Scoppe: Ethics reform: At a crossroads

Associate EditorMay 19, 2013 

— A YEAR AFTER political scandals launched a cluster of competing study panels and catapulted ethics reform to the top of the 2012 campaign agenda, the Legislature has reached a critical crossroads. What happens in the Senate will determine how strong we can hope our new ethics law to be.

There’s no guarantee that the best provisions of either the House or the Senate plan will become law, but this much is practically guaranteed: Any provisions that do not make it into either version almost certainly will die.

That’s because the final version of the bill will be determined by House and Senate negotiators. And if they add new elements, the bar to pass the bill will rise from a simple majority to two-thirds in both bodies. So their goal will be to craft a compromise from the components of the already-passed bills.

This makes the Senate debate the final realistic opportunity to add major reform provisions that have been left out of both the bill passed by the House and the version approved by the Senate Judiciary Committee, and to strengthen provisions that don’t go far enough in either version.

Before we look at what’s been proposed and what’s needed, let’s review the purpose of an ethics law: Our goal is to prevent public officials from serving their own personal interests or the interests of their campaign donors at the expense of the public interest.

We’ll never prevent everyone from doing that, but we can curtail the practice by requiring full reporting of potential conflicts of interest, by outlawing some behaviors that involve conflicts and by creating a muscular, independent oversight and enforcement mechanism with serious penalties.

Independent oversight

An ethics law is only as good as its enforcement, and when it comes to legislators, there’s no reason to have confidence in our enforcement. Unlike the governor, state employees and local officials, whose ethics compliance is policed by the State Ethics Commission, the House and Senate have their own special committees that determine whether legislators violate the law.

After months of demands for an independent ethics authority, the House balked at the last minute and created a joint committee made up of four senators, four representatives and eight members of the public, appointed by legislators, to replace the House and Senate Ethics committees. It’s an improvement, but not as much of an improvement as we need.

The Senate Judiciary Committee’s proposal is much better. It would change the composition of the Ethics Commission — the governor would appoint half the members instead of all of them, with the Legislature appointing the other half. The commission would investigate complaints against legislators; if it found probable cause, it would make a public report to the House or Senate Ethics committee and, if it involved a criminal matter, to the attorney general. The appropriate ethics committee then would decide whether the legislator violated the law and, if so, how to punish him or her.

I don’t see a good reason not to let the Ethics Commission determine whether legislators violated the law, but legislators simply aren’t going to do that. And the fact is that if the commission conducts the investigation and makes its findings public, we have the independent oversight we need. So in this one area, we simply need to make sure the full Senate doesn’t weaken the plan.

Income disclosure

We started this debate with demands for legislators to report all of their income, but it quickly became apparent that legislators wouldn’t do this.

So the fall-back position became requiring public officials to list the sources of all of their income, along with the amount received from lobbyists and from anyone who hires a lobbyist, has a contract with the public official’s agency or is regulated by the official’s agency. For legislators, it should include anyone who contracts with or is regulated by any state government entity.

Otherwise, though, that’s reasonable, because the goal isn’t to find out how much money legislators make; it’s to find out when legislators’ personal interests might conflict with the public interest.

The problem is that neither bill does this.

Under current law, elected and appointed officials and government employees have to report all of their government income, and income they receive from people who have contracts with their agency. The House bill expands that reporting to require all state officials to report income they receive from people who have contracts with state government, and to require local officials to report income they receive from people who have contracts with local government. It also requires them to report income they receive from lobbyists’ employers.

And it requires them to report the sources of any income they receive in excess of $2,500. It doesn’t require them to report the sources of their spouses’ income or their business partners’ income.

The Senate plan requires officials to report the sources of all income that they, their spouses or their business partners receive, regardless of the amount. But it does not require officials to report any additional amounts beyond the current requirements. So, for instance, a senator still wouldn’t have to report how much money he received from someone who sells asphalt to the Transportation Department, or from a lobbying organization, but he would have to report the fact that he received income from those entities, and why.

Making those relationships public is important, but it’s not always enough. Currently, we prohibit lawmakers from voting in many cases on legislation that could benefit them financially. But they’re free to participate in the debate, lobby their fellow legislators and, some argue, vote in committee. The House and Senate bills both require legislators to recuse themselves from participating in any decisions that would benefit them financially.

That’s a good move, but as the governor’s ethics commission recommended, the voting prohibition also should apply to decisions that could hurt public officials financially.

Campaign loopholes

State law requires candidates and political committees to report all contributions and expenditures quarterly, and just before an election. Donations are limited to $3,500 per election to statewide officials and $1,000 to legislative and local candidates, and candidates can’t use donations for personal expenditures. But the law has gaping loopholes:

•  The final pre-election reports are current only up to 20 days before the vote, so candidates wait until they’re inside that blackout period to accept donations that might turn off voters.

The Senate bill reduces the black-out period to five days. The House bill requires candidates to report late donations of $250 or more online within 48 hours. That’s a huge improvement, but it still leaves a 48-hour blackout period. Why couldn’t we require the largest donations to be reported within 24 hours, or even 12, during the last two days?

•  Candidates must keep a list of their campaign donors’ occupations, just as federal candidates do, but they don’t have to report that information. Neither bill changes that. The House bill even adds language that makes it easier for candidates to not collect the information — which serves mainly to perpetuate the fraud that we require occupation reporting.

•  Since a federal court invalidated reporting requirements for independent entities in 2010, shadowy groups have spent untold amounts of money to run hit campaigns against legislators. Both bills propose a narrower definition of these entities that has been upheld by federal judges in other states. It’s not as broad as I’d like, but it’s probably the most we can get away with as long as the U.S. Supreme Court continues to conflate money with free speech and limit our ability to make people acknowledge their attempts to manipulate our votes.

•  Elected officials can form leadership PACS, which allow them to collect far larger donations than they otherwise could, and the political action committees give the money to other candidates, in what is essentially money laundering: The donors curry extra favor with whoever receives their laundered PAC donations, and those recipients are indebted to the official affiliated with the PAC, which makes that official even more indebted to the donors. Both bills prohibit candidates from operating leadership PACs, although their friends can do that under the House bill, and possibly under the Senate bill. The courts might not let us go any farther in closing this loophole.

•  It’s not clear what is and isn’t a personal expenditure or how much detail must be reported, particularly when candidates reimburse themselves for expenses, or how to calculate the value of in-kind donations. Neither bill attempts to address this problem.

Serious enforcement

No matter how thorough a law is, people who are dishonest will disobey it if they think they can get away with it, or that they won’t get punished severely. Which is the case with South Carolina’s ethics law.

Nearly all ethics violations are handled administratively, with a fine, and most people never pay the fines, yet neither bill proposes anything to increase compliance; only the most egregious are criminally prosecuted. And absent a complaint, the most the inadequately staffed Ethics Commission and House Ethics Committee can do is make sure disclosure reports are filed on time, all the blanks are filled in, donations don’t exceed the legal maximums and the numbers add up.

So the only people likely to get caught accepting illegal donations or spending money illegally are those who report doing so. People who deliberately hide or disguise donations or expenditures get caught only if the stars happen to align perfectly.

The Senate Ethics Committee, with far fewer reports to review, has started looking more closely at those reports, which I believe explains why it has brought charges against three senators in the past three and a half years. Yet at least two of those cases grew out of those perfect celestial alignments.

We can increase candidates’ incentive to be honest by increasing the penalties — and prohibiting people from running for office again if they have outstanding fines. And we can give ourselves a fighting chance of catching those who aren’t honest by conducting random audits — like the ones the IRS does on taxpayers to see if they’re claiming bogus deductions or leaving off income — to check the names and numbers on the reports against bank records.

The Senate bill doubles the annual registration fees for lobbyists and their employers, to give the Ethics Commission more money, which should help it increase enforcement; the House budget temporarily doubles the fees, but it also requires the commission to relinquish some other funds.

The Senate bill also increases penalties for criminal violations, for instance making it a felony for legislators to participate in matters that affect them financially; that’s good.

But neither bill increases fines; neither prohibits people from being re-elected after refusing to pay their fines. Neither requires random auditing. The House bill even increases the standard of proof for criminal convictions.

The good news is that there’s still a chance to add the missing provisions to the bill and shore up the shortcomings, and at least give us a fighting chance of a strong bill coming out of the final conference committee. But there’s a lot of work to be done. And the clock is ticking.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571. Follow her on Twitter @CindiScoppe.

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