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.

       $483,935
     -- 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.

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