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Loophole B: 14 lawmakers’ undisclosed business with state


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Nov. 6, 2015 — Georgia’s disclosure laws for legislators who do business with the state, as we reported Wednesday, are a mess.

The laws purportedly allow voters to see exactly how their elected officials benefit from tax dollars. Two statutes in the Georgia code require disclosure in some fashion, but they apply to different situations and it’s unclear whether one supersedes the other:

  • The Codes of Ethics and Conflicts of Interest, under Title 45, requires that a so-called Business Transaction Report be filed for state transactions with any business in which a lawmaker or family member owns more than 25 percent.
  • The Ethics in Government Act, under Title 21, says legislators must report such dealings on a Personal Financial Disclosure if he or she owns more than 5 percent (or $5,000) of the business. But, the fine print says, that’s only if the payments are “authorized and exempted from disclosure” under Title 45.

The latter requirement hasn’t been enforced or reviewed by a judge, as best I can tell, so it’s anybody’s guess what it means. But some experienced campaign lawyers interpret it to say no transactions need to be reported under Title 21. They say only Title 45 applies.

Nevertheless, many elected officials believe Title 21 applies to their business dealings with the state, and they have filed disclosures accordingly.

So, to determine exactly what we’re talking about, I compiled a list of all lawmaker’s business interests and compared them to the vendors that each state agency reports paying. Those payments are posted on the State Auditor’s website,

My methodology was less than perfect. Legislators must disclose these payments by calendar year, while the auditor lists them by fiscal year. The auditor’s website doesn’t include payments to subcontractors, to vendors paid with a P-card or anything before FY 2010. And lawmakers aren’t required to identify which businesses they own a 25 percent interest in, so there’s virtually no way to be sure whether they complied with Title 45’s disclosure requirement.

I came up with payments to 14 legislators’ businesses that weren’t reported on one form or the other, sometimes both. The lawyers can sort out whether the law required disclosure. I was more interested in the transparency than the legality of these types of transactions.

Four lawmakers stood out as not fully disclosing payments that the law appears to require:

  • Rep. Karen Bennett reported her business, Metro Therapy Providers, collected an even $300,000 in calendar years 2012 to 2014 from the Department of Community Health. DCH, though, reported that it paid her company $518,000 in the comparable fiscal years. Bennett said she disclosed the amounts shown on 1099 forms sent to the IRS and couldn’t say why DCH reported a different amount.
  • Rep. James Beverly said he didn’t report state payments to his optometry practice because he believed he was only required to do so if they made up 20 percent of his business’ income. DCH and the Department of Juvenile Justice paid his business, Midtowne Vision Center, $132,763 in fiscal years 2012 through 2014.
  • Some lawmakers disclose their state pensions. Not Rep. Gerald Greene, who estimated his benefit from the State Teachers Retirement System is about $2,000 a month. In a 2014 interview, he said he regarded those benefits as deriving from his local school system and not the state. Disclosure, he said, “has never really come up.”
  • Various state agencies reported paying Pruett Air Conditioning $611,000 from 2010 to 2014, but Rep. Jimmy Pruett only filed Business Transaction Reports for 2011 and 2012 showing payments of about $63,000. None of the payments were reported on his Personal Financial Disclosures. (Pruett also disclosed $522,000 that the Department of Community Affairs paid for office space in Eastman, but not the name of the partnership, Mosquito Creek Properties, that collected the rent. The matter was an issue when his 2014 election opponent brought up the $178,000 in back property taxes that Mosquito Creek owed.)

The details on the other 10 legislators:

  • Sen. John Albers reports owning an interest in Slalom Consulting but no transactions with state agencies. The University of Georgia’s Carl Vinson Institute paid $284,100 to Slalom Consulting in FY 2014. Slalom won the work, a university spokeswoman said, as a preferred provider with the expertise needed to help reorganize the Department of Behavioral Health and Developmental Disabilities.
  • Dalton State College bought nearly $50,000 of carpet from J&J Industries in FY2014. J&J’s general counsel, Sen. Charlie Bethel, reports owning an interest in the company but did not disclose the transaction.
  • House Majority Leader Jon Burns filed Business Transaction Reports showing his B&S Feed and Farm Supply sold $71,899 worth of fish food and related items to the the Department of Natural Resources from 2011 to 2014, when he chaired the House Game, Fish & Parks Committee. His Personal Financial Disclosures did not disclose those purchases.
  • Rep. B.J. Pak’s former law firm, Ballard Spahr LLP, collected $946,399 from 2011 to 2014. Pak said he researched the law and concluded he didn’t have to report the payments. None of the money wound up in his pocket, he said, and his interest in the firm was “minuscule” — less than the 5 percent or $5,000 that triggers disclosure under the Campaign Finance Act.
  • At one time, Rep. Butch Parrish said, he was unsure whether to report Medicaid payments to his Swainsboro pharmacy since they could be regarded as coming from a third party rather than directly from the state. He’s disclosed nearly $1.5 million since 2012, though, after deciding “the simplest thing to do is go ahead and put it on the disclosures.” He has not reported the $136,000 in rent that the Department of Human Resources  paid to a company in which he said he owns 4 or 5 percent. “I didn’t know that I had to disclose that,” he said. “I don’t have anything to do with the rental or management or anything.”
  • Georgia Olive Farms won two state grants totaling $70,000 in 2011 and 2012 to study marketing and infrastructure costs needed to support an olive oil industry in Georgia. Although Georgia Olive Farms was organized as a non-profit collaborative, Rep. Jason Shaw lists it among his business assets. Shaw did not disclose the grants; his attorney, Doug Chalmers, said Shaw’s interest is less than 25 percent so he was not legally required to do so.
  • Rep. Calvin Smyre has not disclosed payments in which he’s reported an ownership interest: Columbus-based Synovus Bank, where he recently retired after 38 years’ service, and insurance giant AFLAC of the talking-duck commercials. From 2010 to 2014, Synovus collected $7.4 million from several universities, the authority that operates the state fairgrounds, the Secretary of State, the Firefighters Pension Fund and other state institutions. AFLAC took in $670,000, primarily from the Georgia Lottery and the University of West Georgia, over the same period.
  • Sen. Ben Watson reported that he personally received a little over $12,000 in Medicaid payments for 2011 through 2014. The Department of Behavioral Health said it paid SouthCoast Medical Group about $88,000 over roughly the same period. Stephen Leonard, Watson’s assistant campaign treasurer, said SouthCoast is a partnership of dozens of physicians that treats Watson as self-employed and passes on compensation only for services that he renders directly. Watson said his ownership is probably less than 5 percent.
  • The state Law Department reported paying Rep. Andy Welch‘s law firm, Smith Welch Webb & White, $9,806 in 2014. Welch did not disclose the payment.
  • Sen. Tommie Williams filed Business Transaction Reports showing a state university and a technical school paid his pine straw business more than $136,000 for landscaping work since 2010. “For legal reasons, he was not required to duplicate those same transactions on the personal financial disclosure report,” said Chalmers, who also represents Williams.

Again, there’s nothing definitive to prove that any of these omissions violated either law. But true transparency, I should think, would require disclosure of all such payments on a single form with no ambiguities about what should be reported.

Ethics Loopholes A-to-Z Archive

A: ALEC scholarships top $350K, go undisclosed

B: Business disclosure laws baffling, often ignored





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