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Friday, December 16, 2011

UPDATE: Ethics Commission won't require disclosure on campaigns

Posted By on Fri, Dec 16, 2011 at 11:30 AM

DISCLOSURE 'DOWN THE TUBES': Ethics Commissioner Paul Dumas favors improving statute.
  • DISCLOSURE 'DOWN THE TUBES': Ethics Commissioner Paul Dumas favors improving statute.

Max is awaiting a decision from the Ethics Commission regarding his complaint that the Little Rock sales tax campaign committee didn't adequately report expenditures on the successful campaign to pass the sales tax. The commission is currently in private deliberations.

UPDATE FROM MAX: I was smashed.

By a 4-0 vote (Chairman Catherine Johnson didn't participate because of a conflict with a participant) the Ethics Commission this morning dismissed my complaint that the Little Rock sales tax committee hadn't properly disclosed its expenditures. It reported only checks to a consulting group, the Markham Group, that ran the campaign and spent money on advertising and other means in the committee's behalf.

The vote reversed an earlier vote by the commission finding probable cause of a violation and offering a proposal to settle the case. The sales tax committee refused to settle and asked for today's public hearing. It was represented by Kevin Crass of the Friday firm, who argued that disclosure of only payments to campaign consultants had been a common practice of ballot question committees (true, though not universal) and it would be unfair to the good citizens who worked on the campaign to give them even a mild reprimand for doing what they believed to be legal. He argued that the law allowed this reporting practice. The law requires disclosure of expenditures of $100 or more, but Crass said that requirement was met by disclosure of payments to the Markham Group.

DISCLOSURE DOWN THE TUBES: Ethics Commissioner Paul Dumas favors improving statute.
  • DISCLOSURE 'DOWN THE TUBES': Ethics Commissioner Paul Dumas favors improving statute.
UPDATE: Down at the bottom, find several updates that indicate a desire on the part of the Ethics Commission to correct the loophole I've identified. Paul Dumas, who acted as chair at today's hearing, said he'd back legislative action to tighten the statute. Graham Sloan, director of the Ethics Commission, also said he believed a recommendation for change was a strong possibility. If that happens, all will not be in vain.

Rita Looney, counsel for the Ethics Commission, argued that my complaint was "meritorious." She noted, as I did, that if the procedure to disclose only payments to campaign managers or other intermediaries were allowed that public accountability would be nil. Robert McLarty of the Markham Group said there were "proprietary" things that full financial reporting would reveal about his campaign strategy. Looney said that was exactly the sort of thing the public was entitled to know. It is also precisely the sort of thing that candidates routinely disclose. McLarty agreed he spent money both in behalf of the committee and at its direction. Professional consultant though he might be, the procedure being followed here allows cleansing of all ways to trace how money is spent. I used the phrase "money laundry" previously, to the great unhappiness of the consultants, but I can't think of a better metaphor for the process perfected here.

Crass said that, if the law was lacking, the Commission should move to fix it by rule change or legislation, not by "changing" the law in midstream. (I'd prefer to say it didn't require a law "change," but overdue enforcement.) Looney noted that this was a case of "first impression" — that nobody had complained about reporting lacks on ballot question committees previously. Crass suggested it was the Commission's duty to identify shortcomings in filings and notify filers about it. He said that had not happened in this case. Looney responded that, as a practical matter because of the size of staff and the huge number of filings, that most are not closely reviewed and that commission investigations tend to be complaint-driven.

So the question: Will the Little Rock Regional Chamber of Commerce, revealed clearly in the hearing as the genie behind the curtain of this and other issue campaigns, join me in asking the same sort of spending disclosure for ballot issues that is required for political candidates? I've asked CEO Jay Chessir that question — and, again, for voluntary disclosure (what's to hide now?). I've also asked Paul Dumas, the acting chair of the Ethics Commission, if today's vote — a reversal of a vote that seemed to signal a feeling of a problem in reporting — was a prelude to an effort by the Commission to improve the law. I'll update if I hear from either of them. I hope Chessir proves me wrong and 1) returns my call e-mail and 2) says he supports accountability in election spending.

Crass did a good job highlighting the good intentions of the committee and the professionalism of the Markham Group. A veteran of Ethics Commission battles as counsel to former Gov. Mike Huckabee, he declined to comment whether he thought the law could use some clarification.

The bottom line today is that there is now, undeniably, no accountability for spending of ballot question committees. The fellow pushing a casino amendment could write me a check for $1 million to spend however I wanted and comply with disclosure laws by reporting that one check. The Ethics Commission and I might disagree on whether that's what the letter of the law allows, but I'd hope most would agree it is NOT in the public interest. The Ethics Commission's future response to this outcome will be a measure of whether it deserves its name.

UPDATE: I asked Robert McLarty, whose firm does a great deal of this work, if he'd support a change to insure more disclosure. He said: "... there's a process of changing and making law and I'm not in that business. There's a lot of things at the capitol that need help." That's what's known as a non-denial denial, I think.

Jay Chessir, similarly, isn't inclined to jump on the public accountability bandwagon with me. I asked for voluntary disclosure on this campaign. He said by reporting some categorical spending (without names of recipients of the money or any supporting information for the claimed amounts) the committee had already disclosed more than was required. Support for change in the law to make it clear that more disclosure is required? "We have not seen a proposed change in which to express an opinion."

Graham Sloan, director of the Ethics Commission was more hopeful: "I'm confident the commission will recommend a change in the statute." He said I'd identified a shortcoming that could be fixed by legislation and he believed it was likely the commission would recommend the change for the 2013 legislative session. He said he was confident the legislature would be amenable to a proposal for more disclosure on ballot questions.

Paul Dumas, a Morrilton lawyer who acted as chair today, echoed Sloan. He said the commision, after hearing from Crass, felt constrained by the poor language of the statute in finding a violation. But he said: "It's clear public disclosure is down the tubes with the way this statute is written and the way it has been applied. The solution to that lies with the legislature, not with us." He said he'd "very much like to see that statute looked at by the legislature in light of what you brought to light." He said the statute need to be more clear, more specific and more favorable to public disclosure.

Legislators, can I get a sponsor? Disclosure: Expect it to mean fighting the Chamber's historic preference for secrecy.

The Commission had voted 4-0 Oct. 21 that it found probable cause a violation HAD occurred. It proposed that the committee agree to an unintentional violation, with a letter of caution, and file an amended report with disclosure of expenditures of more than $100. This was the finding that the committee contested at today's hearings, which turned the commissioners around. Commissioner J.B. Minix didn't participate in the first hearing, but Catherine Johnson did because it was before the Friday Firm was working on the case. Here's the full finding of probable cause of a violation.

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