New SC ethics law does not go far enough, critics say

Suspended state Rep. Jim Merrill’s latest ethics filings show he makes his income from Geechee Communications, his Daniel Island-based marketing and public relations company.

But the filings do not show who pays Geechee.

That omission underscores one of the shortcomings of a new ethics law, passed last year by S.C. lawmakers. That law requires lawmakers to disclose who pays them, and Merrill did that, disclosing that he gets his income from Geechee. But Merrill was not required to disclose who paid Geechee.

A statewide grand jury investigating allegations of State House corruption alleges private companies and trade groups paid the now-indicted Berkeley Republican’s firm hundreds of thousands of dollars in exchange for his influence as a legislator.

Last year, S.C. lawmakers passed two changes to S.C. ethics laws, including one, going into effect last week, that requires lawmakers to publicly disclose their sources of income and the income of their family members.

But some ethics watchdogs say those changes still fall short in revealing state lawmakers’ potential conflicts of interest.

Part-time legislators – many who own businesses or law firms – still can avoid publicly disclosing when some special interests hire their private firms, ethics watchdogs say.

“It’s always about: Are they acting in the citizens’ interests or their own interests?” said Lynn Teague, vice president of the S.C. League of Women Voters. “If they have clients that are utility companies, are they working for the utility companies or are they working for their constituents?”

Critics: Reforms do not go far enough

For years, advocates have pushed to tighten ethics laws in the Palmetto State, which earned a D- rating in 2015 for transparency and accountability, as judged by the Center for Public Integrity. But those efforts have faced resistance from legislators accustomed to policing themselves.

After years of scuffling, lawmakers last year passed two new ethics laws.

One empowers a revamped, eight-member Ethics Commission to investigate allegations against legislators, who previously investigated themselves.

The other requires elected officials to list the source and type of any private income they receive on their statements of economic interest. Those statements also must include the income of their spouses and family members.

But, critics say, the reforms do not go far enough in requiring lawmakers to reveal what special interests are paying their businesses.

Merrill, for example, did not disclose in ethics filings who hired his marketing company. But state investigators allege he used that company to enrich himself with money from private companies and trade groups willing to pay for his influence in the General Assembly.

Among a number of charges, prosecutors say the Berkeley Republican, through Geechie Communications:

▪  Was paid $391,174 by the S.C. Association of Realtors. Merrill then sponsored two property tax bills benefiting the association or its affiliates, prosecutors allege.

▪  Received about $172,485 from a New Jersey-based bus contractor. Merrill then sponsored legislation “to privatize school buses” in South Carolina, benefiting the contractor, prosecutors allege.

▪  Was paid $148,693 by the Charleston Area Convention and Visitors Bureau while serving on the S.C. House’s budget-writing committee. On that committee, Merrill chaired a House subcommittee that oversaw the budget for the S.C. Department of Parks and Tourism, which provides money to the visitors bureau.

▪  Received about $35,000 from Infilaw Management Solutions, which was trying to buy the Charleston School of Law in 2014. Merrill then used his position on a House higher education subcommittee to “influence governmental decisions involving this purchase,” prosecutors allege.

Merrill has denied any wrongdoing and vowed to fight the charges in court. And some of the companies cited in his indictment have denied trying to buy his public influence.

‘It’s a systemic problem’

But ethics advocates say those kind of arrangements are not unique in the Legislature.

“This isn’t about a couple of rogue legislators and the rest of the system is fine – nothing to see here,” said Ashley Landess, president of the libertarian-leaning, pro-small government S.C. Policy Council think tank. “That’s what the public is being lulled into believing. That’s not true. It’s a systemic problem. ... They’re all doing this, and some to much greater degrees than others.”

And the relationships between lawmakers and special interests often are not disclosed, she said.

State law requires legislators to explain to the State Ethics Commission their businesses’ relationships with registered lobbyists or lobbyist principals, groups that want something from the Legislature. However, that information is not posted publicly online.

About half of the companies prosecutors allege paid for Merrill’s influence were not registered as lobbying the Legislature anyway.

The Merrill case highlights a number of problems with S.C. ethics laws, said Teague, with the League of Women Voters.

For example, she said, lawmakers must tell the state about business ties with a registered lobbyist principal, a group – such as a chamber of commerce – that wants something from the Legislature.

But lawmakers could keep secret a contract with an individual business, within that chamber, that has not registered as a lobbyist principal, even if they are working on that business’ behalf in the Legislature, she said.

“There are so many ways to find yourself at a level that isn’t accountable under the law,” Teague said. “There’s always another Russian doll inside the bigger Russian doll that you can create.”

‘Some things are confidential’

How to fix the holes in the state’s ethics laws is unclear, legislators and good-government advocates agree.

Legislators who are lawyers would have to breach attorney-client privilege to disclose whom they do business with, for example. Other legislators who are in business could be giving their business competitors an advantage by disclosing their clients, lawmakers say.

“If you and I are competitors, and I’m a senator and you see my customer list, you can go after my customers and try to undercut me,” said Senate Ethics Committee chairman Paul Campbell, R-Berkeley. “So some things are confidential to the business.”

This story was originally published April 8, 2017 at 11:05 AM with the headline "New SC ethics law does not go far enough, critics say."