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Ethics Report Final

Ethics Report Final

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Published by Richard Phelps
Ethics Report Final
Ethics Report Final

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Published by: Richard Phelps on Jan 09, 2014
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01/10/2014

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SOUTH CAROLINA SENATE SELECT COMMITTEE ON ETHICS REPORT AND RECOMMENDATIONS Introduction
In June 2013, the President Pro Tempore, Senator John Courson, established the Senate Select Committee on Ethics (the "Committee") to review the comprehensive ethics reform bill, H. 3945, and to consider any changes that would strengthen ethics enforcement and compliance in South Carolina. Senator Courson also requested that the Committee consider the structure and  jurisdiction of the State Ethics Commission and the House and Senate Ethics Committees. Members of the Committee include the following Senators: Luke Rankin, who serves as Chairman, Chip Campsen, Brad Hutto, Darrell Jackson, Wes Hayes, Gerald Malloy, and Shane Massey. The Committee held its first meeting on October 8, 2013, during which public testimony was taken. The Committee met again on November 6, 2013, to discuss the substance of a pending Senate amendment (JUD3945.0078) to H. 3945 and other ethics-related issues. After much deliberation, and taking into account the testimony and written submissions offered at the public hearings, the Committee concludes that meaningful and comprehensive ethics reform is needed in South Carolina to address various weaknesses in the current law. Requiring the disclosure of private income sources, regulating political committees, increasing criminal penalties, and banning Leadership Political Action Committees ("Leadership PACs") are areas where improvements can and should be made. To implement these changes, reform measures and the make-up of the existing State Ethics Commission and the House/Senate Ethics Committees also should be evaluated. The Committee finds that the current level of staffing at the State Ethics Commission is woefully insufficient to audit the approximately 22,000 filings it reviews annually. Should the General Assembly decide to expand the jurisdiction of the State Ethics Commission to include auditing and investigating House and Senate members/staff for alleged ethics violations and compliance matters, the Committee recommends that sufficient funding be appropriated to enable the State Ethics Commission to carry out its charge. The Committee finds this is an essential precursor to reconstituting and empowering the State Ethics Commission. The following report summarizes the issues for consideration regarding ethics reform as the Senate resumes its deliberations.
I. Income Disclosure
Much attention has been focused on the lack of clear rules defining what sources of income must be disclosed on a Statement of Economic Interests. The Committee believes that reforms in this area will greatly enhance the trust in South Carolina's public officials. With a few limited exceptions, the Senate amendment would require the disclosure of all sources of income on the annual Statement of Economic Interests. Such disclosure now would include all sources of income received by the filer or a member
of the filer‟s immediate family, except for income
received pursuant to a court order, interest earned on certain savings, checking or brokerage accounts, and income earned from a mutual fund for which the investment is managed by an
 
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investment company. The Senate amendment would require the disclosure of the specific source
of income received by a public official, a member of the public official‟s immediate family, or a
 business with which the public official or his immediate family is associated if the income is
received from: (1) a contractual or financial relationship with a lobbyist‟s principal
 (including consulting or independent contractor work); (2) a contractual or financial relationship with a state or local governmental entity (including consulting or independent contractor work); or (3) a source regulated by a governmental entity with which the public official serves. The Senate amendment would require a public member to disclose the specific source of income received by the public member, a member of his immediate family, or business with which the public member or his immediate family is associated when the income is derived from a source directly regulated by the governmental regulatory agency on which the public member serves. The Senate amendment would require a member of the General Assembly to disclose on his annual Statement of Economic Interests a listing of fees earned by the member, a member of his immediate family or a business with which he is associated, while representing a client for compensation in a claim brought against a state governmental entity if the funds are paid by or on behalf of a state governmental entity. In such matters, the nature of contacts made with the governmental entity also must be disclosed.
II. Rules of Conduct
 Similarly, much attention has been focused on
 perceived
‟ or alleged
conflicts of interest whereby elected officials participate in legislation benefiting individuals or entities for whom the elected official is employed, without full and proper disclosure by the elected official, or recusal. The Committee believes that reform also is greatly needed in this area. The proposed Senate amendment would address a number of issues concerning the conduct of  public officials, public members, and public employees. For example, a public official, public member, or public employee would not be allowed to award or participate in any discussions regarding the awarding of a contract with the state or political subdivision for a business or individual with whom the public official, public member, public employee, or a member of his immediate family is associated. The Senate Amendment would clarify that a public official,  public member, or public employee may not knowingly engage in a private business for compensation during the hours of employment for the State or a political subdivision thereof. It also would clarify that a public official, public member, or public employee may not knowingly use offices, equipment, materials, or supplies of the State for a private business or private  business activities for which he or she is compensated. The Senate amendment also would require that any recusal for a conflict of interest extend to all instances for which the matter is  before the body, including study committees and subcommittees. The Senate amendment also would increase the criminal penalties for violations of certain ethics laws and mandate the recovery of the value of anything received in violation of the law.
 
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The proposed Senate amendment would render a member of the General Assembly ineligible for a judicial office for a period of two years after he ends legislative service or fails to file for election to the General Assembly.
III. South Carolina Public Integrity Unit
South Carolina Attorney General Alan Wilson and his staff have testified numerous times that South Carolina needs to create a mechanism that would enable certain state agencies to share information to aid an ethics investigation.
The Senate amendment would create the “South Carolina Public Integrity Unit,” which would be a voluntary partnership among certain s
tate agencies for the investigation or prosecution of more serious ethics violations. Membership would consist of the Attorney General, the Chief of the South Carolina Law Enforcement Division, the Director of the State Department of Revenue, the Executive Director of the State Ethics Commission, and the Inspector General. The Public Integrity Unit could receive allegations of criminal conduct or complaints against public employees, officers, or officials and would establish protocols for cooperation among the entities during investigations and  prosecutions. Without further authorization from the General Assembly, the Public Integrity Unit would sunset after five years following the effective date of the legislation.
 IV. Lobbying
 A number of statutory changes have been recommended related to the
 perceived
 revolving door between holding elected office and becoming a lobbyist. For example, the Senate amendment would prohibit, for a period of two years, a former public official, public member, or  public employee from lobbying or representing clients before the agency or department on which he formerly served in a matter where he directly and substantially participated during his public service or employment. It also would prohibit, for a period of two years, a former public official, public member, or public employee from accepting employment from a person who is regulated by the agency on which the public official or public employee served or was employed and involved a matter where he directly and substantially participated during his service or employment. The Senate amendment would retain a one-year prohibition for lobbying and employment for matters in which the public official, public member, or public employee was not directly and substantially participating during his public service or employment. The Senate Amendment
would increase the annual registration fee for lobbyists and lobbyist‟s principals
from $100 to $200. These additional registration fees would be retained by the State Ethics Commission for use as a part of its annual operating budget.
V. Campaign Finance
A major concern of the Committee is the currently unregulated nature of campaign committees in South Carolina due to a recent federal court decision. In 2010, a South Carolina Federal District Court judge struck down South Carolina's statutory
definition of “committee”
on grounds that it was unconstitutionally overbroad. (South Carolina Citizens for Life, Inc. vs. Krawcheck) Consequently, since that time, there has been no enforceable contribution limits on the amount of money that a political committee can accept for use in influencing the outcome of an elective office in South Carolina. There also has been no enforceable reporting mechanism to

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