Fog Over the Southport Marina
"Our citizens have a right to demand and expect the highest ethical conduct from their leaders," said Governor Mike Easley at a press conference on March 2, 2006. But a recent deal to change the leaseholder of the state-owned Southport Marina appears to fall short of meeting the "appearance" standard in state ethics guidelines that were recommended by Easley himself.
Ethics guidelines for state government employees under the governor's control are embodied in Executive Order One, approved by Gov. Easley on January 12, 2001. According to the guidelines, "Officials should be prepared to remove themselves immediately from decisions, votes, or processes where even the appearance of a conflict of interest exists."
The Southport Marina, which includes boat slips and a public launching ramp, had been leased to a private enterprise known as Southport Marina, Inc. for years, but residents of Southport were not pleased with the arrangement and wanted the state to sell the marina to the town of Southport. But Easley stated that the marina was not for sale, promising that instead, the state would try to find another company to lease the facility.
The marina falls under the control of the North Carolina State Ports Authority (NCSPA), which renewed a new lease agreement with Southport Marina, Inc. on December 29, 2005 under the condition that the company would operate under new ownership. The terms gave the new owners control over the marina through the year 2040, changed the payments owed to the state, and required that at least $2.5 million in repairs be undertaken. The new agreement also included a provision on which Southport residents insisted - that the marina remain open to the public.
But when viewed with an eye to transparency, the whole process left many residents seething. Negotiations by NCSPA for the lease did not include competitive bidding, and the deal was subject only to the approval by the Council of State and the governor, which authorized it at their January 10, 2006 meeting by a vote of 5-2. Voting in favor of the lease agreement were Lt. Gov. Beverly Perdue, Insurance Commissioner Jim Long, Secretary of State Elaine Marshall, State Treasurer Richard Moore, and Agriculture Commissioner Steve Troxler. Cherie Berry, Labor Commissioner, and Les Merritt, State Auditor, voted to oppose the deal (Attorney General Roy Cooper and Superintendent of Public Instruction June Atkinson did not attend the meeting). The governor's office said that although Gov. Easley presided over the meeting, he did not vote on the deal. And while it's true that the governor participated fully in the discussion about the lease, he failed to disclose everything that he knew.
Four members of a group formed in 2005 called The Committee to Save Southport Marina traveled to Raleigh for the Council of State meeting on the lease in hopes of learning the identities of the new leaseholders. One of them, Jerry Miller said, "To make an informed decision, the Ports Authority had to know who the owners were. You can't sign a lease with people if you don't know who they are."
Miller has a point. Surely, the Ports Authority had to know who the people were. If the Ports Authority knew and Gov. Easley knew, why couldn't members of the Council of State be similarly informed before they were required to vote on the lease?
Labor Commissioner Cherie Berry thought the information was important, too. Prior to the vote on the lease by the Council of State, she attempted to learn the identities of the soon-to-be owners of the lease, insisting that the public had a right to know and that public disclosure is necessary in order for state officials to avoid a conflict of interest when making decisions on real estate matters. Gov. Easley blocked Berry's objections and said nothing, presiding over the meeting during which the vote was taken on the deal without ever mentioning his involvement, despite questions that were raised for which he clearly knew the answers.
After the lease was approved by the Council of State, two Southport residents filed a complaint with the North Carolina Board of Ethics charging that Gov. Easley had a conflict of interest in participating in the lease agreement, which they termed a "sweetheart deal" for Easley's friends and political supporters. The complainants alleged that Easley "unethically" used his influence to convince the Ports Authority and the Council of State to award the lease to Wilmington developer Charles "Nick" Garrett, Jr., and Cary developers Tim Smith and Julian "Bubba" Rawl, all of whom are well known to the governor. Garrett had renovated Easley's Southport home in 2001 for $250,000. News reports indicate that Garrett and his wife had contributed $16,000 to Easley's political campaigns since 2000, while Smith and Rawl together gave $14,000. Easley had also appointed Garrett to the North Carolina Architecture Board and the Clean Water Management Trust Fund Board, and the Department of Transportation gave Garrett a state license tag franchise in 2003 even though a department official had recommended against it.
Commissioner Berry voted against the deal, but afterward, some other members of the Council of State complained that they'd been had. Easley, however, continued to thwart requests in subsequent meetings to learn the identities of those involved in the deal. According to the Carolina Journal, Easley told Berry that she "didn't allow enough time" for the information to be placed on a meeting agenda, even though she'd made the request five days in advance of the meeting.
News media organizations also tried repeatedly to obtain the identities of the new leaseholders, but they were stonewalled by both the governor's office and the Ports Authority.
Easley has maintained all along that Garrett does not have an ownership interest in the leasing company. But determining exacting who does have an ownership interest has proved elusive. Apparently, the lease agreement did not require that the new owners' names be revealed to the public, though the deal was contingent on the lease of the marina to Garrett, Rawl, & Smith. And Don Carrington, executive editor of the Carolina Journal has uncovered documents that indicate that people close to the lease deal at least suspected that Garrett had an ownership interest.
In June 2006, news reports indicated that SAS, a software company based in Cary, had acquired a role in operating the marina, but there was no public disclosure of SAS's participation when the lease deal was being negotiated. SAS has declined to comment on who owns the marina lease.
On June 7, 2006, the NC Board of Ethics dismissed the complaints of the Southport residents against Gov. Easley regarding his relationships with the marina leaseholders. The dismissal was based on the recommendation of executive director Perry Newson, who said he'd found no credible evidence to support the charges against the governor.
But didn't the governor have an obligation to inform the Council about his business relationships with the people to whom he was recommending the lease of the marina?
Apparently that falls beyond the realm of the "highest ethical standards" that Easley claims citizens should expect. In fact, those standards seem to apply to everyone but him. Carrington reported about a telephone conversation he had with retired Superior Court Judge Robert Farmer, chairman of the Board of Ethics. Farmer told Carrington that any Council of State member who had any concern about a possible conflict of interest should consult with the Ethics Board. "All they have to do is ask for an advisory opinion," said Farmer. But when Carrington asked the chairman whether the Easley ethics guidelines applied to the governor, he replied, "Probably not."
