In the midst of his heated re-election campaign last year, Gov. Nathan Deal touched down in Missouri and was whisked to a reception and a dinner at the elegant St. Louis Club.
There, he was feted by top executives from Centene, a state contractor that has been paid nearly $4 billion over the past five years to provide health insurance to Medicaid and PeachCare recipients in Georgia.
Deal left Missouri with his campaign account fatter; Centene executives poured more than $40,000 into the Republican’s re-election bid.
Such fundraising isn’t unusual for Georgia politicians. An Atlanta Journal-Constitution investigation found that over the past five years, Deal’s campaign and political action committees have collected more than $1.8 million from about 90 of the state’s biggest vendors or their executives and family members.
Campaign funds for state lawmakers and advocacy committees pushing agendas in the Legislature are filled with contractor money as well.
The flow of cash between politicians and companies hoping to win or retain lucrative government business has been in the spotlight since DeKalb County CEO Burrell Ellis was accused of strong-arming contractors into contributing. Ellis was found guilty earlier this month of trying to shake down Power and Energy Services, an Austell business, for a $2,500 campaign contribution and threatening to end its $250,000 contract with the county. He was sentenced to 18 months in prison.
One city leader said the verdict sent “a shock wave” though political circles among officials who are typically aggressive in soliciting money from vendors.
“I know there are a lot of people who made similar phone calls,” said Sandy Springs Mayor Rusty Paul, a longtime Capitol lobbyist and former senator. “That kind of sent a wake-up call to a lot of elected officials who thought this was OK.”
Loose ‘pay to play’ laws
A former state ethics chief said hitting up vendors for campaign money has long been a staple of Georgia politics. With limited conflict of interest laws, few politicians or donors are prosecuted.
“There is a line you have to be careful you don’t cross,” said Rick Thompson, a former state ethics commission director and treasurer of a now-defunct political action committee backing the governor’s agenda. “There is absolutely nothing in the law against calling vendors to contribute to your campaign. There is nothing unusual about it. That’s your first call. It’s the nature of the beast.”
That’s not true on the federal level. There has long been a ban on campaign contributions by federal contractors to federal candidates. The D.C. Circuit Court of Appeals unanimously upheld that prohibition earlier this month.
“The danger, there, is that the decision on granting a government contract ends up being based not on the merits but on the political money,” said Fred Wertheimer, president of the nonpartisan Democracy 21 group.
“These ‘play to pay laws’ have been adopted in order to ensure when you are dealing with taxpayer money, that the decisions are being made on the best result for the government in awarding a contract, not because somebody was able to put up a whole lot of money to get the contract.”
Unlike Ellis, state officials haven’t been accused of improperly using contracts to get contributions. And while Deal and lawmakers approve more than $40 billion a year in state and federal spending, they don’t directly decide which vendors to use. Most often that is done by state agencies using procurement guidelines, or in the case of many health programs, based on whether a provider has been approved to handle Medicaid patients.
“Gov. Deal followed the law and followed it to the letter,” said Brian Robinson, the governor’s spokesman.
Sen. Josh McKoon, R-Columbus, a longtime ethics reform champion, said it would be helpful for politicians to more clearly disclose contributions from vendors. Currently, candidates list the name of donors, and in some cases, the occupation or company of the donor. But they don’t have to disclose a donor as a state contractor.
“I think most people would say our conflict of interest laws are too lax,” McKoon said. “But you run into the issue of how do we create a bright line that makes sense and doesn’t create a gotcha situation while accomplishing the public policy goal of trying to separate out these relationships.”
The few Georgia laws aimed at limiting donations are rife with loopholes.
Elected regulators, such as the commissioner of insurance, are banned from accepting contributions from companies they regulate. But they get around that by raking in big money from the owners or executives of companies they regulate.
There are caps on how much a person or company can contribute, but there are ways around that, too. An example comes from the nursing home industry, which receives more than $1 billion a year to care for the elderly and disabled. Owners give. Family members donate. Checks are written in the names of their various businesses as well.
Cost of doing business
When it comes to large state vendors, the haul can be significant.
The AJC found that two companies with big state business — PruittHealth and Community Health Services of Georgia, along with the owners, relatives, executives and subsidiaries — contributed more than $300,000 to Deal’s two gubernatorial campaigns and his Real PAC.
For Deal, the St. Louis trip to collect campaign cash from Centene was the second big money-raiser from out-of-state donors in three days. The campaign collected about $26,000 in checks from executives with The GEO Group, a Florida-based Department of Corrections contractor, on Aug. 22.
And while the Missouri trip didn’t raise eyebrows at the time, emails obtained by the AJC show that some of those involved in the trip worried it could have. The Aug. 25 trip came as racially charged riots were roiling nearby Ferguson over the fatal police shooting of Michael Brown, an unarmed black man.
“The situation in St. Louis and Ferguson … Do y’all see that causing any problems for the Gov. coming to St. Louis? Press could potentially make something of it were they to find out,” wrote Ray Williams, vice president of governmental affairs at Centene.
The trip went on.
‘We believe in good government’
Unlike contributions that top candidates receive because they are a Republican or Democratic nominee, donations from contractors are usually nonpartisan.
C.W. Matthews, the state’s biggest road builder, is a good example.
Former Democratic Gov. Roy Barnes considered the chairman of C.W. Matthews one of his oldest friends. The company was good to Barnes when he was governor, with executives and family members donating about $50,000 to his re-election campaign in the two years leading up to the vote. When Sonny Perdue upset Barnes in November 2002, the company quickly gave $10,000 to the Republican’s campaign.
Barnes tried to make a political comeback in 2010 as Perdue was finishing up his second term. Company executives and family members contributed at least $77,000 to his campaign. But the company hedged its bets by contributing $12,000 to Deal that year. Since then, the company and executives have contributed an additional $17,000.
C.W. Matthews was paid at least $1.1 billion for road work from 2010 to 2014, according to Department of Audits reports, and it just won a major contract to extend I-85 HOT lanes in Gwinnett County. The Marietta-based company said it won contracts with the state because it was the low bidder.
“We give because we are a company in the state of Georgia and we believe in good government… there is no expectation of contracts,” said Matthews’ Vice President Michael Bell. “If the state does well, we do well.”
Lawmakers also targeted
Many of the contractors have also given to the campaigns of advocacy committees or prominent state lawmakers, who have to approve the spending plans governors’ recommend.
For instance, in the most recent campaign disclosures filed earlier this month, two top health care contractors, Wellcare and Blue Cross, reported contributing $2,500 and $1,500 to House Appropriations Chairman Terry England, R-Auburn. C.W. Matthews reported giving $50,000 to a political action committee pushing legislation to increase spending on transportation projects.
Contractors and vendors wind up on the list of top beneficiaries of state spending in different ways.
Road contractors certified by the Department of Transportation bid on projects, and the lowest bidder generally gets the work.
Hospitals, clinics and health care providers go through a state and federal process to be approved to handle Medicaid patients and don’t generally get “contracts” like a road-builder or someone supplying the state with printer paper. If they are approved, they provide health care to patients and get reimbursed by the state.
Sometimes the decisions on health care contractors lead to disputes and court cases among politically powerful vendors.
One of the most recent public contracting fights occurred in 2013, when the Department of Community Health decided to make Blue Cross Blue Shield of Georgia the sole manager of the state’s $3 billion-a-year State Health Benefit Plan, covering 650,000 people.
UnitedHealthcare, which had been the dominant player in managing the plan, sued the state, claiming the DCH used “state-sponsored bid-rigging” to make sure Blue Cross got the contract.
Both companies were major donors to Deal’s Real PAC fund, and one of United’s key lawyers was Randy Evans, the governor’s political attorney.
A year later, UnitedHealthcare dropped the legal fight after the DCH agreed to let it once again be one of the companies managing the plan.
Contractors such as United were especially busy donating to Real PAC. About half of the money taken in came from companies or individuals who do business with the state.
One, WellCare, was listed as contributing $50,000 to the committee on the same day that a Medicaid official said the state planned to extend the company’s contract through 2016. Officials said the decision had been made well before that. Audit reports show WellCare was paid about $7.3 billion for services from 2010 to 2014.
WellCare officials said the company and its executives have contributed about $164,000 to Deal’s campaigns and committees supporting his agenda.
“Health care is a critical issue facing our country,” said Elizabeth Goodman, the vice president for public policy and government affairs at WellCare. “It is important for WellCare to be engaged in the health care policy debate and in the affairs that shape its policy.
“WellCare also voluntarily adopted a full disclosure policy and publicly reports all political contributions on our website, above and beyond the requirements of state and federal law.”
UnitedHealthcare, which received the most payments from the state over the five years the AJC studied, contributed at least $72,800 to Deal campaigns and his PAC. UnitedHealthcare officials declined to comment.
Paul, who used to lobby for Georgia’s politically powerful nursing home industry, said a lot of businesses feel like giving to politicians is merely a necessary expense.
“I have gotten contributions from people who do business with the city, but I don’t pay that much attention to that sort of thing,” he said. “They want to make sure they have the ability to go in and state their case, they want to be able to go in and be heard.”
But he added, “I don’t think many politicians, when they are setting their schedule up, go back and look at their contribution forms.”
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