Records fail to disclose $235 million in state work given to elected officials’ private interests

AUGUSTA — Between 2003 and 2010, the state paid almost $235 million to private organizations run by legislative leaders or the spouses of high-level state officials.

But because of a loophole in state law, not one penny of that spending was disclosed to the public in ethics filings.

An investigation by the Maine Center for Public Interest Reporting has determined that the state paid millions of dollars to organizations associated with the following officials:

• Sen. Joseph Brannigan, D-Portland, chairman of the Appropriations and Health and Human Services committees: $98 million to Shalom House, where Brannigan was executive director. Brannigan is still in the Legislature but has not been a member of those committees since 2011.

• Rep. Joseph Bruno, R-Raymond, House minority leader: $35.6 million to Goold Health Systems, where he was CEO and president, and $49 million to Community Pharmacies, where he was a board member of the controlling group. Bruno’s legislative service ended in 2004.

• Rep. Arthur Lerman, D-Augusta, member of the Appropriations Committee: $14 million to Support Solutions Inc., where he was executive director. Lerman’s legislative service ended in 2006.

• Human Services Commissioner Brenda Harvey: $15.4 million to Mobius Inc., where Harvey’s husband, David Lawlor, was executive director. Harvey resigned as commissioner in January 2011.

• Workers' Compensation Commission Deputy Director Steven Minkowsky: $21.6 million to Continuum Healthcare, where Minkowsky’s wife was CEO of four facilities owned by the group. Minkowsky retired from the commission in February 2011.

The failure to disclose such significant financial connections between the state and high-level public officials limits the public’s ability to hold government officials accountable, said Judy Nadler, senior fellow at the Markkula Center for Applied Ethics and former mayor of Santa Clara, Calif.

“It doesn’t matter what size your state or your city, you should always err on the side of disclosure; you cannot disclose enough,” Nadler said. “It’s all an effort to allow the public to have an open and transparent government so they know where the money’s coming from and going, who might be influencing decisions and any considerations that might lead a legislator to be unduly influenced.”

Each of the legislators or state officials says they did nothing wrong and that their statehouse colleagues knew of their overlapping private and public roles, thereby, they claim, creating a “check” on any possible conflicts of interest.

“I think it was well-known. Because I’d been here for a long time, I think everybody knew,” Brannigan said.

“My work as Executive Director of Support solutions,” Lerman wrote in an email to the Center, “was well known among my colleagues at the Legislature and others who frequented the State House.”

But Arn Pierson, vice president for programs at Common Cause in Washington, D.C., said the informal system of legislators or executive branch officials being aware of each other’s potential conflicts isn’t good policy.

Citizens, Pierson said, deserve even more to know this information.

“You can’t have a public discussion of whether there’s a significant conflict and whether there should be recusal if you don’t have the information to begin with,” he said.

Only part of one of the cases uncovered by the center has been public knowledge, until now.

In 2000, the Washington, D.C., watchdog group, the Center for Public Integrity, revealed the state contracts that had gone to Bruno’s Goold Health Systems and that he had crafted legislation that benefited his pharmacy group.

While serving in the state Legislature for two terms, wrote the Center’s Ken Vogel, Bruno “has used his political power in the Pine Tree State to benefit himself and both companies, one of which receives more than $10 million in taxpayer-funded contracts from the state.”

Bruno denied any conflict of interest. The Portland Press Herald and Bangor Daily News picked up the story and editorialized in favor of stronger legislative disclosure laws.

Those laws were never strengthened, and the tally has since mounted to millions in taxpayer dollars that have gone to organizations affiliated with State House leaders.

Other legislators have worked for organizations that have gotten millions in state money, including Spurwink, Rumford Group Home, Little Angels Daycare, Community Counseling Center and Discovery House. Those legislators were not in influential positions, but the amounts paid to their employers by the state in fiscal year 2006 alone — not included in the $235 million — totalled more than $60 million.

The loophole that allows these potential conflicts to go unreported works this way: State law requires that legislators or high-level state employees report only state purchases of goods or services directly from the individual legislator or family member, not from a corporation or entity for which the legislator or family member works.

Each year, they fill out a form called “Sources of Income.” Question No. 8 asks: “List each executive branch agency to which you or a member of your immediate family sold goods or services with a value in excess of $1,000 during the time period. Indicate whether you or a family member sold the goods or services. If none, check the box.”

Commissioner Harvey, whose husband was the executive director of a mid-coast social services agency that got $5.6 million in state funding during fiscal year 2009, checked “none.” She was legally able to do that because the millions in state money did not go to her or her husband as individuals.

Likewise, Brannigan, Lerman and Bruno each checked “none” in response to the same question on the legislative disclosure forms, where the language is virtually the same as on the executive branch forms.

Said Phyllis Gardiner, an assistant attorney general, “The reporting obligation in Section 1016-A(7) thus does not appear to encompass goods and services provided to an executive branch agency by a corporation that employs, or is owned by, the legislator.”

So, if legislator Mary Smith is an accountant and performs accounting services for the state for which she is paid more than $1,000, she would have to disclose this under the requirement. But if legislator Mary Smith were the president of Accounting Associates Inc. and performed the same work, she would not be required to disclose.

Staff at the state’s Commission on Governmental Ethics and Election Practices, which receives and reviews legislative and executive disclosure statements, confirmed that this interpretation is correct.

“If that’s the limits of it, we’re missing a broad range of significant potential conflicts of interest,” Pierson said. “That interpretation is so narrow as to not make the law useful.”

Jonathan Wayne, executive director of the state ethics commission, said he, too, believes the law may be too limited in scope.

“I think it would certainly be better disclosure to the public if it were broadened to include organizations, whether nonprofit or profit-making, that had a certain relationship to the official,” Wayne said.

“I think it’s just good for the public to know if public officials or members of their immediate family have significant contracts with the state,” he said.

But Brannigan questioned whether the public would be interested in his business dealings.

“Would they know any more if you wrote it down on a piece of paper that nobody looks at?” he said.

Senate President Kevin Raye, a Republican from Eastport, said he was surprised to learn that the disclosure law failed to include businesses affiliated with a lawmaker or executive branch official.

“It almost strikes me that it’s an oversight or somehow wasn’t anticipated,” said Raye said. “I would have thought we already were disclosing this.”

Raye said he would consider introducing legislation to fill the disclosure gap.

“I think it would be in keeping with the spirit of the disclosure law,” he said. “I’m perfectly comfortable with including this aspect under the existing law.”

The Maine Center for Public Interest Reporting is a nonprofit and nonpartisan journalism organization that provides in-depth reporting as a public service to its Maine media partners.

The e-mail address is mainecenter@gmail.com.

The website is pinetreewatchdog.org.

Loophole means officials’ interests

in final year in office remain secret

By Naomi Schalit and John Christie

© The Maine Center for Public Interest Reporting

Citizens who want to understand the potential conflicts between private and public interests in the State House aren’t only handicapped by disclosures that don’t disclose much.

Some disclosures don’t even exist.

A loophole in state ethics law means that lawmakers and executive branch officials who leave office between one year’s disclosure filing deadline and the next year’s filing deadline don’t have to file a disclosure for their last year (or portion of a year) in state government.

An example: Rep. Joseph Bruno, R-Raymond, left office at the end of 2004. Ethics commission staffer Cyndi Phillips had this response when asked for a copy of Bruno’s 2004 financial disclosure:

“Unfortunately, we do not have a disclosure form for Senator Bruno for 2004 because he would not have had to report until February 2005, when he no longer was in office.”

The disclosure law’s wording is at fault, said Jonathan Wayne, the commission’s executive director.

By the filing deadline for Bruno’s last year in office, “Joe Bruno was not a legislator. So under the way the statute was written, we wouldn’t expect to receive a statement for Mr. Bruno in 2004, which was his last year of service.”

It’s the same situation for executive branch officials who leave their jobs. There is no disclosure form on file, for example, for the last month and a half that Kurt Adams served as chairman of the Public Utilities Commission in 2008.

“Kurt Adams was not required to file a statement because he left his position in May 2008 — 11 months before the reporting deadline,” Wayne said.

He wrote that statement in May 2010, adding that he and other members of the ethics commission staff believed this to be a loophole in the law.

“The Commission staff plans to propose some amendments to 1 MRSA 19, including instituting a reporting requirement for former employees,” Wayne wrote in an email.

“I'm not sure exactly what the proposed requirement will be, but it could be something along the lines of requiring managerial employees to file a statement for the current year upon the termination of their employment,” he wrote.

That change has yet to be proposed by the commission, but in December 2011, Wayne said it was an option the commission would consider for the next full legislative session in 2013.

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Comments

 's picture

Much ado

Another lengthy Christie exposé about nothing. Sure, more disclosure is a good idea and it could even start with a little more detail in the House and Senate Register. The article misleads readers to the wrong assumptions as posted. Christie and Schalit point to Brannigan who has been elected and re-elected for more than a dozen terms and has served his constituents well. Go to http://shalomhouseinc.org/index.htm and see how the money is used, as it is to pay providers throughout the state, to provide for our Maine citizens. Bruno is an astute businessman. He also brought his expertise to the table to the benefit of Mainers. Would the authors boost farmers from the Ag Comm.? Fisherman from the Marine Resources Comm.? Business people from the whatever they call that committee these days? Educators from the Ed. Comm.? And so on. The Legislature operates under Mason’s Manual of Legislative Procedure. Sec. 522 states: “The right of members to represent their constituencies, however, is of such major importance that members should be barred from voting on matters of direct personal interest only in clear cases and when the matter is particularly personal” (p. 354). Brannigan, Bruno and Lerman I know are good people and public servants and don’t deserve the “misleading and sensationalist” (thanks Mr. Morin) slander as presented in this article.

GARY SAVARD's picture

First the Turnpike Authority,

First the Turnpike Authority, now this. No wonder the "good ol' boy" establishment in Augusta has been going after Governor Lepage's throat since election night. His election obviously upset the apple cart. Life for them would have been sooo much better with Cutler or Mitchell in the Blaine House. This kind of stuff may be legal, but it sure smells.

Mark Elliott's picture

it's only legal because those

it's only legal because those we have appointed to represent us have made or allowed it to be legal. Kinda like the insider trading at the federal level. That loophole was intentionally put in the law by those that benefited from it......

 's picture

Craven

Wonder where Lewiston Senator Craven works?

 's picture

Forget about loopholes

What I would like to know is why we are giving this kind of money away in the first place?

 's picture

These are contracts for services

I agree that there's an issue here, but we should be clear that these are contracts for services. The payment to these organizations is disclosed. They fact that legislators and other state officials also work for these non-profits is what is not well disclosed. The story is a bit misleading and sensationalist.

Conflicts of interest

It is shameful conduct exhibited by members of both parties who should know better; thier explanations are equally shameful+ self servingI hope this administration takes note+ puts an end to it, but I doubt that will happen.

Mark Elliott's picture

If this administration hadn't

If this administration hadn't "taken note" we still wouldn't know about it.........but we do now. This is the kind of stuff the LePage administration is finding. After nearly 4 decades of democrat control, I am sure there is much more to be found.

JOHN PAINTER's picture

I hope that this "loop hole"

I hope that this "loop hole" will be closed, and possibly an inquiry held to assure there are no more such loop holes and determine if there was any breech of the public trust by these officials.

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