Ethics loophole: off-books lobbying

By Cameron McWhirter
 and James Salzer

The Atlanta Journal-Constitution

When John Oxendine’s stepson shot and injured a bystander at a private quail preserve last month, the accident caused public debate about hunting safety.

But at the state Capitol, it sparked discussion on another topic: shadow lobbying.

Under state law, all lobbyists are supposed to register with the state and report their expenses for the public to see. The policy goal: Let the public see who is trying to influence their elected officials and how they’re doing it.

But what counts as lobbying? Lobbyists and legislators say loopholes and lack of clarity in the law have made it impossible to tell when such off the books schmoozing crosses the line.

The shooting occurred while the state Insurance Commissioner and his family were spending a three-day weekend as guests of Delos Yancey III, a powerful insurance executive whose companies are regulated by Oxendine. Yancey is not registered as a lobbyist.

Were it not for an errant shotgun blast, the public never would have heard about this three-day weekend.

Ethics was already in the spotlight after a scandal involving former House Speaker Glenn Richardson, whose ex-wife said he had been having an affair with a lobbyist for Atlanta Gas & Light while co-sponsoring a bill that benefited the company. Richardson’s resignation rocked Georgia politics and has everyone re-examining how legislators and lobbyists interact.

Critics say unreported lobbying is common and they want tighter laws and enforcement so the public knows who is spending what on whom at the Gold Dome. Ethics groups are calling for more transparency about what gifts elected officials receive, and many of those complaining the loudest are high-powered, registered lobbyists.

Trip Martin, a leading Gold Dome lobbyist, said unreported lobbying is hurting his business because others aren’t playing by the rules.

“My focus is on what I call unregistered agents who are being compensated to impact public policy decisions, be that legislation, state contract procurement or state rules and regs, yet they refuse to register,” Martin said.

So, was Oxendine being lobbied?

The Insurance Commissioner and GOP candidate for governor says no; he was just spending time with a friend. “We like to hang out,” he said.

Yancey, CEO of the State Mutual Insurance Co. and a donor to Oxendine’s campaign, isn’t talking.

Under state law, any lobbying trip costing more than $250 is supposed to be reported to the State Ethics Commission, and anyone lobbying is supposed to be registered.

The 2005 ethics law, however, does not explicitly prohibit lobbyists from entertaining state department heads, such as Oxendine, without disclosing the expenditure unless they are meeting about a specific rule or regulation. If they talk about business issues or specific cases, it’s not considered lobbying under the law.

Critics are incredulous.

Martin, founder of Georgia Link Public Affairs Group, a lobbying firm with one of longest lists of corporate clients in the state, said he has decided to root out rogue lobbyists and out them to the public.

“They know who they are,” Martin said. “And I am personally looking to identify them.” He did not say how he plans to identify unregistered lobbyists or to whom he would present the information.

Lobbyists and legislators told The Atlanta Journal-Constitution of instances in which state officials and legislators were wined and dined by CEOs who picked up the check so lobbyists wouldn’t have to disclose them. They also told of corporate jets being used to send legislators to golf outings, bowl games and even European vacations. Some lobbyists declined to speak on the record for fear of angering legislators and other lobbyists.

The public hears about such trips only on rare occasions. Several years ago, the head of a title pawn company acknowledged he had flown Richardson to Las Vegas for a conference at a time the Legislature was considering more regulations for the industry. Last year, Oxendine’s staff acknowledged Yancey had taken Oxendine on at least one hunting trip to Mexico that was never reported.

Legislators grappling with ethics reform say they want to make sure that when anyone tries to butter up a legislator with a fancy dinner or vacation, the public knows about it.

“Are there loopholes in the system? Yes,” said Sen. Dan Moody (R-Johns Creek), chair of the Senate ethics committee. “We want 100-percent disclosure. That’s what the public deserves.”

Some want undisclosed trips and gifts to end.

“There is no question there are junkets,” said former state Sen. Rusty Paul (R-Atlanta), now a nursing home lobbyist. “There is no question there needs to be more transparency.”

Of course, open government advocates don’t like the situation either. Bill Bozarth, executive director of Common Cause Georgia, estimates about half of all lobbying now taking place isn’t being reported.

Years ago, lobbying out of the spotlight was the norm. Before the state had any ethics laws, all manner of trips, dinners and gifts were delivered to legislators. Beginning in the 1980s, Georgia lobbyists had to start wearing badges. Later, they had to start disclosing what they spent on lawmakers, although that didn’t stop problems. In one of the most notorious lobbying trips in modern state history, lobbyists arranged for five lawmakers to attend a golf outing on Daufuskie Island, S.C. Four strippers from Atlanta also attended. The incident spurred calls for tighter ethics rules and tarnished several political careers.

When the Republicans swept to power in the 2000s, they promised a new era of open government. Gov. Sonny Perdue set up strict rules for his own staff regarding gifts and imposed a waiting period before former staffers could lobby the government.

In 2005, Perdue pushed an ethics reform bill that in some respects made lobbying more transparent by requiring more lobbyists to register and report their expenses. In 2006, the first year the new ethics law was in place, 1,507 people registered as lobbyists and reported spending a total of $1.2 million on lobbying. Last year, 1,806 people registered and spent $1.5 million on lobbying.

But loopholes and weak enforcement allowed a lot of what the public would consider lobbying to take place without public scrutiny.

Robert Highsmith drafted the 2005 law while he was Perdue’s lead counsel. He said the law’s goal was simple: If you are paid to promote a business interest, you have to register and report expenses.

“When it gets complicated is when people try to think of artful dodges,” he said.

For example, self-styled “media consultants,” who direct campaigns and television ads to affect policy, haven’t been registering even though they work to influence legislators for clients. Some people have fashioned businesses by exploiting such loopholes. It didn’t help that enforcement has been hampered by budget cuts. Last year, the State Ethics Commission budget was slashed by about a third.

Richardson’s career implosion last fall led to calls to tighten rules on lobbying. Some proposals now being considered by the Legislature call for more transparency and others call for limits on gifts. Others would require more disclosure for those lobbying state agencies.

One bill comes from a longtime lobbyist-turned-legislator. Rusty Kidd, elected this year from Milledgeville as the state’s only independent legislator, was a lobbyist for decades and knows the seamier side of the business. In fact, he set up the Daufuskie Island trip. Kidd said shadow lobbying is a chronic problem. He said he knows of CEOs picking up tabs for dinners where lobbyists were present. He said CEOs regularly offer up beach houses, lake houses, hunting lodges and yachts to legislators.

Kidd’s bill — H.B. 914 — would solve the disclosure problem, but in a way more legislators might find unpalatable.

He would make legislators disclose all of their trips and gifts. By making legislators declare every gift they receive, nothing could be hidden, he argues.

That said, most observers of Georgia politics, including Kidd, think legislators will be reluctant to make themselves report gifts and trips.

“They’re not going to go along with it,” Kidd admitted. “I realize it’s not going to pass.”

Other states and Congress require elected officials to report gifts, trips and dinners they receive. Elizabeth Bartz, president of State and Federal Communications, an Ohio company that tracks state ethics legislation for companies nationwide and also consults on ethics issues, said Maryland, California and other states now require elected officials to disclose gifts and trips.

Maryland, for example, requires all state officials, including legislators, department heads and judges, to file annual disclosure forms listing any gifts valued at more than $20 “from a person doing business with the State, regulated by the State, or registered as lobbyists.”

Legal experts on ethics laws say regulating lobbying is complicated and requires careful consideration of the constitutional right of everyone to petition their government.

Stefan Passantino, a lawyer who focuses on ethics compliance and who represents various politicians including Oxendine, said lobbying is much easier to complain about than to control through legislation.

“The problem is to try to capture what the public mood is, what the public considers lobbying,” he said.

Moody, who now leads a joint ethics committee with Rep. Joe Wilkinson (R-Sandy Springs), said the lobbying rules are complicated by the fact that Georgia has a part-time Legislature, so most lawmakers also have full-time jobs. The question comes up all the time, he said, “when are they getting lobbied and when are they involved in normal business?”

But he said that whatever the Legislature passes this year, “our ultimate goal is to have a very open and transparent reporting system.”

Until then, the wining, dining and hunting continue — and the public rarely hears about it.