Secrecy Shrouds Boeing and Other Deals

January 15, 2010

Investigative Reports

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The NerveNo.

That’s often the favorite word of state and local government officials when asked to reveal details of taxpayer-funded incentives given to businesses.

Over the past two months, The Nerve submitted 35 requests under the state Freedom of Information Act to S.C. lawmakers, state agencies and counties seeking information on the Boeing incentives package and other companies that have received tax breaks over the years.

To date, 18 requests have been denied in totality and another seven partially rejected. Not only have officials refused to reveal details on the Boeing deal, but they won’t even release information on breaks given to certain companies that no longer exist in South Carolina, such as Mack Trucks, which came to the state nearly a quarter century ago.

Only seven requests were granted without any stated exceptions – virtually all from county agencies. Another county said it couldn’t locate the requested records.

Two requests are pending. South Carolina’s Freedom of Information Act is weak in part because it requires government agencies only to acknowledge within a 15-business-day deadline that they received a request, but not necessarily to provide the requested records within that period.

Denying FOIA requests is part of the culture of government secrecy surrounding incentives deals. Negotiations on the front end and finalized agreements on the back end typically are done behind closed doors. And even if agreements are eventually released, taxpayers aren’t informed about the specific costs of certain incentives because they are considered private tax records.

In the Boeing deal, eight top-ranking or key legislators in the negotiations rejected The Nerve’s request for the incentives agreement; cost-benefit analyses, and all written communications on the deal, including e-mails, to or from them or their staffs.

Both the Senate and House delete e-mails after 180 days, according to their e-mail retention plans. There is no statewide comprehensive plan regarding the retention of official state e-mail.

In a written response to The Nerve, Senate lawyer Michael Hitchcock said the FOIA allows exemptions for incentives agreements and related documents that haven’t been finalized, and “working papers” of General Assembly members and their staffs.

Hitchcock said he was responding to separate FOIA requests sent to Senate President Pro Tempore Glenn McConnell, R-Charleston; Finance Committee Chairman Hugh Leatherman, R-Florence; Senate Majority Leader Harvey Peeler, R-Cherokee, and Berkeley County Republican Sens. Larry Grooms and Paul Campbell.

House Clerk Charles Reid, an attorney, gave the same reasons in denying FOIA requests on behalf of House Speaker Bobby Harrell, R-Charleston; Ways and Means Committee Chairman Dan Cooper, R-Anderson; and House Majority Leader Kenny Bingham, R-Lexington.

State law, however, doesn’t require officials to exempt incentives agreements that aren’t finalized.

Hitchcock, responding to a separate FOIA, said McConnell and Leatherman were not “in possession of any documents” relating to a detailed Board of Economic Advisors cost-benefit analysis that they publicly claimed was provided to the General Assembly before their Oct. 28 vote on the Boeing incentives legislation. Reid, responding on behalf of Harrell, gave a similar response.

Those FOIA requests did not ask for any specifics of the BEA analysis. Rather, The Nerve sought written records, including e-mails, that only mentioned the analysis.

Seven of the eight lawmakers also didn’t respond to a separate written list of general questions about the BEA analysis. Campbell was the only lawmaker to contact The Nerve directly after receiving the questions and FOIA request, though he said he never saw the incentives agreement or analysis.

The Governor’s Office also declined an FOIA request to release the incentives agreement. It did provide The Nerve with a 70-page packet of documents, though it was mostly known background material on the Boeing project, a handful of routine e-mails to or from chief of staff Scott English and spokesman Ben Fox, and congratulatory letters from various officials to Boeing’s CEO.

No e-mails or other written records from the governor were provided, though The Nerve requested them. In a written response denying those records and the incentives agreement, Sanford’s chief lawyer, Swati Patel, cited FOIA exemptions for incentives agreements and other contracts that haven’t been finalized.

Likewise, the S.C. Budget and Control Board, Department of Commerce and Treasurer’s Office declined FOIA requests for the incentives agreement, citing those exemptions. Requests for written communications from Commerce Secretary Joe Taylor and Treasurer Converse Chellis on the Boeing deal also were rejected.

Chief Commerce lawyer Karen Manning denied two FOIA requests for a dollar-amount list of incentives given to various companies over the years, citing a 1996 state Attorney General’s opinion that said an agency doesn’t have to “create a record where the record does not otherwise exist.”

Manning also wouldn’t release incentive agreements for several companies, including Mack Trucks, that no longer have S.C. plants, contending the law before 1998 exempts from disclosure “all information related to industrial recruitment.” She did offer to make a “good faith” search of records for the defunct Air South airline, but only if The Nerve first deposited $205.

Manning quoted a search fee of $45 per hour, though the FOIA requires that records be furnished at the “lowest possible cost to the person requesting the records.” The Nerve did not pay the $205 deposit and obtained Air South documents through an FOIA to Lexington County for $15.

The Commerce and Treasurer agencies also found a new roundabout way to deny FOIA requests.

Commerce spokeswoman Kara Borie and Treasurer spokesman Scott Malyerck each required The Nerve to submit a list of certain incentive-related questions under the FOIA. But the agencies in subsequent written responses denied the requests.

The reason, according to them?

The law doesn’t require officials to respond to questions.

Reach Brundrett at 803-779-5022, ext. 106, or rick@scpolicycouncil.com.