Oxendine's big funder

Republican candidate for Governor of Georgia John Oxendine gathers with other candidates to discuss issues in a debate sponsored by the Georgia Municipal Association at the Hilton in downtown Atlanta, Monday, Jan 25, 2009. Elissa Eubanks, eeubanks@ajc.com

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Republican candidate for Governor of Georgia John Oxendine gathers with other candidates to discuss issues in a debate sponsored by the Georgia Municipal Association at the Hilton in downtown Atlanta, Monday, Jan 25, 2009. Elissa Eubanks, eeubanks@ajc.com

Individual giving is limited to $12,200, yet 10 PACS set up by one insurance exec gave $120,000 total.

Two Georgia insurance companies with the same boss funneled $120,000 -- nearly 10 times the legal limit -- to Insurance Commissioner John Oxendine's campaign for governor, records in Georgia and Alabama show.

The documents show Oxendine, who wields regulatory power over all insurance companies in Georgia, received the money through 10 Alabama-based political action committees set up by Donald V. Watkins, a director of Admiral Life Insurance Co. of America and State Mutual Insurance. Both companies are headed by prominent businessman Delos "Dee" Yancey III and are run out of the same building in Rome.

Georgia's Ethics-in-Government Act prohibits officials from taking money directly from companies they regulate. The law also prohibits funneling money through multiple PACs to get around contribution limits of $12,200 per candidate in an election cycle.

Oxendine, 47, was the first Republican to announce his candidacy for the 2010 governor's race, and he has been a leading fund-raiser. As of the close of 2008, he had raised more than $1 million.

Oxendine and Watkins both spoke with The Atlanta Journal-Constitution Wednesday. They emphatically stated the money donated from the 10 PACs had come from various donors, which they argued made the donations legal. They declined to identify those donors.

On Thursday, the AJC found Alabama Secretary of state records showing payments by Admiral Life and State Mutual into the PACs.

When the information was presented to Oxendine, he said: "I had no knowledge it came from an insurance company.... If those facts are true, they do concern me."

Watkins did not return follow-up calls. In a lengthy e-mail sent to the AJC Friday, he acknowledged that Admiral Life, which he described as an affiliate of State Mutual, made the contributions to the PACs. He stated PAC supporters decided to give the money to Oxendine "with no input from State Mutual or its affiliates."

Watkins wrote: "Our review of Georgia laws governing campaign financing indicates that the PAC contributions to Mr. Oxendine's campaign were entirely legal and constituted clearly protected political activity."

Yancey, the CEO of Admiral Life and of State Mutual, did not return repeated calls for comment. However, a company official, Richard Burton, sent an e-mail to the AJC on Friday stating: "[W]e had the transactions reviewed by two independent outside attorneys, familiar with both Federal and State campaign contribution and disclosure requirements, who each concluded Admiral Life did not violate any existing law."

On Wednesday, Oxendine told the AJC that he wasn't sure who gave him the PAC money, but said it was from business people, mostly in Alabama.

"It's not like an oversight or I didn't know what the law was," he said. "We received it from completely different sources, and they are not common."

Oxendine added later, "I don't want you to think we had the intent of doing anything inappropriate."

Also on Wednesday, Watkins told the AJC that the PACs are controlled by the Voter News Network, a group he founded in 2002 and which he would only describe as "a political friendship circle, business guys."

"There is no one person in charge," he said. "We don't have a formal-type organization."

He stressed repeatedly that the PAC money came from various sources.

Records filed with the Georgia Ethics Commission and the Alabama Secretary of state tell a different story.

Campaign records filed with Georgia show Oxendine's campaign received payments totalling $120,000 from 10 Alabama PACs in the fall and winter of 2008. The AJC traced all of those PACs back to either a post office box or the address of the Alamerica Bank, which is co-owned by Watkins.

Alabama Secretary of state records show Watkins co-founded a bank with Yancey's father, who used to run State Mutual. Alabama Secretary of State records list Watkins' son, Donald V. Watkins Jr., as the chair of all the PACs. He did not return calls for comment. Watkins said his son simply served as an administrator to the PACs.

Alabama Secretary of State records, reported under the Alabama Fair Campaign Practices Act, show nine of the PACs received just one donation each in the last two months of 2008 -- a $14,000 payment from "Admiral Life Insurance Company of America, P.O. Box 33, Rome, GA, 30162-0033."

Seven PACs reported no other income for 2008 except for a $2,000 check from the State Mutual Insurance Co. Most of the PACs had small balances at the beginning of 2008 -- one had only $5.79 -- until donations from Yancey's companies came in.

Three PACs took some money from a Birmingham business PAC earlier in 2008. Two PACs gave money to another Watkins PAC. One PAC gave $20,000 to a local Birmingham candidate.

The three PACs also took payments from State Mutual and Admiral Life. Those PACS gave $12,000 each to Oxendine.

The money sent by the PACs to Oxendine accounts for more than 10 percent of all the money his campaign for governor had raised by January.

The 10 PACs were all set up in 2002 by Watkins. Alabama Secretary of State records show that in their first years, the PACs focused on raising and distributing money in Birmingham.They did not donate much outside of Alabama.

That changed in July 2006, when companies owned by Yancey or companies in which he sat on the board of directors began making payments into the PACs. In 2006, donations from Yancey-related companies totaled $19,000 for each PAC. That year, the PACs gave a combined total of $171,000 to the Georgia Republican Party. State ethics law does not limit the amount a person, business or PAC can donate to a political party.

Yancey's Admiral Life, registered as a corporation in Georgia since 1969, sells supplemental health insurance. It did little business in Georgia in 2008, reporting less than $10,000 in premium revenue, according to the National Association of Insurance Commissioners Web site. The company has offices across the country, however, and sells supplemental medical insurance. It earned about $19 million nationally in premiums in 2008, according to the Web site.

State Mutual Insurance Co. reported $10 million in revenue in Georgia last year, selling life and health insurance policies. The company reported national premium revenue of $75 million in 2008, according to the Web site.

Oxendine has been insurance commissioner since taking office in 1995. His job includes regulating about 1,600 insurance companies and licensing about 137,000 insurance agents. He also regulates small loan companies and serves as the state's Safety Fire Commissioner, overseeing enforcement of state fire codes.

In at least one instance, discussed in a 2002 federal appellate decision involving the Yanceys, State Mutual sought and received approval from Oxendine for the special sale of an insurance company they owned.

Yancey is a major player in the insurance industry. He chairs the Georgia Life & Health Guaranty Association, a state-created organization that pays claims when insurance companies become insolvent. He is a member of the board of directors of Wakely & Associates, Inc., an administrator for insurance companies, and the American Insurance Marketing Corp.

Yancey has been a contributor to state and national campaigns for years. Federal Election Commission records show he has favored national Republican candidates and committees, including U.S. Sen. John McCain and former President George W. Bush. But he previously also gave to state Democrats, including former Gov. Roy Barnes and former U.S. Sen. Max Cleland.

Yancey gave $1,500 to Oxendine's campaign for governor in 2007 and another $1,500 in 2008, well within legal limits. His wife, Molly Yancey, gave Oxendine $5,000 in 2006.

Rick Thompson, executive secretary of the state Ethics Commission, would not comment on the specifics of the AJC's findings, but said the Ethics Commission is required by law to investigate possible violations of the Ethics-in-Government Act.

Thompson said the commission can impose civil penalties of up to $1,000 per violation if it finds contributors gave more than the legal limit. If the commission finds the donations beyond the legal limit were intentional, it can refer the case to state prosecutors for criminal prosecution. Cases involving the transfer of money across state lines could be referred to federal authorities.

Asked if he was concerned about legal ramifications, Oxendine said the law specifies that donors, not recipients, of illegal donations are punished under the law.

Recipients aren't at fault, "as long as it appears to be an appropriate contribution on its face," he said. "All we can go by is what the giver tells us."

Staff writers John Perry, Andy Miller and Aaron Gould Sheinin contributed to this report.