On some days, nothing, on others, my two cents worth on matters related to Alabama politics or anything that captures my attention. Some days I will discuss the Siegelman/Scrushy legal situation, or provide records used in my reporting.
Friday, April 29, 2011
Bonus Chapter II: The Governor's Money Pot
Next week I will be publishing on my web-site and probably the blog as well five "bonus chapters" that were cut from, "The Governor of Goat Hill." Hard to believe but at one stage the book was even longer. There will also be a section on my reporting on the James' administration that was severely cut, and some table-scraps, mostly involving reporting, that didn't make the book.
For a preview, here's, "Bonus Chapter II: The Governor's Money Pot."
Portions of this chapter -- about Siegelman's misuse of the Governor's Contingency Fund -- are in the book. Siegelman's defenders frequently say that he didn't do anything that other governor's didn't do. I disagree. Certainly, no other governors abused the contingency fund as he did. Of that, there can be no dispute.
-- Amount of charges by Siegelman, his wife Lori, his "confidential assistant" Nick Bailey and others to a special pot of money called the governor’s contingency fund, and for which state auditors were unable to determine the nature of the expenditures and/or their public purpose.
“Let me come to the defense of my wife this way: I ran for governor, Lori did not. If you plan to keep kicking someone around, kick me.”
-- From Feb. 28, 2003 letter Siegelman sent Register publisher Howard Bronson, after our first story on the contingency fund.
Each year, some $700,000 to $1 million is provided to the governor’s office to pay for all manner of expenses, from legal bills to the staff’s coffee vendor. Administrations are given considerable latitude when spending money from the fund. State law merely requires that it be used “for a public purpose at the governor’s direction or discretion.”
The law requires that the governor’s office provide the legislature with periodic reports of the spending. For whatever ancient reason, the state comptroller doesn’t maintain the supporting documents for those charges. Instead, these are kept at the governor's office.
If you want those supporting records,you ask the governor’s office, and it provides them. That, in any event, is how it’s supposed to work, and until Siegelman, always had.
In February 2002, a lobbyist suggested to Montgomery Advertiser reporter Mike Cason that he review certain charges from the fund. He subsequently submitted a list of 45 expenditures to Siegelman’s press office and requested the supporting documentation.
The list included records for travel-related expenditures by Siegelman and others; and the credit card bills and receipts explaining charges to American Express cards issued to Siegelman, his wife, Bailey, and several others. Some records were provided, but many, including the AMEX bills, were not.
Siegelman spokesman Rip Andrews told Cason that the administration was of the position that some spending records were private. Andrews and others, including Ted Hosp, the governor's general counsel, were unable to cite any case law supporting that position.
Rip said the withheld records pertained to the industry recruiting trips and that their disclosure could jeopardize future efforts. This was bunk, as was Rip’s pledge to Cason and therefore the public that no personal items were charged to the cards and that receipts and supporting documentation did in fact exist for all the purchases.
What, though, were Rip’s options? Telling Cason and thus Alabama voters that hundreds of thousands of dollars in public expenditures couldn’t be explained or supported by receipts?
That taxpayers picked up the tab for Nick Bailey, Siegelman’s budget officer/confidential assistant/ADECA chief to, as will be seen, fly himself and others to Las Vegas twice? That public funds were used to pay for the first family’s vacations, including one to the Virgin Islands?
The administration opted for the lesser of two public lashings – the one of predictable scale sure to be administered for violating the records law preferred to the catastrophic stink guaranteed by release of the records and the acknowledgement that, in many cases, none existed.
A Birmingham News editorial scolded Siegelman for disobeying one of his own post-G.H. ethics reform executive orders. In that particular Aug. 2001 order, Siegelman issued a mandate requiring all state agencies to generate annual reports of their grants, contracts and expenditures, and make the information public. The order covered the governor’s office and the contingency fund.
“This is just one more example of Don Siegelman saying one thing publicly and doing another thing privately,” opined the News after the Advertiser reported on Siegelman's refusal to turn over the spending records.
Bob Riley, then a candidate for the Republican gubernatorial nomination, added salt to the wound. He told the Associated Press that Siegelman “signs an executive order requiring disclosure, then he refuses to follow it.”
A year later found Siegelman out of office and the contingency fund records in the safekeeping of the new Riley administration. I was of the position that the records merited a look see.
I had been reviewing contingency fund expenditures since early in the James’ administration and had made excellent use of them. (See, Bonus Chapter VI: The Fob James Section.)
Cason’s story from the year before suggested rather strongly that Team Siegelman had something to hide. Shortly after Riley’s swearing in I called his press people and asked if I could review the records. No problem, they said. It was all public.
It took five days and two trips to Montgomery to sift through a roomful of file cabinets bearing thousands upon thousands of pages of bills. On these days, from 8 a.m., until 5 p.m., I eyeballed tens of thousands of itemized expenses. I copied all the AMEX bills and much else besides. I couldn’t feed the records into the copier, but had to do it page by page. Wore my ass out, to say nothing of my fingers, sentenced to hell by a thousand papercuts. Don’t expect this will engender much pity, but I sure felt sorry for myself.
Upon returning I organized the bills and entered them into my Quicken program at home.
At this stage we were sensitive to the potential for claims that I, and the paper, should leave Siegelman alone. I justified the stories on the following grounds: He had refused the year before to divulge the records; he would surely be running for statewide office again; and above all, the expenditures were newsworthy.
Our review focused primarily on the AMEX bills and travel charges, including those to a Tuscaloosa-based firm called Worldwide Travel. In 1999, Siegelman ordered all agencies to make their travel arrangements through Worldwide, whose owner was a friend of his and Bailey’s.
The laws governing the fund had to be explained to readers, including the requirement that state employees all the way up to the governor's office provide receipts and other documentation explaining the expenditure of public funds. As anyone who’s completed one knows, expense reimbursement forms are drudgery, though I'm sure the governor has secretaries to do the detail work. In any event, the law demands documentation for the spending of public funds regardless of whose doing the spending, as it should.
The state Examiners of Public Accounts audits the contingency fund every four years. These reports are notoriously picky. Four years before, the audit of the James’ administration cited First Lady Bobbie James’ use of her own money to buy silverware, furniture and other items for the mansion. She’d turned in the receipts and been reimbursed. According to the examiners, Mrs. James’ actions cost taxpayers $72 – that being the amount in sales tax the state would have saved had the administration bought the items, since the state doesn’t pay sales tax.
The examiners inability to determine the purpose of a single out-of-state airline ticket was noted in the audit and news stories on same, as was the James Gang’s failure to document the purpose for spending $945.56 on 21 hams.
Considering the reporting of these minor infractions, Siegelman could hardly claim he didn’t know the rules governing the fund, nor, having tortured them, complain at being called out for it.
One charge in particular impressed me for its gall.
Every year graduates of high schools and colleges receive letters seeking donations to their alumni funds. Most of us would like to give, or contribute more than we do, but our generosity is mitigated by financial realities. No such realities plagued Siegelman upon receipt of a form letter seeking donations to the alumni association of Mobile’s Murphy High School. (See record below.)
The governor wrote a notation on the letter telling his secretary to "send $500" to the alumni fund. It came, not from his pocket, but from Alabama taxpayers. Here he was, using public funds to play big man on campus at donor time.
Among the multitude of other relatively small if equally dubious charges were $35 to renew his membership in the National Rifle Association; $336.35 for “Personal Power” audiotapes by tanned, tall and toothy motivational speaker Tony Robbins; and $43.45 for a pair of shoes.
Larger outlays included:
-- $6,251.35 in flight, hotel and assorted purchases in December 1999, when the Siegelman family and Bailey flew to and stayed in Puerto Rico, then on to the Virgin Islands. There they spent the Christmas holidays at the vacation home of Jack Miller, the Mobile lawyer, state Democratic Party boss, and beneficiary, through his firm, of substantial amounts of state legal business awarded by Siegelman.
-- $3,690 to fly Bailey and unidentified others on two charter airplane trips to Las Vegas. (During the 2006 Siegelman trial, Bailey's confirmed a litany of gifts and payments given him while he served Siegelman. Among them: four tickets to a Las Vegas show from dogtrack owner come electronic bingo bribery defendant Milton McGregor.
-- $1,443.64 for a state security officer to chaperone Siegelman’s daughter on a personal trip to North Dakota.
-- Thousands of dollars in unexplained purchases from vendors including Banana Republic, the Gap, Bloomingdales, Amazon.com, and Delta Air Lines’ in-flight catalogue. (See one many examples of such bills below.)
-- Thousands more in travel-related bills so Don and Lori Siegelman could attend three of the annual summer gatherings/junkets held by the Conference of Western Attorneys General (in Custer, S.D.; Sun Valley, Idaho; and Monterey, Calif.)
It’s difficult to fathom how the Siegelmans presence at a conference of attorneys general from western states could benefit Alabama citizens, but he deemed it so, and used the contingency fund to pay for airline tickets, hotel bills, meals and the rest. Later, Siegelman's friends in the ex-attorneys general community were to band together and file petitions, legal briefs and generate substantial publicity for Siegelman's claim to have been railroaded by Republican prosecutors.
With a few exceptions, no itemized receipts or written explanations existed for trips and credit card charges by Siegelman, his wife, and Bailey.
Within the files was a December 1999 memo from governor’s office accountant Becca Crawford to state examiners.
“I cannot make any sense out of some of these receipts," she wrote.
The first story on the contingency fund expenditures enraged Siegelman, perhaps as no other by me before or after. It followed my first review of the files, and led with undocumented trips and charges by the First Lady. The bills indicated, for example, that when in Birmingham, Lori Siegelman was something of a regular at Planet Smoothie, which sells fruity frozen energy drinks.
The piece began:
In mid-October, with her husband campaigning for re-election virtually around the clock, then-first lady Lori Siegelman flew to Buffalo, N.Y., took a shuttle bus to Canada and spent more than a week at the Queen's Landing Inn, according to bills from an American Express card issued to her by the governor’s office.
Alabama taxpayers paid $156.50 for her flight from Atlanta to Buffalo, $52.09 for the shuttle bus, $38.81 for a meal and $797.94 for the hotel room in a town called Niagara-on-the-Lake, the bills show.
In the final 14 months of her husband's administration, Lori Siegelman billed the state for trips to New Orleans; Monterey, Calif.; Albuquerque, N.M.; Boston and for an airline ticket to Milwaukee, according to the American Express bills.
The former first lady -- regarded as a private woman who rarely appeared with her husband at government events -- also used the card at restaurants in Birmingham, where she has family and where the Siegelmans bought a home in December 2001; and to buy goods, including vitamins, books and artwork.
We knew that the Siegelmans would refuse to answer questions from me, but recognized the sensitivity of reporting on his wife’s spending. She had been, well, the first lady, and first ladies frequently use their positions to advocate for pet causes or public projects. Still, spouses and children of governors should not be confused with those of presidents in terms of what taxpayers pay for.
It was decided that Bill Barrow (then one of the Register's Montgomery reporters, now a reporter with the New Orleans Times-Picayune) would contact Siegelman. He did, but Siegelman declined to take his questions.
I went beyond the call of duty by searching Merlin (the computer library of Register stories) and Nexis for stories reporting trips, official or otherwise, and this allowed me to verify or reject the public purpose of some of the travel. I was under no obligation to present readers with what amounted to guesses for permissible reasons for charges by the Siegelmans and Bailey, but did so anyway, as here, in that first story:
Siegelman’s decision not to comment to the Register makes it difficult to know for certain if any charges were made for personal expenses.
Some purchases, such as art or even books, could have been for the Governor’s Mansion -- an allowable use of contingency funds, assuming the art or books remained at the mansion following the first family’s departure.
Another example: In November 2001, the first lady charged $621.42 to Sleeping Bear Press, a publisher of children’s books. Lori Siegelman’s chief project as first lady involved the promotion of art for children, and she hosted several arts festivals for children from throughout the state.
The children’s books could well have been associated with those festivals -- an expense that would be allowed from the contingency fund.
The Associated Press picked up the story and called Mike Kanarick, the third and final Siegelman spokesperson and still helping out. Kanarick told the wire service that anyone “who attacks the integrity and fine character of the former First Lady has stooped to a new and unconscionable low.”
Our story hadn't attacked anyone's integrity or character. It had merely catalogued spending of state funds for which there was no explanation, some of which involved Lori Siegelman.
The Montgomery Advertiser, its reporter rebuffed a year before when he sought the records, published an editorial that asked, tongue in cheek, the question, “Was former first lady hunting for industry?” (See below.)
Our paper also editorialized on the spending, Siegelman wrote a long letter to Register publisher Howard Bronson. He complained that I “knew or should have known” that his wife “personally paid for personal items and that all of Lori’s travel was for a public purpose – namely, the advancement of arts education for Alabama’s school children … Your reporter has shown a continuous reckless disregard for the truth.”
That prompted a story by us, written by Barrow and reporting Siegelman’s complaints and our responses to them. Readers were told that Siegelman had refused our request to explain the charges; and that I had sent multiple e-mails to the press staff of the new governor as well as the governor’s office accountant seeking any additional records from the prior administration that might explain the bills. In fact, I'd feared reporting that no explanations were provided for the charges cited in the story, only to learn otherwise, post-story, from Siegelman. That made me work that much harder to locate possible reasons for the spending.
Bill's story reported Siegelman’s explanation for many of his wife’s trips. Some were to meet other first ladies to help build houses for Habitat for Humanity, and certainly met the public purpose requirements of the contingency fund. Others involved travel to conferences related to the arts – Lori Siegelman’s chief interest -- and arguably met the requirements as well. Some – such as traveling with a friend to Chicago to watch the Alvin Ailey dance troupe – struck me as questionable.
I didn’t relish Siegelman’s attack on me for writing about his wife, but appreciated his vigorous and clearly heartfelt defense of her.
There had been rumors of difficulties in the marriage, understandable if so, considering the pressures of the job and Lori Siegelman’s private nature. Most of what I knew about Siegelman was unflattering, his disingenuous side. Here he was from another angle, caring about his wife and ferociously angry at her being written about.
Siegelman chose to communicate with us to defend his wife, but refused Barrow’s request that he explain other charges. As Bill reported, the former governor “declined specific comment on other contingency fund expenditures mentioned in the Register’s Sunday news story, including shoes and chocolates purchased in Chicago on his credit card and more than $78,000 spent to print and mail invitations to the state Christmas tree lighting ceremony.”
My second story reported the first family’s trip to Puerto Rico and the Virgin Islands and presented an overview of the American Express bills.
The abuses presumably would have been worse, or in any event, more numerous, had someone not stepped in and put the kibosh on the credit cards midway through Siegelman’s term.
Three days after publication of our first story, Ted Hosp delivered a $38,799 check to the state. It was from the trust account of the law firm of long-time Siegelman lawyer Bobby Segall, whose signature it bore. A memo described it as a partial settlement of expenditures disallowed by the examiners. As far as Siegelman was concerned it was a final settlement, since it was both the first and last such payment.
In May, the examiners issued a report that supported our findings, and then some. Phil Harrod, who had audited the Guy Hunt administration and every governor’s contingency fund since, told readers he’d never come across problems “of this magnitude.”
Despite considerable time and effort, the examiners were at the end of the day unable to determine the public purpose of $483,935 spent on trips, meals, and truckloads of other items, many of which couldn’t be identified by the available records and memory banks.
Harrod spoke to Siegelman once, in an exit interview. Of this meeting, readers were told:
In summarizing the $483,935 worth of trips, meals, and assorted items that the examiners could not issue an opinion on, Harrod wrote that Siegelman “represented to me that these disbursements were made for a public benefit and purpose.”
Harrod determined, however, that “the lack of supporting records, travel authorizations, contracts and other written documentation limited my ability to determine whether public funds were spent in accordance with applicable state laws and regulations.’”
Harrod, for example, was unable to determine the purpose, public or otherwise, of Bailey’s trips to Las Vegas, or able to learn what Bailey and Lori Siegelman bought from airline catalogues.
“In a lot of cases, they didn’t have an answer,” he said. “Time had passed and they said they just did not know.”
Here's a portion of the letter from Murphy High to alumni seeking donations. The handwriting on the side is Siegelman's, directing that $500 be sent to Murphy from the contingency fund.
Here is one of the payments for the Personal Power/Tony Robbins videotapes.
This is one of many AMEX bills -- this one, for expenditures on Nick Bailey's card -- and reflecting charges for which there was no supporting documentation. In other words, there were no records showing what was purchased from the Gap, Bloomingdales, Amazon.Com, and on and on and on.
Below is editorial by the Montgomery Advertiser which, a year before, had been denied the records that didn't become available until Siegelman vacated the governor's office.