SC Commerce Department can’t keep secret information about business deals, judge rules

The S.C. Department of Commerce has been violating the state’s public records laws by keeping secret basic information about financial incentives the state offers to companies if they locate here, a judge has ruled.

The ruling, if upheld on any appeal, would force the state Department of Commerce to routinely make public far more information than it does now about now-confidential dealings with companies seeking millions of dollars in grants and tax breaks.

State circuit Judge Robert Hood wrote that the department has needlessly and unlawfully kept routine data secret, including the identities of prospective companies’ executives and lawyers involved in deal negotiations.

Commerce concealed “far too much otherwise public information (than) is otherwise necessary for the public to understand what its government is doing,” the judge wrote.

“While the Court does not dispute Commerce’s contention that companies ‘are very private’ and, under normal circumstances, ‘do not have to reveal this information to the public,’ the question here is whether the public is entitled to disclosure of certain public information once these companies voluntarily seek and obtain public assistance. The economic incentive deals at issue here concern ... public expenditures to the tune of tens of millions of public dollars,” the judge wrote.

Commerce spokesperson Alex Clark said in statement late Monday, “We respectfully disagree with the court’s interpretation and application of the FOIA exemptions and are reviewing our legal options moving forward.”

‘Cult of secrecy’

State Sen. Dick Harpootlian, D-Richland, brought the FOI lawsuit against Commerce in October 2019. At the time, he charged that Commerce has a “cult of secrecy” in that it routinely cloaks its dealings with prospective companies, even years after the deals are completed.

Harpootlian’s lawsuit specifically accused the agency of violating the state’s FOI law by withholding some documents and heavily redacting others that he requested regarding incentives for Singapore-based Giti Tire, which has a plant in Chester County some 50 miles north of Columbia.

But he became interested in the Commerce department, and its behind-the-scenes dealings, in early 2019 after he learned about a proposal to offer the Carolina Panthers $115 million in tax credits in exchange for moving the NFL team’s headquarters and practice facilities to Rock Hill. He publicly criticized the plan.

In October 2019, at a hearing on the lawsuit before Judge Hood, Harpootlian put Commerce chief Bobby Hitt on the witness stand and grilled him for nearly an hour about the department’s secrecy practices. Harpootlian asserted that included status reports on the Giti project, breakdowns of the project’s costs and the data that Commerce used to work up a cost-benefit study of the proposal.

That kind of information is crucial for the public to determine whether Commerce-sponsored projects have paid off for South Carolinians, Harpootlian and his lawsuit have alleged. Harpootlian was represented by a lawyer in his firm, Chris Kenney.

During the hearing, Hitt defended his department, saying companies wouldn’t come to South Carolina if the state made public information that would benefit their competitors. Hitt also stressed that Commerce’s actions reduce unemployment across the state and bring needed jobs.

In an interview Monday night, Harpootlian said he is not seeking information about any company’s trade secrets, just basic financial details on incentives the state offers that will allow the public to judge the efficacy of Commerce’s deals.

“Right now, there are no audits, nothing,” he said. “To evaluate a deal, you have to know its components.

“Judge Hood has told them they are breaking the law,” said Harpootlian, who is running for re-election on Nov. 3. “It is ludicrous that I — a sitting state senator — had to sue them to find out basic information. I am putting them on notice right now I will be filibustering their proposed budget next year if there’s not more transparency.”

If Commerce appeals, the specific information sought in the lawsuit likely won’t be released to the public until the department stops appealing or all of its appeals are rejected by higher courts — a process that could take years.

Harpootlian also called on Gov. Henry McMaster, who is Hitt’s boss, to order Hitt to release the records and not appeal.

“This information is five years old — the deal is done,” Harpootlian said.

Asked Tuesday about Harpootlian’s call for the governor to order Hitt to drop any appeal, McMaster’s office responded after The State’s print deadline:

“Of course the Department of Commerce must follow the Freedom of Information Act, and if they need clarification, prior to an appeal, as to whether this order is consistent with the law, they should ask for it,” said McMaster spokesperson Brian Symmes.

“The bottom line is South Carolina can provide taxpayers with transparency and accountability while maintaining its competitive edge in attracting jobs and investment.”

This story was originally published October 13, 2020 at 5:00 AM.