Wednesday, October 21, 2015

Digging in the lobby reports; a $4,000 steak dinner and a $30,000 lobbyist-legislator loan

Posted By on Wed, Oct 21, 2015 at 1:23 PM

JAKE FILES: Says $30,000 lobbyist loan repaid.
  • JAKE FILES: Says $30,000 lobbyist loan repaid.
Should a lobbyist loan a legislator $30,000? It happened. Read on for more circuitous road to that discovery.

The hot rumors that the federal investigation of Mike Maggio has spread into other lobbyist/legislator relations sent me to perusing lobbyist activity reports, beginning with that of Gilbert Baker, the bagman for campaign contributions to Maggio and a number of other political candidates, both judges and legislators, the biggest single recipient of Baker bundles being Supreme Court Justice Rhonda Wood (almost $50,000). Baker also claimed credit for a $100,000 infusion into Stacy Hurst's unsuccessful race for House, but others said later he'd exaggerated.

Baker has been accused of no crime, but phone calls and texts between him and Maggio are a critical part of the case against Maggio, who's pleaded guilty to taking campaign contributions (seemingly arranged by Baker) in return for reducing a nursing home negligence verdict against a home owned by the man who provided the contributions (Michael Morton of Fort Smith) Baker helped round up. Only Maggio has been charged.

Speculation continues that Baker could be providing information about others. He is a registered lobbyist himself now.

So I took a look at lobbyist activity reports for his MEJ Consulting. I was curious, for one, to see what expenses were reported for the steak dinner he co-hosted at the American Legislative Exchange Council gathering in San Diego last summer. This free feed was possible thanks to a little ol' bit of clarifying and tweaking Sen. Jon Woods did to the new ethics law to allow camp-following lobbyists to go to out-of-town conferences and slop legislators out of sight of the public. This despite a constitutional amendment that allegedly ended such free wining and dining, but really didn't.

Baker, whose clients include a major tobacco company, spent $834. Len Pitcock, working for Cox Communications, tossed in $884. Robbie Wills, slopping for Balanced Energy, spent $834. Ted Mullenix spent $834, but didn't identify which of his many clients he billed. DBH Management Consultants, headed by Bruce Hawkins, also spent $834 and also didn't say which of his clients paid the freight. None identified which legislators were on hand. But a $4,000 dinner was either a lot of legislators or a lot of good wine.

Several in this group of lobbyists also were among a larger contingent that spent in the neighborhood of $2,000 each to entertain attendees of the Southern Legislative Conference, another  free party that continues despite the so-called ethics amendment.

But wait, there's more. I'm so glad I perused these reports because I turned up an interesting disclosure on the DBH Management form:

It answered "yes" to the question of whether it had loaned, promised money or given a line of credit to a public servant — in this case $30,000 to Republican state Sen. Jake Files of Fort Smith.

There is no law against this as far as I know. 

But look at the lengthy list of Hawkins firm clients.
They are so numerous and widespread, it's hard to see how a legislator could vote without frequently casting ballots for or against the interest of Hawkins.

Do we really need a rule against lobbyists' loaning money to legislators? Shouldn't common sense guard against this sort of thing. I called Files and Hawkins.

Files was open, but — I think it's fair to say — sheepish. "He loaned money to one of my companies and I repaid it according to terms of the loan." He also said he'd cleared the arrangement with Graham Sloan, director of the state Ethics Commission.

"I understand the appearance of conflict of interest," Files said. "If there were any [actual conflict], I would recuse."

Why not go to a bank? I didn't get a precise answer to that. He said his real estate ventures use many banks and he could have qualified. He said "somebody" had suggested Hawkins as a source of a short-term loan. He said it was for six months, at 5 percent, and had been repaid. It was for a real estate limited partnership, J3 Partners.

He said he couldn't recall ever carrying significant legislation for Hawkins and had no plans to do so. Given Hawkins' roster of clients, he said he was sure he'd been lobbied by him over the years.

Future dealings with Hawkins?

"I'd probably look at them a little closer because of appearances. I'm not planning to carry anything, but I plan to be more cautious. But I tend to be cautious anyway."

Hawkins said he'd simply done a favor for a friend. He said he knew the arrangement would come out and he'd taken care to report it and clear its propriety.

"I loaned money to a friend. It was a business decision. In addition to being my friend, he also happens to be a legisator."

He contacted the Ethics Commission "out of an abundance of caution," he said. "They walked through this and I got assurance it was legal as long as it was done in a businesslike manner."

Hawkins said he had to go the bank himself to borrow money to make the loan to Files. But he referred to Files my original question about why Files needed to go to Hawkins if bank lending was available.

Hawkins, too, said the loan had been repaid. He said it shouldn't affect future relationships. He said he'd told Files to recuse whenever necessary or matters relating to his interests.

UPDATE: I spoke with Graham Sloan. He said he'd spoken with Files and Hawkins within the last week, but only as to reporting requirements on the loan.

PS: Given the occasion to talk with Hawkins, I asked him about rumors swirling about extensions of the investigation that led to former Judge Mike Maggio's guilty plea. Hawkins' name turned up on the edge of that matter because of his creation of political action committees that had received money aimed  Maggio. He said those activities were legal. He said he'd freely spoken to federal investigators since and had nothing to hide. He said he had done nothing wrong. And he said in response to a direct question that he was not a target of investigation.

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