘capacity as Speaker of the House of South Carolina’ to promote his business interests.”

State law bans public officials from using their office to “obtain an economic benefit interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.”

On Feb. 14, the South Carolina Policy Council, the parent organization of The Nerve, filed a formal complaint against Harrell with S.C. Attorney General Alan Wilson asking his office to investigate whether Harrell:

  • Used his office for his financial benefit or that of his family business;
  • Used campaign funds for personal purposes;
  • Failed to maintain required records documenting his campaign expenditures;
  • Adequately itemized campaign reimbursements as required by state law; and
  • Violated state law by appointing his brother to a state judicial screening panel.

Wilson’s office forwarded the complaint to the State Law Enforcement Division (SLED) for a preliminary inquiry. The status of the inquiry is unknown; SLED typically does not comment publicly on matters referred to the agency.

Harrell has denied publicly that he has done anything wrong, and he has not been charged with any criminal or administrative violations.

Palmetto State Pharmaceuticals was incorporated on Dec. 15, 2005; the company was registered with the state by Harrell’s brother, John Harrell, a Charleston attorney, Secretary of State records show. After becoming the House speaker, Bobby Harrell appointed his brother to the S.C. Judicial Merit Selection Commission, a 10-member panel appointed by legislative leaders to screen and nominate candidates for judicial seats.

Efforts Monday by The Nerve to reach John Harrell were unsuccessful.

On April 3, Grimm – Bobby Harrell’s nephew – signed “articles of dissolution” for Palmetto State Pharmaceuticals, indicating that the company’s shareholders unanimously cast its 100 votes – one vote per outstanding share – to dissolve the company, Secretary of State records show.

The same unanimous vote was recorded in the “articles of revocation of dissolution” signed by Harrell on May 13.

The paperwork filed with the Secretary of State’s Office doesn’t identify any of the owners of the company’s 100 outstanding shares; Harrell’s income-disclosure forms filed with the State Ethics Commission from 2008 through 2011 list him as the owner of the company. No reasons were given in the paperwork for dissolving Palmetto State Pharmaceuticals or the later reversal of that decision.

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