SC Lawmakers Don't Reveal Who Pays Them, Review Finds

The state of South Carolina has been very generous over the years to Sen. Hugh Leatherman.

Since 1993, a concrete company with ties to the Florence County Republican – one of the Palmetto State’s most powerful lawmakers – has received more than $30 million in state funding, mainly through the S.C. Department of Transportation, payment records reviewed by The Nerve show.

Leatherman was president of Florence Concrete Products Inc. when he joined the Senate in 1981 and served in that position until 1993, records show. What the longtime Senate Finance Committee chairman hasn’t publicly revealed in recent years, however, is that he holds stock in the concrete company and therefore continues to have a financial stake in the business.

In an apparent change of heart, Leatherman listed his stock ownership on his latest required state income-disclosure form filed with the S.C. State Ethics Commission on March 26 – less than three weeks after The Nerve submitted a formal open-records request for information about state payments to the company.

His statement of economic interests, which covered 2012, says that he is a “minority” stockholder in Florence Concrete Products, though it doesn’t give specifics on the amount of stock he owns. The form also lists him as president and owner of another company known as Leacon of Florence Inc., described by other media as a development company; and lists his wife as owner of ERA Leatherman Realty.

But the senator hasn’t publicly revealed  another for-profit company registered under his name since 2006 and named after him  – Hugh Leatherman LLC.

In South Carolina, the lack of transparency by public officials about their private sources of income – and the potential conflicts of interest connected with that – has been as acceptable as wearing seersucker suits in summer.

South Carolina is the only state in the nation that requires officials to report just their government income, according to ethics-reform recommendations issued earlier this year by the governor-appointed S.C. Commission on Ethics Reform. Forty-seven states require some type of disclosure of private and public income sources, the report said.

Why Disclosure Matters

Not knowing where and how public officials earn their private incomes makes it very difficult, if not impossible, for the public to discern if there are any conflicts of interest. State ethics laws, for example, ban members of the S.C. General Assembly from:

• Using their office to “obtain an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated”;
• Voting on sections of the annual state budget bill relating to an agency if the legislator, an individual with whom he is associated, or a business with which he is associated, has represented any client before that agency within the past year;
• Entering into contracts with state agencies involving businesses in which the lawmaker or an individual with whom he is associated has an ownership interest of greater than 5 percent in that business if the legislator voted on that year’s section of the state budget bill dealing with that agency; and
• Representing clients for a fee in a contested case before state agencies if the lawmaker appointed a member of the governing board of the agency within the past year, or voted on the section of the state budget bill dealing with that agency.

In passing the House version of the fiscal 2014 state budget last month, 45 House members recused themselves from voting on at least one section of the budget – a few of them not voting on a dozen or more sections – citing at least one of the reasons listed above, according to The Nerve’s review of the official House Journal.

But none of the lawmakers who recused themselves provided specifics on the nature of their potential conflicts of interest, likely because a recusal form they submitted asked them only to check off the sections of ethics law that applied to them and to list the sections of the budget from which they abstained.

The list of those who didn’t recuse themselves on any budget section  –  more than three-quarters of House members  – included notables such as House Speaker Bobby Harrell, R-Charleston and president of a pharmaceutical company called Palmetto State Pharmaceuticals, whose conflict-of-interest issues The Nerve has previously chronicled.

House Majority Leader Bruce Bannister, R-Greenville and an attorney, recused himself from voting on 29 sections of the proposed 2014 budget, including, for example, the sections dealing with the departments of transportation, insurance and revenue. Contacted last week by The Nerve, Bannister said he did it as a precautionary measure, not because he had any actual conflicts.

“I don’t want to disadvantage my clients or a future potential client,” Bannister said, explaining he or his law partners couldn’t represent clients in contested cases before state agencies in the upcoming fiscal year if he had voted on sections of the budget dealing with those agencies.

State law, however, allows lawmakers to vote on the budget as a whole, even if they had recused themselves earlier on voting on separate budget sections, which means they are ultimately approving appropriations for those agencies where conflicts of interest exist or potentially exist.

And because lawmakers aren’t required to report their sources of private income on their state income-disclosure forms, the public doesn’t have a good way of monitoring them for potential conflicts.

Some lawmakers name the companies they work for and their positions in their legislative biographies listed on the General Assembly’s website, but most give only general descriptions such as “businessman,” “developer” or, in the case of Bannister and other lawyer-legislators, “attorney.”

Bannister is the managing partner at the five-attorney Bannister & Wyatt law firm in Greenville. He focuses on family law, eminent domain and real estate law, according to the firm’s website. The firm lists a total of 27 practice areas, including matters dealing with rights-of-way and property condemnation, and tax fraud and evasion.

Reluctance to Reveal Income

Income-disclosure forms for federally elected officials and candidates are far more detailed than the annual statement of economic interests form required for state officials by the State Ethics Commission, as The Nerve first reported last month in conjunction with the primary election for the vacant 1st Congressional District seat.

For example, one of the candidates, state Rep. Peter McCoy, R-Charleston, reported he earned $84,000 last year with his Charleston law firm, McCoy & Stokes LLC, plus $22,400 as a state lawmaker. He also listed land in Fairfield County, valued between $100,001 and $250,000, as his sole investment asset.

Another candidate, S.C. Rep. Andy Patrick, R-Beaufort and CEO of a security consulting firm in Hilton Head known as Advance Point Global Inc., listed the value of his investment in his business in the range of $100,001 to $250,000, though the former U.S. Secret Service agent reported earning only $5,100 last year with this firm, along with his $22,400 legislative income, his disclosure form shows.

Among  GOP candidates for the congressional seat who had not released their federal forms before publication of The Nerve’s March 26 story were S.C. Sen. Larry Grooms and state Rep. Chip Limehouse.

The day after that story was published, Grooms told The Nerve in a text message that he had mailed his form that day to the “appropriate authority,” noting, “I was previously unaware that my campaign had failed to send in Form B as it should have been mailed back in early February.”

The Berkeley County lawmaker, who is chairman of the Senate Transportation Committee, released his federal form last week to The Nerve after several requests, noting he also paid a $200 late filing fee required by federal law. Several days later, the U.S. House Clerk’s Office published Grooms’ form on its website.

As of Thursday, the General Assembly’s website had listed Grooms as president and CEO of GTI (Grooms Texaco Inc.), described by Grooms as a petroleum-leasing company. Asked Thursday morning why he didn’t list income from that position on his federal form, Grooms replied in a text message: “There was no income from GTI. The corporation ceased operations nearly two years (ago) and was dissolved.”

Several hours after that text message, the reference to Grooms’ position with GTI was removed from his biographical information listed on the Legislature's website.

Grooms on his federal form reported total rental income last year of $131,005 to $302,500 on properties in Bonneau, Moncks Corner and St. Stephen in the Lowcountry; and Clemson in the Upstate. Asked by The Nerve if he had any other privates sources of income, Grooms didn’t provide a direct answer, responding only, “I stand by my disclosure as being true and correct.”

Limehouse, a real estate agent and broker-in-charge at Limehouse Properties in Charleston, initially told The Nerve prior to the March 26 story that he had “filed everything I needed to file” for the U.S. House race, though he declined follow-up requests for a copy of his federal income-disclosure form.

“I’m not going to waste another second on this,” the first vice-chairman of the budget-writing House Ways and Means Committee said in his last conversation with The Nerve on April 1.

Limehouse Properties handles residential and commercial real-estate transactions, and also is involved with property management, including managing three historic inns in downtown Charleston, according to its website.

Limehouse’s federal form was not listed on the U.S. House Clerk’s Office website as of publication of this story. Representatives at the Washington, D.C., office declined repeated requests by The Nerve for confirmation of whether Limehouse had submitted his form.

As of Monday, Limehouse's state income-disclosure form for 2012 income had not been posted on the State Ethics Commission's website.

Many Unanswered Questions

The latest statements of economic interests were due to the State Ethics Commission by Monday. Of 68 legislators whose forms were posted on the Ethics Commission’s website as of Friday, at least 31 are business owners or partners in firms, legislative and S.C. Secretary of State records show, though 22 didn’t report any of their business connections, The Nerve’s review found.

State law requires politicians to list any business on their statements of economic interests in which they own at least 5 percent of a company’s outstanding stock and if the total value of those shares is $100,000 or more, said Cathy Hazelwood, the State Ethics Commission’s chief lawyer and deputy director.

“It applies to any business that has outstanding stock of any class,” Hazelwood said in an email to The Nerve. “Sole proprietorships normally don’t have stock, but the others normally do.”

Hazelwood said the reporting requirement doesn’t depend on whether the person earned any income in the previous year from the stock ownership.

A review of Leatherman’s online statements of economic interests covering 2007 through last year show that he didn’t report his stock ownership in Florence Concrete Products. During that time, the company received nearly $12.3 million in state funding, according to records provided by S.C. Comptroller General’s Office to The Nerveunder the state’s Freedom of Information Act.

From July 23, 1993, through March 5 of this year, Florence Concrete received 589 state payments totaling $30,112,736, The Nerve’s review found. That works out to be an average of more than $1.5 million per year over the nearly 20-year period.

The vast majority of payments were from the state Department of Transportation.

Comptroller general records show no state payments to Leacon of Florence Inc., which has been registered with the state since 1991; Leatherman lists himself as the president of that company on his recent income-disclosure forms. Florence County property records for Leacon of Florence Inc. and Leacon Inc. list more than 250 entries for transactions between 1992 and last October.

The Nerve on March 8 submitted a Freedom of Information Act request to the Comptroller General’s Office for state payment records involving Florence Concrete and Leacon; on March 26, Leatherman reported his stock ownership in Florence Concrete with the State Ethics Commission.

State transportation officials did not respond to The Nerve’s written questions by publication of this story about whether Leatherman had any influence over DOT payments to Florence Concrete over the years. Sherry Jones, the company president, did not respond last week to a phone message from The Nerve seeking comment.

As chairman of the budget-writing Senate Finance Committee, Leatherman has a great deal of say over DOT’s annual budget; his committee chairmanship also automatically affords him a seat on the powerful five-member S.C. Budget and Control Board, which is chaired by the governor.

Leatherman also serves on the S.C. Transportation Infrastructure Bank Board, which has funneled several billion dollars over the years for major transportation projects mainly in the Charleston, Myrtle Beach and Greenville areas. A DOT official, however, in a written response last week to The Nerve said no payments to Florence Concrete Products since fiscal 2007 were for Infrastructure Bank projects.

“They (purchase-order payments) are primarily material purchases associated with activities in our field maintenance units,” said Christy Hall, DOT’s deputy secretary for finance and administration.

Since joining the Senate in 1981, Leatherman has been involved with at least eight businesses, including hotel and investment companies, according to a review by The Nerve of the S.C. Legislative Manual, published annually, which lists lawmakers’ biographical information.

The Nerve’s review found that a for-profit company named after Leatherman  – Hugh Leatherman LLC –was registered with the Secretary of State’s Office in August 2006; the registered agent is listed as Leatherman, with his home address. Florence County property records show 11 transactions from 2006 through last September involving that company.

Leatherman has not listed that company on any of his income-disclosure forms, though it is unclear, given the stock-ownership requirement cited by Hazelwood, whether he must do so under state law.

The Nerve last week left six messages with Leatherman seeking comment on his current and past companies, and state funding over the years to Florence Concrete Products. As has been his longstanding practice with The Nerve, Leatherman did not respond.

Rick Brundrett writes for The Nerve, a publication of the South Carolina Policy Council, which is a nonprofit organization that promotes the principles of limited government, free enterprise, and individual liberty and responsibility.