Lt. Gov.-elect McMaster facing state ethics charges

Lt. Gov.-elect Henry McMaster, a former state attorney general who helped author an ethics reform report for Gov. Nikki Haley, is facing allegations that his 2010 gubernatorial campaign accepted $72,700 in improper contributions from 51 donors.

The complaint was filed by a Greenville financial adviser with ties to one of McMaster’s June Republican primary rivals for lieutenant governor. McMaster’s camp said Tuesday the dispute is over a technical issue in campaign-finance law that has been resolved by a previous Ethics Commission opinion.

But state ethics commissioners found probable cause last month that McMaster might have violated state ethics laws. A closed hearing for the Columbia Republican is scheduled for March 18 in Columbia, according to documents released Tuesday by the Ethics Commission.

If the commission finds McMaster, a former U.S. attorney, violated campaign-finance laws, members could issue a public reprimand, order restitution and levy fines of up to $2,000 for each violation.

South Carolina’s last elected lieutenant governor, Ken Ard, resigned from office in 2012 after he pleaded guilty to using campaign money to buy personal items. Two state senators took turns completing Ard’s term.

However, the head of a government watchdog group said Tuesday that he does not expect the allegations to cost McMaster the post that he is slated to take over next Wednesday.

If found to be a violation of state law, McMaster’s actions do not appear intentional, said John Crangle, state director of Common Cause.

“It’s a sloppy embarrassment with his campaign finances,” Crangle said. “It’s surprising he let this happen to him.”

McMaster and another former state attorney general, Travis Medlock, co-chaired an ethics reform task force appointed by fellow Republican Haley in 2013. That task force produced a report used to develop proposals to toughen state ethics laws governing legislators.

McMaster is now the second consecutive S.C. attorney general to have run into campaign finance problems during the 2010 election. The current attorney general, Alan Wilson, refunded $42,500 in excess 2010 contributions after reviewing his campaign filings last year. The Lexington Republican won re-election last fall.

The allegations against McMaster stem from the period after he lost the 2010 GOP primary for governor, won by then state-Rep. Haley. After the loss, McMaster set up a separate general election campaign account and accepted contributions to retire his campaign debt – even though he was not in the November general election.

Some donors to McMaster’s general-election account already had given him the state-mandated maximum contribution of $3,500 for his primary race. The State broke news of McMaster’s excess contributions in a story in April.

At that time, Ethics Commission attorney Cathy Hazelwood told The State that McMaster could not exceed the $3,500 contribution limits for the one election in which he ran – the primary.

“You can keep collecting money to retire debt as long as you don’t exceed the limit,” she said in April. “The problem is he changed election dates when he wasn’t in the next (general) election.”

According to the Ethics Commission’s charges, nearly half of the $149,500 raised by McMaster’s campaign after the 2010 primary came from donors who exceeded state contribution limits.

John Camp, who was McMaster’s campaign treasurer in 2010, told The State in April that he understood a new election cycle allowed candidates to collect from donors to pay off debt – even those who had given the $3,500 maximum. But Camp said he did not ask the Ethics Commission for its interpretation of state law.

In a request to dismiss the charges, Butch Bowers, a Columbia attorney representing McMaster, argued the Ethics Commission failed to prove that donors who already had given the maximum $3,500 to McMaster’s campaign could not give more money to retire his campaign debt.

He also cited a 1992 Ethics Commission opinion, requested by McMaster after his previous run for lieutenant governor in 1990, that suggested active campaign accounts and campaign-debt retirement accounts can be treated separately. But no campaign contribution limits were in place at that time.

A spokesman for McMaster said the complaint about a four-year-old campaign was filed in the middle of the 2014 race for lieutenant governor to embarrass the Columbia Republican, who was favored to win the November election.

“The question raised is a technical one: Should a candidate for public office be allowed to set up a separate debt retirement account after the campaign is over?” McMaster spokesman Jeff Taillon said. “We are working with the state Ethics Commission towards a favorable resolution.”

According to the commission charges, those making improper contributions included: payday lenders Cash America and Ace Cash Express; McCall Farms; rail operator Norfolk Southern; and Camden attorney John Rainey, who has been a Haley antagonist.

The complaint against McMaster was filed with the Ethics Commission in April by David Ellison, a Greenville financial adviser, about two weeks after the article about McMaster’s improper gubernatorial contributions appeared in The State. The complaint, which came about two months ahead of the June GOP primary, included excerpts of the story.

Ellison served on the Furman University board with Pat McKinney, a Republican Charleston developer who ran for lieutenant governor against McMaster. Ellison donated $3,500 to McKinney’s campaign. McKinney’s daughter and Ellison also work at the same Greenville financial services firm.

Efforts to reach Ellison were unsuccessful Tuesday.

McKinney, who dropped out of the GOP race rather than face McMaster in a runoff, said he had no knowledge of Ellison filing the ethics complaint against his onetime political rival until contacted by reporters Tuesday.

“Henry is duly elected, and I wish him the best,” McKinney said.

McMaster, a Republican stalwart in South Carolina who led the state GOP for eight years, endorsed Haley after she won the 2010 GOP primary. Haley became governor, and she backed McMaster when he ran for lieutenant governor in the general election.

Haley appoints the nine members of the Ethics Commission. The commission’s former chairman, Columbia attorney James Burns, became her chief of staff after she won re-election in November.

This story was originally published January 6, 2015 at 1:08 PM with the headline "Lt. Gov.-elect McMaster facing state ethics charges."