S.C. Ethics Commission Appointments in Violation of State Law

July 29, 2013

Investigative Reports

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Got EthicsTwo of Gov. Nikki Haley’s appointees earlier this year to the State Ethics Commission, which recently cut a deal with the governor over multiple alleged campaign-reporting violations, were not confirmed by the S.C. House as required by state law, a Nerve investigation has found.

Commission officials won’t say whether Haley’s appointees – attorneys James Warren of Greenville and Twana Burris-Alcide of Rock Hill – participated in the July 15 “consent order” involving the reporting violations, though records show Warren has participated in at least two commission meetings, while Burris-Alcide has attended at least one meeting.

The commission issued a “public warning” to Haley, who agreed to pay a $3,500 fine based on a reduced list of violations after more than a year of secret dealings between her campaign and the commission, the order shows.

As of this morning, Warren and Burris-Alcide were listed on the commission’s website as being commission members. The website was changed on July 8 – the same day The Nerve published a story revealing that all but one of the nine commission seats were either vacant or held by members whose terms had expired – to reflect that Warren and Burris-Alcide had joined the commission.

Warren and Burris-Alcide filed required statements of economic interests with the commission on March 12 and April 4, respectively, indicating that they had been appointed to the commission.

State law (Section 8-13-310 of the S.C. Code of Laws) requires that the governor appoint all nine commission members, “upon the advice and consent of the General Assembly.” The Nerve’s investigation found that although Warren and Burris-Alcide had been confirmed this year by the Senate (Warren on Feb. 28 and Burris-Alcide on March 21), there were no records that the House had done the same.

Minutes from the commission’s March 20 meeting show that Warren participated in that meeting, which included a closed session for unspecified reasons, though commission Executive Director Herb Hayden said then that Burris-Alcide had “not yet completed  the confirmation.” Warren and Burris-Alcide attended the May 15 commission meeting, which included a closed session, and were identified then as commission members, according to the meeting minutes, which weren’t posted on the commission’s website until after The Nerve’s July 8 story.

Before publication of the July 8 story, The Nerve attempted to find out from Hayden and Deputy Director Cathy Hazelwood if the House had confirmed the appointments of Warren and Burris-Alcide, but received no response to written and phone messages.

The Nerve last week contacted S.C. Rep. Kenny Bingham, R-Lexington and the House Ethics Committee chairman, about the situation and was informed that he would have House legal staff look into the matter. On Thursday, Bingham provided the following written response to The Nerve:

“House staff has confirmed to me that up until these last two appointments from Gov. Haley, both the House and Senate confirmed all previous appointments to the State Ethics Commission. However, it appears that the Governor’s Office inadvertently sent these last two appointments only to the Senate for confirmation. The House will be notifying the Governor’s Office of their oversight in this regard, and we will work with them to resolve this issue.”

When informed Friday by The Nerve of Bingham’s response, Hayden replied in an email, “I was made aware of the issues with the confirmation of Mr. Warren and Ms. Burris-Alcide yesterday.”

Neither Hayden nor Hazelwood, the commission’s chief lawyer, responded to follow-up questions fromThe Nerve, including:

  • Why Warren and Burris-Alcide were listed on the commission’s website as members if they had not yet been confirmed by the House;
  • If Warren and Burris-Alcide participated in any way in the July 15 consent order;  and
  • If so, whether the consent order is legally binding given that Warren and Burris-Alcide were not legally appointed.

Warren, Burris-Alcide and Commission Chairman Phillip Florence Jr. of Charleston did not respond to written or phone messages from The Nerve last week seeking comment. All three are lawyers.

Although appointed this year by Haley, Burris-Alcide already is in “holdover” status, as her term expired on June 30, according to the commission’s website. Burris-Alcide’s term was only for a little more than three months – starting on the day she was confirmed by the Senate – while Warren’s five-year term is listed as beginning on May 31, 2010, and expiring on May 31, 2015, the site shows.

State law (Section 8-13-310) says commissioners who have completed a full five-year term are “not eligible for reappointment,” though the same statute allows members to serve “until their successors are appointed and qualify” – in effect, allowing them to remain indefinitely in “holdover” status.

The commission’s website as of this morning listed two vacant commission seats; two seats with five-year terms expiring in 2010 and 2011 (Florence’s term expired on June 30, 2011); and four seats with terms expiring on June 30, including the seat listed as belonging to Burris-Alcide. Under state law, one commissioner must be chosen from each of the state’s seven U.S. congressional districts (Warren and Burris-Alcide live in the 4th and 5th congressional districts, respectively); the other two are at-large members (including Florence).

Warren is the only person listed on the commission’s site as having an unexpired term. Excluding Warren and Burris-Alcide, the terms of the other commissioners listed on the site – Florence, Richard Fitzgerald of Mt. Pleasant, E. Kay Biermann Brohl of Aiken, Jonathan Burnett of Florence and George Carlton Manley of Simpsonville – began during the administration of former Gov. Mark Sanford.

Asked by The Nerve about the vacant and “holdover” seats on the commission, Hayden said only in his email response on Friday, “Any questions regarding the Governor’s appointment process should be addressed to the Governor’s office.”

As has been his practice with The Nerve, Haley spokesman Rob Godfrey did not respond to written questions for either the July 8 or today’s story.

No Hearing Held

On July 7, 2011, Bridget Tripp, the then-outreach director for the state Democratic Party, filed a complaint with the Ethics Commission alleging that Haley violated state ethics law by failing to provide addresses for campaign contributors in 45 instances during her 2010 election campaign for governor, and failing to report during the same election period, as well as the start of the 2014 campaign cycle, the occupations for non-corporate contributors in 2,354 instances in which donors gave $100 or more – about 60 percent of the nearly 4,000 donations in question.

In total, Haley misreported more than $1.3 million in campaign contributions, Tripp alleged in her complaint. She declined comment when contacted last week by The Nerve.

More than eight months after the complaint was filed, on March 29, 2012, the Ethics Commission announced that it had found probable cause that Haley violated state ethics law, alleging in one count that she “failed to maintain a record of the occupation of each person making a contribution to her campaign” from January 2010 to January 2012, though a specific number was not given. The other six counts alleged that Haley failed to report the addresses of six individual contributors during the 2010 campaign, as well as for the 2014 election cycle.

The Ethics Commission at the time set a hearing for July 18, 2012, on the charges. But nothing was released publicly for more than a year after the March 2012 probable-cause findings.

Whether the scheduled July 2012 hearing for Haley, if it had been held, would have been public is unclear. One section of state law (Section 8-13-320-10-g) dealing with the Ethics Commission says that all “investigations, inquiries, hearings, and accompanying documents must remain confidential until a finding of probable cause or dismissal unless the respondent waives the right to confidentiality.”

But under another section (Section 8-13-320-10-j), a hearing after a probable-cause finding is made “must be held in executive session unless the respondent requests an open hearing.”

The Nerve’s review of the commission’s annual accountability reports from fiscal 2008 through 2012 found that a total of 152 hearings were held during the period, though the documents didn’t indicate how many of the hearings were public.

Haley never requested an open hearing on her Ethics Commission charges, but instead had her campaign work secretly with commission staff over a 15-month period to resolve the matter, the July 15 consent order shows.

Ironically, Haley, a Lexington County Republican, faced a separate, public hearing in June 2012 by the S.C. House Ethics Committee on charges that while she was a House member, she illegally lobbied for the Lexington Medical Center, where she worked as a fundraiser for its foundation, and Columbia-based Wilbur Smith Associates, where was a paid consultant. The Ethics Committee cleared her of all charges following the hearing.

Haley’s spokesman, Godfrey, didn’t respond to The Nerve’s written questions this month about why Haley did not request a public hearing on her State Ethics Commission charges, especially given her public statements on the need for greater transparency in state government.

The July 15 consent order, signed by Haley and Florence, said Haley, “by and through her attorneys, has indicated to the Commission her desire to resolve this matter without the burden of a hearing,” and that to “avoid a lengthy and costly hearing into the allegations, both the Commission, through its staff, and the Respondent (Haley), through her legal counsel, have attempted to resolve this matter through an agreed upon order.”

The order also noted that the commission has “historically resolved matters similarly by consent orders,” though The Nerve’s review of commission accountability reports from fiscal 2008 through 2012 found that there were 61 consent orders issued, less than half the number of hearings (152) held during the same period.

Asked about the apparent discrepancy between the language in the July 15 consent order and the figures cited in the accountability reports, Hayden told The Nerve in a written response, “The language in the order does not state, nor even imply, that a majority of cases are resolved by consent order, only that the Commission has resolved similar cases in a similar fashion.”

Reduced Charges

According to the July 15 order, after “significant due diligence and amendments made by (Haley’s ) campaign,” only one of the 45 contributions cited in the original complaint against Haley did not include a required address, though the order also said Haley’s campaign couldn’t provide evidence that it had obtained addresses for seven other contributions within seven days of receiving the donations, as required by state law.

Under that law (Section 8-13-1312), if names and addresses cannot be determined within the seven-day window, the contributions that were received must be turned over the state Children’s Trust Fund.

The July 15 order also said Haley’s campaign couldn’t find occupations for “several hundred” contributions – as opposed to the 2,354 instances alleged in the original complaint – though it didn’t give a specific number.

State law allowed the commission to fine Haley up to $2,000 per violation, according to the order, though neither Hayden nor Hazelwood would answer The Nerve’s written questions about the maximum-allowed civil fine in her case.

Assuming, for example, there were at least 200 reported contributions that didn’t list donor occupations, and that each contribution in question was a violation, Haley could have faced up to $400,000 in fines for those infractions, The Nerve’s review found.

Under the July 15 order, Haley is required to pay within 30 days of the receipt of the order:

  • A $3,500 fine to the Ethics Commission for the admitted violations;
  • $2,000 to the Ethics Commission to reimburse it for “investigative and administrative costs,” as allowed under state law; and
  • $4,176.78 to the state Children’s Trust Fund as required under state law for the eight cited cases involving the contributors’ addresses. The order pointed out that the amount represented less than 1 percent of the nearly $3.2 million in total contributions received by Haley’s campaign during the review period.

Haley’s spokesman, Godfrey, did not answer The Nerve’s written questions last week about what source of funds that Haley intends to use to pay the fine and costs specified in the consent order.

Asked how the Ethics Commission arrived at the $3,500 fine, Hayden told The Nerve in his written response, “The process by which the order was created is attorney work product and not public.”

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