On June 28, the six-member House Ethics Committee will begin to decide whether or not Nikki Haley broke the law. The question that this sextet of lawmakers will ask: Did Haley illegally lobby for a client while she was a member of the state House of Representatives? And they've called roughly a dozen witnesses to testify in order to help them find an answer.
The House Ethics Committee, which regulates the behavior of current and former House members, will hear from witnesses who are allegedly familiar with Haley's one-time job at Lexington Medical Center and engineering firm Wilbur Smith and Associates. And it is what she did for those companies that is the subject of the case against her. But Haley herself will not be among those called to sit before the six-member panel — while her accuser, Republican activist John Rainey, will be.
In November, Rainey filed a lawsuit against Haley. Although the case was dismissed by a state court in March, it has since been taken up by the Ethics Committee.
Rainey's complaint revolves around whether Haley broke any laws as a member of the S.C. House either by lobbying a state agency on behalf of the hospital or by doing secret consulting work for Wilbur Smith and failing to properly abstain from legislation benefiting the engineering firm. Both occurred during the time she represented Lexington County as a Republican in the S.C. House prior to becoming governor in 2010. At the heart of the matter is the fact that no one has said exactly what Haley did for either Wilbur Smith or Lexington Medical. But the members of the committee want to find out.
In 2008, Lexington Medical president Mike Biediger created a $110,000 hospital foundation fundraising job for Haley even though she had no previous experience. At the time, the hospital was seeking legislative approval for a heart surgery center. The House and Senate voted to fund the heart center, but then-Gov. Sanford vetoed the bill. According to e-mails that have been made public, Haley left the hospital job on rocky terms and hired an attorney to negotiate a severance package after she was let go.
In the case of Haley's time at Wilbur Smith, both the governor and the engineering firm have been silent about what she did to earn the $40,000 that the firm, which does business with the state, gave her in consulting income. Haley voted on at least one measure that impacted Wilbur Smith regarding the firm's work on an abandoned state farmers market project, according to the complaint against Haley.
For Rainey, this lack of information is troubling. From his home in Camden, the former chair of the revenue-projecting S.C. Board of Economic Advisors who recruited Mark Sanford to run for governor has launched a series of private investigations into the current governor's previous business dealings. As result of what he has uncovered, he believes that Haley may have used her influence as a lawmaker to benefit the entities that paid her, even going as far as to call her "the most corrupt person to occupy the Governor's Mansion since Reconstruction."
"But for Haley's public office as a member of the House, [Lexington Medical Center Foundation] would not have received thousands of dollars from lobbyists and lobbyist principals," Rainey said in the November complaint.
He also accuses her of directly lobbying, which is illegal for lawmakers to do. As evidence, he points to an e-mail he uncovered that Haley sent to Lexington Medical president Biediger. In a response to a question about the status of the heart surgery center's certification efforts, Haley wrote, "We have some work to do not only to switch votes but to hold the ones we have. We are as close as we are going to get and can't afford to leave one stone unturned. We were all given assignments and are working on them. Fingers crossed!"
Haley and her attorneys have denied that she did anything wrong while working for Lexington Medical and Wilbur Smith, saying that she was only doing what any lawmaker would do to benefit his or her constituents. Not surprisingly, Haley's attorneys have framed the ethics case against Haley as a political witch hunt, a charge that seems credible to some. After all, the firm Rainey hired is headed by state Democratic Party Chairman Dick Harpootlian.
Culture of corruption
It's been said that the best defense is a good offense, and there's no question that Haley's attorneys have gone on the offensive. In the first written defense from the governor's lawyers to the House Ethics Committee, they essentially proclaimed: Clear Haley or we'll throw you all under the bus.
On March 30, Haley's attorneys wrote to the chairman of the House Ethics Committee, telling him that Haley's "business activities and conduct are commonplace in the Legislature." The governor's lawyers added, "To find otherwise would not only impugn the integrity of many other members of the General Assembly, but also that of many of South Carolina's best corporate partners: BlueCross BlueShield of South Carolina, Michelin, AT&T, Time Warner Cable, and several others."
The defense came as a shock to political observers.
"Politicians used to hide the fact that they were in bed with big corporations," says Ashley Landess, president of the limited-government think tank the S.C. Policy Council. "Now they brag about it? And expect us to celebrate it? And now they tell us not to question it or we're going to make these big corporations angry? That's crazy."
Following that letter to the House Ethics Committee, Butch Bowers, an attorney who has represented Haley in multiple hearings before the committee, doubled down on the threat to expose legislators, pledging to provide the ethics panel with a list of such lawmakers who work for lobbyist principals. So far, no such list has been made public.
Even more bizarre, Haley's lawyers have argued that Haley could not have lobbied because doing so would be against the law. "What matters is her conduct," Bowers said. "And her conduct confirms that she didn't lobby. And as a matter of law she couldn't have lobbied."
It's an interesting defense: A lawmaker can't lobby because it's against the law.
John Crangle, a Limestone College political science professor and retired attorney who has run the state's chapter of Common Cause for more than 25 years, recalls one person who was a lobbyist and a lawmaker at the same time, former House member Frank McBride. Crangle says that McBride was was paid $25,000 a year to lobby for Benedict College. "He was one of the guys caught up in Operation Lost Trust and ended up in the federal pen," Crangle says. "So the history of people being paid money to function as a lobbyist at the same time as they're a legislator ... the only person I know of that's done that before has ended up in the federal pen." It's possible that the crux of the case could come down to exactly what the definition of a lobbyist is in South Carolina.
While the State Ethics Commission does not have jurisdiction over current or former House and Senate members, it does regulate lobbyists.
On July 18, its eight commissioners will discuss a question about whether the state agency charged with enforcing the State Ethics Act has the jurisdiction to decide if what Haley did was lobbying.
Smells kind of funny
Much of what has transpired so far in the case against the governor is unprecedented.
This is the first time that the House Ethics Committee is investigating the state's sitting chief executive. Furthermore, this is the first time the notoriously secretive panel has had to conduct its business in public. That change in policy came after the House voted unanimously to make public any complaint they investigated. Not so coincidentally perhaps, the House vote was taken and passed just one day before the ethics panel was set to decide on whether the complaint against Haley was worthy of an investigation.
Asked about the timing by a reporter for The Nerve, an online news outlet of the South Carolina Policy Council, the committee's vice chairman, Laurens GOP Rep. Mike Pitts, said, "Smells kind of funny, don't it?"
Even funnier perhaps, the day the House Ethics Committee voted unanimously that the Haley case warranted an investigation, the panel immediately voted to dismiss the complaint, a move that sparked public outcry and a challenge to the vote by Columbia Democratic Rep. James Smith, who wanted the case reopened. Smith argued that the vote made no sense: How could the Ethics Committee declare that the case needed to be investigated and then vote to dismiss it entirely? Many were baffled by the conflicting decisions. (Rainey issued a similar sentiment)
Smith urged the panel to interview people with knowledge of Haley's behavior in the House and seek subpoenas for documents from the hospital and the engineering firm about the work she did.
"There should be no fear of information," Smith said, adding that public trust in the committee was at stake.
Rainey, Haley's accuser, also blasted the panel for its vote to halt an investigation. "It defies all reason or sense of justice that just moments before the committee dismissed the case, it voted unanimously that probable cause existed to investigate," he said in a statement. "In light of such tortured logic, this can only be explained as a political decision to paper over the culture of corruption infecting our public institutions."
In response to the decision, Rainey sent a document dump of new information to the committee regarding Haley's business dealings that he'd uncovered via a Freedom of Information Act request and other sources, providing a list of roughly 20 people he thought the panel might be interested in interviewing and why. Those included lawmakers, private citizens, and lobbyists and officials at the hospital and engineering firm.
Following the dismissal of the case, it was revealed that the panel hadn't really even looked too hard at it. The chairman of the committee, Aiken County GOP Rep. Roland Smith, said in media interviews that the panel did not do much in terms of an independent investigation before dismissing the case. Basically, the panel's members had taken lawyers for Haley and the hospital at their word that the governor didn't lobby for either Lexington Medical or Wilbur Smith.
But the House Ethics Committee suddenly had a change of heart. On May 30, the panel heard Democratic lawmaker Smith's resolution to do a thorough investigation. They voted unanimously to reopen the case. (Rainey's response here)
Could the case go to the attorney general?
Aiken County Republican Rep. Roland Smith, a 79-year-old retired postal worker and minister, chairs the House Ethics Committee. The other five members of the panel are lawmakers who don't make many waves in the House. The State newspaper even went as far as to call them "worker bees."
During the public committee hearings, Richland County GOP Rep. Joan Brady maintained that while the lawmaker panel acts as the judge and jury when deciding the fate of someone they are investigating, she's not sure they really have what it takes to do so.
As if to underscore her point, during one hearing, committee member Rep. Mike Gambrell of Anderson County said, "This stuff seems just a little over the head for a country boy," adding that the case had turned into a "political football."
After all, Brady has said that those on the panel are lawmakers, not investigators. She has repeatedly brought up the option of turning the case over the to state's Republican Attorney General Alan Wilson, who recently indicted and successfully prosecuted former Republican Lt. Gov. Ken Ard on seven counts of public corruption charges.
Where it stands
On June 28, those who the House Ethics Committee have decided to call as witnesses will testify before the panel. The State reports that members also requested documents from two payday lending companies that donated to the Lexington Medical Center foundation while Haley was a fundraiser.
That's likely because at the time Haley solicited the donations from the payday lenders, she was chairing an influential business subcommittee that was dealing with whether or not to clamp down on payday lenders statewide.
Haley and her subcommittee eventually put the brakes on restricting payday lending, leading The State to ask, "Was there a connection between Haley the regulating legislator and Haley the fundraiser, as in you contribute to my foundation, and I'll protect your business?"
Those are the types of questions observers are hoping to see answered this week. Whether those answers will lead to any concrete resolutions remains to be seen.
A Cavalcade of Witnesses
These are the some of the witnesses subpoenaed to testify whether Gov. Nikki Haley illegally lobbied while a member of the S.C. House of Representatives:
• John Rainey, the GOP activist who filed the complaint against Haley
• Michael Biediger, president and CEO of Lexington Medical Center
• Duncan McIntosh, general counsel for BlueCross BlueShield of South Carolina (the company donated to the Lexington Medical Center with funds solicited by Haley)
• Billy Boan, McGuire Woods Consulting
• James D'Alessio, vice president of governmental affairs for BlueCross BlueShield of South Carolina
• Tony Denny, a Columbia lobbyist who runs Denny Public Affairs
• Robert Ferrell, vice president of CDM Smith (successor firm to Wilbur Smith. He hired Haley.)
• Gregory Harris, Columbia attorney
• Earl Hunter, former S.C. DHEC director
• Dan Jones, chairman of Lexington Medical Center