Leatherman’s Florence Concrete a “Disadvantaged Business Enterprise”?

November 25, 2015

Investigative Reports

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By RON AIKEN

Pouring Concrete

Concrete company of South Carolina’s most powerful politician gets in line for corporate food stamps

If any business ever has met the definition of “advantaged,” it’s Florence Concrete.

Founded by Sen. Hugh Leatherman (R-Florence), who served as its president since joining the Senate from 1981 until 1993, the company has a cool $30 million worth of Department of Transportation contracts under its belt. Since that time, Leatherman has served on the influential Senate Transportation Committee, Joint Transportation Review Committee (which appoints DOT Commissioners), State Infrastructure Bank board (which doles out hundreds of millions in new construction projects), Budget and Control Board (which oversees DOT procurement) and, not least significantly, has chaired the Senate Finance committee (which authorizes DOT’s budget).

Few businesses anywhere, in fact, are so privileged in their position or fortunate in their founding as Florence Concrete, and there is no denying the company has prospered from Leatherman’s power.

When asked about appointing himself to the Infrastructure Bank Board, Leatherman said he simply has an interest in the state’s highway system.

Does he ever.

When the business that has been your life’s work and that you still maintain an undisclosed financial stake in – bridge construction – depends on receiving large government contracts, you’d better be.

So why, then, is it on the list of “disadvantaged” state contractors – contractors that get a critical leg up in bidding on state and federal contracts – a designation created in 1999 to assist minority businesses at a “social and economic disadvantage”?

Turns out, it’s easy.

Hire a female president, give her at least 51 percent ownership and day-to-day control (in theory, at least), and viola – letter of the law meet loophole, meet Hugh Leatherman and Florence Concrete.

HEIGHT OF POWER

How does one become disadvantaged in business?

Turns out, that’s also easy.

Start the business yourself, then guide, control, direct and steer it for decades using the influence of your position in the South Carolina Senate. Maneuver yourself deliberately to have the most control over DOT of any sitting legislator and possibly any legislator who ever sat.

Consider: By virtue of his chairmanships, appointments and committee positions, Leatherman oversees not only the budget of the agency his business profits from by the millions but also handles its procurement issues through the Budget and Control Board, appoints the people who run the agency (including naming his son-in-law, whose business also profits from DOT, to the commission multiple times) and directs the quasi-public funding agency that has the ability to leverage millions in public money, through bonds, into billions worth of new projects you can then direct back to your home county and, of course, your personal business.

What do you do then?

While you step back from the role of president and hire a minority president in your place (with the added benefit of earning DBE certification, which Florence Concrete did back in 2012), you continue to earn benefits as a stockholder to a degree you don’t even have to disclose to the State Ethics Commission, which only requires that you list yourself as owning at least 5 percent of a company’s stock and/or if the value of those stocks is $100,000 or more.

So while Florence Concrete meets the technical definition of Disadvantaged Business Enterprise by virtue of having a female CEO (Shirley Jones, who did not respond to a request for an interview by The Nerve), it hardly faces the challenges of minority-owned and operated businesses, whether by gender or race, that others do – which is the point of the DBE program in the first place.

WHAT IS A DBE, ANYWAY?

From the federal Department of Transportation’s website:

“DBEs are for-profit small business concerns where socially and economically disadvantaged individuals own at least a 51 percent interest and also control management and daily business operations.

African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans, and women are presumed to be socially and economically disadvantaged. Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis.”

On the state’s list of DBE-certified businesses, just above Florence Concrete is Columbia-based Flock And Rally, a public relations and event-management firm founded by entrepreneurs Debi Schadel and Tracie Broom with a staff of one, Chloe Rodgers.

Just below Florence Concrete is Florence Ogburu Enterprises, the official business of Columbia realtor Florence Ogburu, an African-American female.

Surrounded then, at least alphabetically, by the smallest of small businesses with female and minority ownership, Florence Concrete looks like the moral equivalent of Donald Trump getting in line for food stamps.

“Florence Concrete being a disadvantaged business just seems absurd on its face,” said John Crangle of the government watchdog group Common Cause. “It seems strange to me, though, just in general, that the federal government considers a company having a woman as CEO to be at a disadvantage. That seems a bit sexist to me.

“But it’s not surprising to me that Florence Concrete would be taking advantage of the letter of the law and not observing the spirit of it.”

By law, 10 percent of federal funds made available for any Federal-aid highway, mass transit, and technology and research must be expended using DBEs. What does that mean in South Carolina?According to documents obtained by The Nerve through the Freedom of Information Act, in FY 2014-15, DBE firms in the state were awarded $39.1 million in new federal contracts, earned $22.1 million in payments from ongoing contracts and made an additional $35.2 million from completed contracts for a total of $108.9 million in contract revenue. For FY 2013-14, that total was $87.3 million.

By any measure, being a DBE has its advantages — especially if you’re already the most advantaged vendor in South Carolina.

Reach Ron Aiken at 254-4411 or email him at Ron@thenerve.org. Follow him on Twitter @RonAiken and The Nerve @TheNerveSC.