Gov. Mark Sanford's past business ties to a nonprofit organization that received $100,000 from a governor's conference bank account has lawmakers considering changes to disclosure laws and the state's competitive grants program.
While no one has accused Sanford of anything illegal, some state lawmakers question his decision to donate the conference money to Carolinians for Reform Inc. given his ties to the organization. Among the group's directors is a former officer in a business owned by the governor's brother, and two men who ran a political action committee that supported Sanford.
"We gave $150,000 for a governor's conference, not a political organization," said state Senate President Pro Tem Glenn McConnell. "There's nothing illegal I know of about it, but it sure is going to raise questions."
In August, the governor's office directed a nonprofit organization run out of the Charleston Area Convention Visitors Bureau to cut a check for $101,534.14 to Carolinians for Reform Inc. That money was left over from the National Governors Association conference held in Charleston in August 2006.
One of the directors of Carolinians for Reform listed in the Secretary of State's office is Frank Zanin, the former chief executive officer and financial officer of Wilson Brothers USA, a company owned in part by Sanford's brother. The governor also has invested money in the business.
Sanford press secretary Joel Sawyer said Friday that Zanin has not been employed by Wilson Brothers for several years.
"There is no business relationship," Sawyer said. "There's not a bit of self- interest in anything here. You have to look at the context."
Sawyer said political opponents of
Sanford are the only ones making an issue of this. This week, Sen. Jake E. Knotts, a Midlands Republican, held a press conference asking for answers about the governor's transfer of this money. Sawyer pointed out that Knotts, although a Republican, supported Democratic Sen. Tommy Moore's 2006 campaign against Sanford.
Knotts admits to a difference of political opinion with Sanford and said he believes the governor's supporters have spread rumors to hurt him politically — something Sanford denies. But Knotts said that doesn't mean this isn't a legitimate issue.
"I just know there are some very close ties, and some questions need to be asked," Knotts said. "This is not just some group of people out of the clear blue sky."
Pieces of the story have come out over the past week, followed by rounds of sniping between the Legislature and governor's office. Here's what happened:
After Hurricane Katrina caused conference organizers to scrap plans to hold the 2006 National Governors Association conference on the Mississippi coast, Charleston was considered as an alternate site. The state Competitive Grants Review Board gave $150,000 to help pay for the conference, and Sanford raised more than $1 million to go along with that.
After the conference was over, about $100,000 of that money remained unspent. Lawmakers have asked how the governor had the authority to give that money away instead of returning it to state coffers. Sawyer said Friday that the Charleston Heritage Foundation, the nonprofit organization set up to handle money for the conference, offered Sanford the option of what to do with the money since he had raised much of it. That nonprofit operated in concert with the Charleston Area Convention Visitors Bureau.
Sanford asked the Heritage Foundation to give the money to Carolinians for Reform, according to Sawyer.
Besides Zanin, the directors of Carolinians for Reform include attorney James Kuyk and Tim Reese of Sullivan's Island. Kuyk and Reese were listed on documents in the Secretary of State's office as members of the political action committee Carolinians for Change, which made Sanford an honorary co-chairman, according to its state filing.
Sawyer said those connections don't constitute a conspiracy, just common sense. It is only natural that the governor would believe the best use of the money would go to an organization that wants to educate people about the very kind of reform that he pushes for in state government, he said.
"It is a like-minded group that shares his ideas," Sawyer said. "It's about making South Carolina a better place."
When some senators made a stink about the move earlier this week, Sanford asked Carolinians for Reform to return the money. Sawyer said the group agreed and is in the process of giving the money back.
Knotts said the visitors bureau did nothing wrong, and even requested that any order to move the money be made in writing. Helen Hill, executive director of the visitors bureau, did not return phone calls Friday.
The governor's office said this scrutiny is ironic because the National Governors Association conference is the only nonprofit of more than 400 to receive money from the competitive grants program to return money.
Sanford has been critical of the competitive grants program, calling it a slush fund for legislators to curry favor in their districts. He has vetoed the program twice, but the Legislature has overridden those vetoes. Sawyer said the motives in this attack on Sanford are clear.
"These people make no secret of their political bias against the governor," Sawyer said. "He's been one of the most vocal critics of the grants. On the other side of the coin, they have not applied this scrutiny to any of the other grants."
That, McConnell said, is not the issue. He said when the state gives a grant for one purpose, there is no room for interpretation.
"In every case, that money is given for one thing," McConnell said. "If they want to use it for something else, they have to reapply. I strongly suspect there will be hearings. We may need to beef up our disclosure laws."
Jimmy Bailey, chairman of the Competitive Grants Review Board, said that before this issue came to light, four or five other grant recipients had asked to use the money in ways other than the original purpose. All were turned down.
"All these little counties know you have to ask to do that," Bailey said. "Why didn't the governor's office?"
Bailey said the application process for grants might have to be changed to underscore the fact that money can only be used for the approved purpose. Right now, any agency that gets money has to send an accounting of their expenses to the review board.
The National Governors Association complied with that law, sending an accounting in April that said the grant money had been spent. The governor's office said that the public money had been spent, and that what was leftover was private. But McConnell said when public and private money is mingled, it all becomes public.
For that reason, Knotts is going to make a Freedom of Information request for the books of Carolinians for Reform. If he gets no response, he will ask for Senate hearings.
Sawyer said Carolinians for Reform is not a political organization and has not expended any of the money in question — or any money period.
But lawmakers say that is not going to be answer enough for them.