Ethics Category

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LOD: Koch Bros., Coca-Cola & ALEC

Thursday, July 14th, 2011

The American Legislative Exchange Council brings together corporations (from Koch Industries to Coca-Cola), conservative state legislators, and rightwing think tanks to fabricate model bills that advance their common interests: reduce government regulation and taxes; increase the transfer of wealth from average Americans to the super rich. ALEC working groups, research memos and draft bills push for predatory lending and against EPA regulating greenhouse gases, for restricting access to voting and against living-wage standards for workers. A treasure trove of 800 model bills has just been uncovered by the Center for Media and Democracy, and the Los Angeles Times provides good examples of how the bills ripple through state legislatures, often without being linked to the shadowy organization – but they’re backed up with millions in campaign contributions by ALEC members. Common Cause is challenging the organization’s claim on its IRS reports that it does zero lobbying. You’re invited to sign Common Cause’s petition calling on the IRS to investigate ALEC for misusing its tax-exempt status.


LOD: A Pause to Raise Money

Tuesday, June 28th, 2011

While the NC General Assembly is on a 24-day recess, House Republicans are taking quick advantage of a loophole in state law to sponsor a major fundraising event this Wednesday and solicit contributions of up to $5,000 from PACs that are barred from giving while the General Assembly is in session. The event looks like a shakedown of lobby groups and PACs whose favorite legislation just passed or is still pending. As our press release says, “This kind of fundraising symbolizes the pay-to-play culture that Republicans said they would stamp out if they won control of the General Assembly.” It’s understandable that candidates need to raise funds, but they should also be working to change the money-dominated system, not pushing the edge of the law or promising to make change and then making things worse. Several Democracy North Carolina staff members and summer organizers are joining a protest of the GOP fundraising on Wednesday, June 29, from 5:00 to 6:30 PM. You can join, too, on the sidewalk at 34 West Franklin St., Raleigh, across from 18 Seaboard Restaurant, site of the fundraiser (near Peace College).


LOD: Pay-to-Play Harms Public Health

Wednesday, June 15th, 2011

Pay-to-play politics can be petty – or deadly serious. The Wilmington Star-News reports that state Sen. Thom Goolsby received a $4,000 donation from the head of the city’s home builders association and shortly thereafter introduced a bill in the General Assembly that the association’s lobbyist had prepared. The bill overrides a city policy about how the Wilmington convention center is rented to groups. That policy hardly deserves statewide attention, but the Goolsby/builder interaction does, because the two men risk being charged under the state’s anti-bribery law if “it could reasonably be inferred that the thing of value [the $4,000 donation] would influence the legislator in the discharge of the legislator’s duties” (NC General Statute 120-86). Meanwhile, one of the biggest campaign donor’s in the state, Duke Energy, joined several other businesses in pushing a surprise bill yesterday that will stop North Carolina from regulating toxic chemicals released into the air by power plants, paper factories, steel mills, etc. This example of arrogant special-interest legislation illustrates the grave consequence for people’s health of pay-to-play politics. On the national level, the Koch brothers are the poster boys of using their money to gain policies that help their businesses and personal fortune at the expense of others’ health and safety. A fascinating, horrible case in point: they’ve used their clout for years to prevent proper regulation of formaldehyde as a carcinogen, costing untold damage.


LOD: Shotgun Merger, Ouch!

Thursday, June 2nd, 2011

Earlier this week, Democracy North Carolina released a report that sharply criticized a proposal jammed inside the state Senate budget to merge and shrink the three agencies that oversee elections, ethics, and lobbying. We’re pleased to report that the proposal, which many others also rebuked, is no longer a part of the Republican budget plan. The Senate passed the budget bill today (H-200) on a party-line vote and it goes to the House tomorrow for final agreement and then to Gov. Perdue for her possible veto. In our report, we pointed out that budget cuts from last year have already seriously impaired the ability of these watchdog agencies to do their jobs. For example, due to staff shortages, the State Board of Elections has not yet processed 42% of the campaign finance reports filed by the state legislators elected in 2010, much less audited them for mistakes and possible criminal violations, as required by law. Unfortunately, another proposal – this one in H-710 – is still alive; it calls for a shotgun merger of these agencies by January 1, 2012, which would create havoc throughout next year’s election, whether by design or accident.


Merger Would Cripple Campaign Finance Disclosure

Tuesday, May 31st, 2011

IMPORTANT UPDATE: We are pleased to confirm that the newest version of the Senate budget DOES NOT include a provision to combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office as described below. We are hopeful that this bad idea will be permanently shelved in favor of preserving disclosure and transparency.

For Release Monday, May 30, 2011

Contact: Bob Hall, 919-489-1931

Shotgun Merger of Agencies Shields Officials from Scrutiny, Hundreds of Campaign Reports Are Already Not Audited

A nonpartisan watchdog group is sharply criticizing a proposal in the state Senate’s budget bill to merge and cut the funding for three agencies that now oversee the ethical conduct and campaign activities of state legislators, thousands of other public officials, and hundreds of lobbyists.

The proposal would combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office into a new agency by January 1, 2012, and put it under the control of General Assembly leaders. The newly created State Board of Elections and Ethics would have a smaller staff, less money and a nine-member board with six members appointed by legislative leaders and three by the governor.

“These are the agencies that guard the public’s trust in government. They hold officials accountable for the honest performance of their duties, and they’re already straining to do their jobs right with limited resources,” said Bob Hall, executive director of the Democracy North Carolina. “The way this merger is being pushed so rapidly, crammed inside a budget bill without a thorough study, is completely irresponsible and highly suspicious. You have to wonder if the Republicans are trying to cripple these agencies and throw them into a state of confusion during the upcoming election.”

The new agency would have 20 fewer positions (15 currently filled) and $1.4 million less a year* to register voters, administer elections, oversee the conduct of public officials and political appointees, regulate lobbying and campaign financing, and enforce more than a thousand pages of state law.

Hall said his concern over the merger was heightened after discovering one area where funding cuts are already blocking public accountability and transparency. A review by Democracy North Carolina of files at the State Board of Elections found that hundreds of campaign finance reports for candidates to the General Assembly in 2010 have not yet been audited, in violation of state law.

“The public has a right to know how money is moving through our election system, who’s cheating and who wants to buy influence,” said Hall. “More cutbacks and this shotgun merger will just shield politicians from scrutiny and reduce transparency, just the opposite of what Republicans promised.”

NC General Statute 163-278.24 says campaign reports must be examined “within four months after the date of each election” to “determine whether the statement conforms to law and to the truth.” Candidates file up to six reports during an election cycle to disclose details about their contributions and campaign spending. But due to budget cutbacks, the State Board of Elections has been forced to lay off clerical and other staff, leading to a large backlog of reports to analyze.

Democracy North Carolina discovered that 651 (44%) of the 1,492 reports filed by the winning and losing legislative candidates in the 2010 general election have not even been entered into a database for preliminary analysis by the Board of Elections staff, much less been audited for errors, missing information, and possible criminal violations.

Paper copies can be viewed through the Board’s website, but some are illegible and it’s impossible to perform the required audit until the information is keyed into the Board’s database. Getting the information from the disclosure reports into the Board’s database is the first step of the auditing process and also makes campaign contributions accessible in a searchable format on the Board’s website.

Hall noted that the Board’s database still does not contain any of the campaign reports for 2009 or 2010 for 49 of the 170 General Assembly winners, including Senate Majority Leader Harry Brown and House Majority Leader Paul Stam. Paper copies of the reports were submitted but they remain unprocessed.

Altogether, 405 of the 960 reports filed by the 170 legislative winners in 2010, or 42% of the reports, have not been entered into the database for processing and have not been audited.

In addition, hundreds of reports for political action committees (PACs) and local and state political parties have also not been entered into the Board’s electronic files for processing.

(You can view a committee’s report at and see if the report is only an Image of the paper report or if the Data has been entered into the Board’s data file.)

“There’s a perception that record amounts of money flooded the General Assembly elections in 2010, but we still don’t have a handle on where it all came from, who deserves kudos for reporting accurately, and who’s violating the law by withholding information,” said Hall.

“The 2012 election will be unbelievably expensive, with hot national and state contests and more spending by secretive groups, corporations and unions following the Supreme Court’s decision in the Citizens United case,” he said. “Some politicians, but not all, are just as happy to keep us in the dark.”

Hall noted that many freshmen Republicans were elected on a promise to increase transparency in government, but they submitted their disclosures report in paper form only, rather than expedite the audit process by filing them electronically.

“Instead of crippling agencies charged with protecting honest government, more candidates should be required to file reports electronically to expedite the auditing process,” he said.

*The Senate’s proposed state budget would make the following cuts:

AGENCY                                           FUNDS CUT        STAFF POSITIONS CUT

State Board of Elections                   $1,002,408    14 positions (10 currently filled)

State Ethics Commission                  $   219,519      2 positions (1 currently filled)

Sec. of State Lobbying Division        $   200,791      4 positions (4 currently filled)

Totals                                                  $1,422,718    20 positions (15 currently filled)

A List of Legislators and the Status of Reports Entered into Database as of May 15, 2011 is included  in this downloadable  file.


Consumer Finance Bill Linked to Campaign Donations

Tuesday, May 31st, 2011

For Release Thursday, May 26, 2011

Contact: Bob Hall, 919-489-1931

Legislation to Increase Charges on Small Loans Follows Surge in Contributions from Consumer Finance Industry

A campaign finance watchdog organization is raising questions about whether an unusual pattern of contributions given by donors in the consumer loan business is connected to a bill now moving through the North Carolina General Assembly that will benefit their industry.

During the last election, donors with consumer finance companies gave most of their campaign contributions to Democratic legislators until late August 2010, when they suddenly switched and began pouring more than $100,000 into the campaigns of 15 Republican newcomers challenging Democrats in hot races, as well as the top three Republican leaders in the General Assembly.

“The industry made a substantial gamble in 2010 by shifting its money from incumbent Democrats to Republican challengers and now it appears to be reaping the benefits of that investment with a bill to enrich the industry,” said Bob Hall, director of Democracy North Carolina, a nonpartisan watchdog organization that has filed campaign finance complaints against both parties in the past.

Click here for the industry’s top donors and recipients. Click here to see all its 2010 donations.

Harry Melton, president of Amity Finance in Gastonia, told Hall that his industry’s trade group, the Resident Lenders of NC, gets recommendations from its lobbyists in Raleigh about who to support with donations. “We have lobbyists that make recommendations to us,” said Melton. “On an individual basis, they let us know who would be favorable to our industry.”

Melton has served on the Resident Lenders PAC committee, but like many industry leaders, he gave more personal donations to legislative candidates in the two months after August 15, 2010, than in the past decade – including to candidates far from his home – with the goal of electing “friendly” state legislators. He is now following progress on a bill in the state House to help his industry.

The bill, H-810, would allow consumer finance companies to raise interest rates to 36% on small loans and increase other fees. The companies say they need to earn more from their loans, but the head of the state North Carolina Banking Commission says the industry is profitable and the legislation is not needed. Representatives of military bases in North Carolina and a coalition of consumer groups also oppose the legislation.

Hall said Republican leaders have kept the bill moving forward despite the formidable opposition. In April, House Republican leaders changed plans and decided to skip routing the bill through the Finance Committee, where its fate seemed in question because of bipartisan opposition.

“It’s hard to explain what’s driving this legislation without following the money,” said Hall.

The new Republican House Speaker Thom Tillis and Majority Leader Paul Stam received $27,200 from consumer finance company donors, including $2,000 after the election was over from Security Finance Corporation PAC, the political action committee of a South Carolina loan business.

In the spring of 2010, Security Finance PAC gave 100% of its money to incumbents, with 75%

going to Democrats, but in late August it changed strategies and began giving all its money to Republicans, with 75% going to 14 challengers of incumbent Democrats.

“That’s very unusual,” said Hall. “More than 90 percent of PAC money goes to incumbents in North Carolina, because those officials are in a position to deliver benefits immediately and when they run for reelection, they have better than a four-to-one chance of winning.”

The Residents Lenders PAC, which represents commercial loan companies, also began giving to Republicans challenging Democrats in September 2010. Six Republican challengers received a total of $4,000 from the PAC, plus $3,500 from Security Finance PAC and more than $25,000 from individuals associated with finance companies in North and South Carolina.

Altogether, 19 Republican legislative candidates – and no Democrats – received five or more donations from finance company PACs and executives, many living hundreds of miles from the candidate’s district. Many donors had not given in a legislative contest in the previous 10 years.

According to the analysis by Democracy North Carolina:

● Consumer finance executives and their PACs donated $65,600 to 15 Republican legislative candidates in highly contested races, including 12 held by Democrats and three open seats. Only 3 of the 134 donations to these 15 candidates were made before the middle of August 2010.

● In addition, these donors made 47 contributions totaling $45,450 to the soon-to-be Senate President Pro Tem Phil Berger, House Speaker Thom Tillis and House Majority Leader Paul Stam. All but 2 of the contributions were made after mid-August.

● By contrast, incumbent Senate President Marc Basnight, Speaker Joe Hackney and Majority Leaders Martin Nesbitt and Hugh Holliman received a total of only $3,600 after mid-August – four  donations from the Resident Lenders PAC and nothing from consumer loan executives.

● Before mid-August 2010, the consumer finance donors and their PACs gave more money to Democratic legislative candidates and committees than to Republicans – $15,550 versus $12,300.

After August 15, the donors gave $126,670 to Republican legislative candidates – more than seven times the $17,400 they gave to Democratic candidates in the final months of 2010.

● Altogether, these consumer finance donors and their PACs gave $172,320 to legislative campaigns in the 2010 election cycle, compared to $30,250 in 2008 and $77,500 in 2006.

● House Speaker Thom Tillis and Republican Majority Leader Paul Stam received nothing from consumer finance donors for the 2010 election until late August. After that, they received nearly three dozen industry-related contributions – a total of $13,950 for Stam and $13,250 for Tillis.

● Of the 17 finance company executives who gave four or more donations to different legislative candidates in 2010, 8 had not made a reported donation to a legislative candidate in the past decade (L. Elmer Britt, David S. Hicks, R. A. “Pete” James, Harry R. Melton, Larry W. Shive, Thomas D. Payne, Daniel L. Thompson, and R. Wayne Smith ) and 6 gave at least 4 times as much as they had given to legislative candidates in any previous election cycle this decade (Gail N. Blanton, Priscilla D. Butler, Glen H. Hall, Royce E. Everette Jr., Al J. Pridgen Jr., and R. David Reese).

● In addition to 3 Republican candidates who won open Senate seats (Thom Goolsby, Brent Jackson, and Bill Rabon), 12 Republicans running against incumbents received multiple donations from finance company donors, often from individuals many miles away; all 12 won: For House – Jeff Collins, Ralph Hise, Stephen LaRoque, Tim Moffitt, Tom Murry, Norman Sanderson, and Mike Stone; for Senate – Jim Davis, Rick Gunn, Wesley Meredith, Louis Pate, and Dan Soucek.


Tuesday, April 19, 2011

Tuesday, April 19th, 2011

Blue Cross of NC is the main backer of a bill to create the health insurance exchange in North Carolina that will help implement the national health reform law. The intent of an independent exchange is to give more people access to insurance coverage, boost competition and lower premium costs, somewhat akin to Travelocity for air fares. But the bill gives Blue Cross and its medical industry allies unusual control over the exchange and an elaborate new process for expanding the insurance marketplace. Something smells funny. So Democracy North Carolina took the advice of “follow the money” and – ouch! – it turns out the bill’s chief sponsors are the top two recipients of Blue Cross PAC money in the General Assembly. Explore the questionable ethics of this legislation in our new report and visit the website of Citizens for Responsible Health Care to learn more.


Wednesday, April 13, 2011

Wednesday, April 13th, 2011

Sweethearts of the Tea Party elected to Congress last November have quickly become water carriers for heavy duty lobbyists and special interests. And they are cashing in like the veterans. So much for their promises of integrity or changing the system; if anything, these guys are even deeper in the pocket of Wall Street and other corporate interests than their predecessors. Here’s how the first of a multi-part investigation into the dealmakers begins: “On a wintry mid-March afternoon at a sparsely attended meeting of a House Financial Services subcommittee, a handful of legislators heard testimony on five bills that would repeal or replace parts of last year’s sweeping financial services reform legislation . . . . The commonality among the five bills? They were all sponsored by freshman Republican legislators holding coveted committee spots, who were showered with campaign donations from financial industry groups immediately after the November elections, according to an analysis by The Fiscal Times and the Center for Responsive Politics.” Another part of the series examines the close correlation between special-interest donations and the committee a member of Congress serves on. It’s no wonder that Americans believe lobbyists and corporations have way too much power, according to a recent Gallup poll.


Friday, April 8, 2011

Friday, April 8th, 2011

The Center for Public Integrity has just released an in-depth investigative report on the sprawling, worldwide business operations of the Koch family, patrons of far-right groups descending from the John Birch Society. Ironically, brothers David and Charles Koch are happy to take government subsidies and spend millions to lobby for special tax breaks and protection from competitors, while defending their right to produce poorly-regulated poisons. Probably their best known subsidiary is Georgia Pacific, the paper and timber products company. The Koch empire is extra hard to hold accountable because the stock is not publicly traded. Importantly, in a case involving Home Depot, the Securities and Exchange Commission has just ruled that stockholders do have the right to place resolutions about corporate political spending on the agenda for a vote. That decision could open the door for more shareholders to demand oversight of post-Citizens United corporate politicking – but the Koch family need only ask themselves what’s best for the world.


Wednesday, April 6, 2011

Wednesday, April 6th, 2011

Duke Energy is feeling heat from both sides of the political spectrum. The company wants to become the largest electric utility in the US, through a merger with Progress Energy, but conservatives want Duke CEO Jim Rogers fired. They don’t like his support for regulating carbon emissions, his executive team’s multiple ethical violations, and (probably most galling) his pledge of the corporation’s treasury to help secure financing for the National Democratic Party Convention in Charlotte next summer. Meanwhile, an eclectic mix of NC progressive-leaning groups has formed Consumers Against Rate Hikes to fight a pending proposal by Duke and Progress to push all the risks of building new nuclear power plants onto ratepayers. The coalition’s website is loaded with background information and action steps.


Thursday, March 24, 2011

Thursday, March 24th, 2011

A significant number of legislators in Raleigh seem determined to help big political donors gut regulations and overturn state laws that protect consumers, public health and the environment. The poor state of accessible campaign finance data makes it difficult to track the pay-to-play culture, but Democracy North Carolina has highlighted the undue influence in several cases involving telecommunications firms, coastal landowners, and billboard companies. Despite promises by the new Republican leaders to cut the strings to big donors, each day seems to bring another proposal that benefits a group of private patrons at the expense of the common good. Even Republican strategist Carter Wrenn flogs Sen. Harry Brown (R-Onslow) for helping vacation homeowners with special-interest legislation that could cost taxpayers millions of dollars. (For more about Sen. Brown and coastal donors, see the charts with our report.)


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