Wednesday, August 25, 2010

Nathan Deal, privatization and the ethics committee report


There’s a little moment right in the middle of the Office of Congressional Ethics report on Nathan Deal which sheds a revealing light on the way rhetoric and reality sometimes collide. It revolves around that often-cited Republican panacea, privatization.

The investigative report describes three meetings which involved -- among others -- Deal, his chief of staff Chris Riley, his business partner Ken Kronan and Georgia Revenue Commissioner Bart Graham. Things seem to have gone fairly routinely until – “out of the blue,” according to the investigator’s interview with Riley, “unprovoked,” according to the interview with Kronan – Graham brought up privatizing the state Salvage Inspection Program during the second meeting.

On the campaign trail, Republican candidates have been holding up the healing powers of privatization for years now. But when the subject came up in this meeting, one gets the impression you could have heard a pin drop.

“The witness (Riley) stated that everyone was confused by the random statement,” the report says.

What Graham was proposing was the replacement of the Salvage Inspection Program, which had grown from a pilot program about a decade before, with a new system whereby licensed private inspectors would have the job of checking salvaged vehicles before the issuance of new titles.

As one of a handful of businesses licensed as a location where state inspectors check salvaged vehicles before new titles are issued, GSD made $288,500 off its business with the state in 2008, and Deal makes a fixed return off the business of $75,000 annually. But he and Cronin say it would have actually been to their financial benefit to drop GSD’s association with the state, and that they were motivated by concerns about whether private inspectors would check rebuilt cars for safety features like air bags. Kronan even went so far as to say it was “a liability and a moral issue.”

Graham argued the program never was intended to do safety inspections, but merely to verify the VIN numbers on the vehicles before titles were issued. By the time of the third meeting, Perdue had eliminated funding for the program in his 2009 budget request, and Graham felt“hotboxed” and cross-examined by state Rep. Doug Collins and other defenders of the program.

The OCE report is concerned with whether Deal violated House ethics rules in setting up these meetings and using House staff and emails in the process, not whether the action which touched off so much concern on Deal’s part was a good idea. But the report also paints a picture of a situation in which most of those involved didn’t know what was going on, and more chaos than costs savings was generated out of the privatization effort, which was eventually nipped by the legislature anyway. Maybe privatization is the nifty idea so many think it is, but government still doesn’t seem to get the hang of it.

It’s interesting to read the OCE report on Deal in parallel with the recent OCE report on Rep. Maxine Waters, which has caused a lot more headlines nationally.

No two members could differ more on the surface, but both their cases involve the propriety of a meeting they requested involving issues affecting their own finances, in her case OneUnited, a minority-owned bank in line for federal bailout funds, for which her husband had been a board member and owned stock valued (pre-bust) at $352,000. Both involve the members’ close relationship with their chief of staff. Riley told investigators he “rarely allows Representative Deal to go anywhere without him, unless it is a family matter.” In Waters’ case, her chief of staff is family: her grandson.

The sum of money involved in the ethics infraction Waters is accused of -- some $12 million in TARP money -- is greater than what was at stake in the Deal case, which became moot after he left Congress but linger as an issue in the governor’s race. But the charges against Deal are more extensive, including not only the same offenses Waters is accused of in setting up a meeting with federal Treasury officials, but additional charges related to his reporting of his income from the salvage business.

Waters, one witness told investigators, worried about whether her husband’s connections might create a conflict of interest in requesting the meeting for a national association of minority-owned banks. In the Deal report, there’s no suggestion of him expressing any qualms.

“At all times I was acting as a public servant addressing matters of public interest in which I had some expertise,” he said in a statement submitted to the OCE.

Whether voters buy that has a lot to do with Deal’s fate this November.

All I can say is stay tuned!

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