CEOs gave heavily during legislative session, exposing loophole in NC’s fundraising ban

August 30, 2018

The co-chief executives at a Georgia firm that brokers tax credits put $41,000 into the campaign accounts of North Carolina General Assembly members during the last regular legislative session.

This is allowed under North Carolina law, despite the state’s partial fundraising ban during session. That law simply forbids donations from lobbyists and the entities that hire them. It’s Monarch Capital that has the team of seven lobbyists in Raleigh, not Monarch’s top two executives, George Strobel and Robin Delmer.

Add in the week before session began, and the two businessmen gave more than $87,000 to Republican legislators and the North Carolina Republican Party, a key cog in the campaign machine this year as the two major parties fight for control of the General Assembly in November’s elections.

The men have not said what fuels their interest in North Carolina politics. Delmer did not return calls. In a brief phone interview, Strobel said they were “just trying to make friends.” Their company lists 46 North Carolina solar facilities on its website, and the firm also deals in film, housing and historic redevelopment tax credits.

North Carolina law lets CEOs and other top executives contribute to campaigns during General Assembly sessions even as it bans donations from the companies themselves year round and forbids anyone who contracts directly with a lobbyist from giving during session. Legislators who defend the system say you can’t limit what individuals give, though the law does just that, year round, for lobbyists themselves.

This year’s legislative session also saw significant donations from hog farmers and beer distributors, both industries with important legislation before the General Assembly. Senate President Pro Tem Phil Berger’s campaign alone raised nearly $222,000 during session. Twenty-three people gave him the maximum allowed: $5,200.

All told during the six-week General Assembly session, more than $1.1 million flowed into state legislators’ campaign accounts. That’s a conservative figure, reached by backing out money that simply flowed from one politician’s campaign to another and money elected officials put into their own campaigns.

Add in donations to the two main political parties and to a handful of other large fundraising vehicles for state legislative races, and the in-session giving topped $3.4 million. Gov. Roy Cooper’s main campaign account brought in another $407,000 during session.

The totals go up again if you include the week before session, which is traditionally a time for fundraisers as political action committees with lobbyists deliver checks just under the wire. This year, the week saw more than $1 million given to state legislative campaigns, the state Republican and Democratic parties and the governor’s campaign account.

Berger, R-Rockingham, brought in about $60,000 that week. House Speaker Tim Moore’s campaign account collected more than $72,000. Both men declined interview requests on these issues.

A WRAL News analysis of campaign finance filings also turned up $16,000 in donations to legislative campaigns during session from 15 PACs with a lobbyist. Each would appear to be a violation of state fundraising rules, but spokespeople for most of the PACs, or the companies they represent, said there was a simple explanation: The checks were written before session.

This is a common explanation, with campaigns saying checks aren’t always logged when received. BB&T said its questionable contribution, $2,000 through the bank’s PAC to Senate Rules Chairman Bill Rabon, R-Brunswick, was delivered at 9:30 a.m. May 16. A bank spokesman said it had a delivery receipt to prove it.

The session began at noon that day. The spokesman said BB&T makes “every effort to ensure that all contributions conform to the letter and the spirit of the law.”

More than a third of the PAC money logged during session went to Rabon’s campaign.

He and other legislators who received donations told WRAL News that, if they were truly made during session, they’d return the money. Earlier this year, the State Board of Elections and Ethics Enforcement ordered more than 30 legislative campaigns, plus Cooper’s, to forfeit more than $53,000 in 2016 and 2017 in-session donations made by Pfizer’s political action committee.

The pharmaceutical company said later that, though the checks were dated during session, they weren’t sent until after session. It blamed “an unfortunate clerical mistake by an outside vendor” for the problem. Moore’s campaign treasurer wrote the elections board asking how a check can be considered a contribution before it’s received, but nevertheless, the campaign forfeited $3,500.

This year, 18 of the top 20 donors to legislators during the week before session were PACs. The other two were Strobel and Delmer.

Rep. Jason Saine, R-Lincoln, whose campaign got $5,000 from each man during session, said they’re interested in an issue before the state Department of Revenue. A department spokesman said state rules on taxpayer privacy prohibited him from confirming anything. Sen. Brent Jackson, R-Sampson, who also received donations from the duo, said they’re interested in solar tax credits, which the state phased out in 2015.

Lobbyists for Strobel and Delmer’s company didn’t return WRAL News’ calls.

Jackson said he hadn’t thought of donations from company executives as a way around the in-session ban on donations from entities with lobbyists. Rabon, who also got $5,000 from each man during session, said he doesn’t see a problem with the arrangement.

“The Democrats wrote the law,” Rabon said. “What do I think the law should be? I think anyone should be able to give as much as they want, at any time, and it should be disclosed that day.”

Beer distributors also gave during session. Mark Craig, the president of distributor R.H. Barringer, put more than $30,000 into state legislative campaigns during the six-week period, including the maximum $5,200 to Berger. He was the top individual donor to legislative campaigns during session.

“No comment on anything, but thank you,” Craig said when WRAL News asked about the donations.

R.H. Barringer’s board chair, Jasie Barringer, donated another $8,200 in-session, and Teresa Craig kicked in another $5,200 to Berger. The North Carolina Beer & Wine Wholesalers Association PAC gave $18,400 during the week before session and on opening day.

The PAC split this money between Berger, Moore, R-Cleveland, the North Carolina Democratic Party and a pair of Republican committees raising money to protect GOP majorities in the House and the Senate: the Senate Majority Fund and the House Republican Campaign Committee.

These committees are controlled by top chamber leadership and function under essentially the same rules as the state parties. They can accept unlimited donations from individuals and PACs.

Beer wholesalers fight annually to protect laws that require brewers to work through a distributor once they sell 25,000 barrels of beer a year. This year, they won a battle against large breweries, changing several laws governing relationships between the two, including rules on the transfer of distribution rights.

Scott Prestage, with Prestage Farms, gave Moore’s campaign $5,200 right at the end of session, after the General Assembly passed legislation meant to make lawsuits against hog farms harder to win. Going back to the beginning of the year, people connected to Prestage Farms gave Moore $31,000 in campaign donations. Half are dated two-and-a-half months before the session began. The rest came in the session’s closing days or the day after the session ended.

They gave another $4,000 in late March and early April to state Rep. Jimmy Dixon, R-Duplin, a farmer who championed the lawsuit protection bill this year.

Officials with Prestage Farms declined WRAL News’ interview requests.

Smithfield Foods’ PAC gave another $10,000 to various legislators and the state Republican and Democratic parties, some just before, some just after the session began. The North Carolina Pork Council gave $10,000 during session to the state Republican Party and $5,000 right at the session’s start to the Democrats.

Both of these party committees can raise money during session, including from “lobbyist principals,” the name in state code for people who employ lobbyists.

Similar rules apply to the so-called “affiliated party committees,” including the Senate Majority Fund, the N.C. House Republican Campaign Committee and the Republican Council of State Committee, a fundraising vehicle headed by Lt. Gov. Dan Forest.

Despite loopholes, it’s clear the partial session ban depresses fundraising. Giving peaks right before session, then falls off a cliff.

There was a major bump during the first week of session this year for the state parties, but that’s because three large donors – LinkedIn co-founder Reid Hoffman, Durham investor Greg Lindberg and Lindberg’s Eli Research company – donated $1.3 million that week to the state Republican and Democrat parties.

Eli Research’s donation went to the Democratic Party’s building fund, which, unlike the normal party committee, can accept direct donations from businesses.

Other big donations went to Forest’s Republican Council of State Committee, which reported a $100,000 donation at the end of session from Phil Drake, of Drake Software, and a $25,000 donation two days before the session from George Luecke, an executive with one of Lindberg’s companies.

The N.C. House Republican Campaign Committee and the N.C. Senate Majority Fund didn’t do any major fundraising during the session, other than $2,500 the House committee logged from the beer distributors PAC on the first day of the session. The Senate committee accepted $2,500 from the beer and wine wholesalers the day before the session began, as well as $1,000 from Smithfield Foods’ PAC.

None of this accounts for the dark money that flows through North Carolina politics. These nonprofits flood the airwaves with political ads most election seasons, and they’re supposed to operate separate from political candidates, though their paths often cross.

Cooper, for example, attended a fundraiser for Moving NC Forward, a group run by some of the same people who worked in his 2016 campaign, the day after last year’s legislative session. More than 100 bills from that session awaited his review and signature at the time.

Despite his role as a watchdog for 17 years, Common Cause North Carolina Executive Director Bob Phillips said he was surprised, and troubled, to hear how much money flows during the legislative session.

Letting corporate executives donate despite other session fundraising bans is “sort of like a loophole you could drive a Mack truck through,” Phillips said.

Bill Gilkeson, a retired General Assembly attorney now with Bailey & Dixon, said CEO donations sound like “a good way to get somebody’s attention” during session.

WRAL News consulted Gilkeson and Greensboro attorney Marshall Hurley, a former general counsel for the state GOP, to verify aspects of state campaign finance law.

The state’s partial in-session ban came into law in the 1990s. Republican 3rd District Congressman Walter Jones, who pushed for reforms while in the state House, said he hopes the laws he helped pass have done some good, “even if it’s been in a very modest way.” Reform is always a hard sell, Jones said, and laws only do so much.

“You always find people that will find a way to get around a law,” he said.

Some called those reforms “the lobbyist protection act,” Gilkeson said. Before that, “it almost seemed like a shakedown of lobbyists,” he said.

Like Phillips, House Majority Leader John Bell, R-Wayne, said he was surprised to learn how much money changes hands during the session. He said state leaders probably need to review the laws on the books.

Phillips said money changing hands doesn’t mean something nefarious is going on, but you might have “a hard time convincing an average citizen of that.”

“Why would these folks be giving?” he asked. “Does anyone want to answer that question?”

Hurley likened political money to a balloon.

“You squeeze here with regulation, there’s going to be a bubble somewhere else,” he said. “It’s a long way to a foolproof and perfect system.”

Even the concept of an in-session ban, Hurley said, “in itself is flawed.”

“All it’s really done is change the date of the check,” he said. “Does that really alter behavior?”

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