REQUEST FOR AUDIT OF THE N.C. DEPARTMENT OF TRANSPORTATION
October 14, 1997
The Honorable Ralph Campbell
Office of the State Auditor
300 N. Salisbury St.
Raleigh, NC 27603
Dear Mr. Campbell:
Our organizations respectfully request that you immediately launch a comprehensive investigation of political patronage in the state Department of Transportation (DOT), including the inappropriate, wasteful, and possibly illegal use of state resources to serve partisan or personal ends rather than the public interest.
The urgency for a top-to-bottom audit is heightened by J.A. Cartrette’s recent charge that he was offered a “seat at the table” by DOT Secretary Garland Garrett in exchange for a substantial political donation — a conversation that Garrett confirms in many details, though denies amounted to a promised seat on the powerful Board of Transportation.
Our organizations have different perspectives on public-policy issues and different views of how DOT should be reformed. However, as more reports surface of fundraising and favoritism within DOT, it is clear to all of us that dramatic action must be taken. A thorough documentation and evaluation of the exact nature, scope, and consequences of patronage within DOT is crucial to understanding how the agency can become more accountable to the public interest.
We provide below a brief description of areas that need examination, based largely on published accounts and new research by Democracy South. What emerges is a pattern of widespread abuse within DOT that involves political money linked to jobs, promotions, board appointments, highway contracts, and the location of roads. This pattern raises serious questions about the agency’s lack of financial accountability, absence of objective performance standards, and arbitrary exercise of authority by management or BOT members in decisions regarding personnel, contract awards and the use of public resources. The areas include:
** On-the-job Campaign Fundraising. Phone records of Transportation Secretary Garland Garrett confirm that he was at his office when he called J.A. Cartrette to discuss a political contribution for the Jim Hunt reelection committee and “a seat at the table.” State law prohibits on-the-job campaigning and the use of state phones and property for partisan fundraising. The Columbus County district attorney is investigating possible violations of election law; however, it seems appropriate for the state Auditor to examine the questions: How many other fundraising-related calls did Garrett make on state time with state resources? How widespread is political fundraising by DOT employees?
According to Algie Toomer’s testimony, Division of Motor Vehicle supervisors R. Keith Whitfield and Alexander Killens solicited donations from him. Killens later became a paid employee of the Hunt reelection committee. Interviews with current and former workers at the Ferry Division also indicate that its employees have raised funds during work hours. Gerald W. “Jerry” Gaskill, the division director, is a former chair of the Carteret County Democratic Party and is still very active in partisan fundraising.
A Ferry Division employee laughingly told Democracy South that he made a political donation because, “It was a requirement at the Ferry Division. They tell you, ‘Beverly Perdue is going to be doing such-and-such [fundraiser] and you need to go. It cost you $100 so send the money.’ Or it’s like: ‘You like working here?’ ‘Yeah.’ ‘Well, don’t forget to go to Beverly Perdue’s thing.'”
** Bundling by DOT Employees. A preliminary review of campaign reports by Democracy South indicates that DOT employees and their families contributed more than $100,000 to the 1996 Jim Hunt committee. Many of those contributions came in bundles logged in by the Hunt campaign on the same day. For example, on February 3, 1995, the Hunt committee recorded 19 contributions related to Division of Motor Vehicles employees (including $250 from Algie Toomer and $500 from Keith Whitfield). Was Whitfield the one who collected these checks, and did he or other DOT employees solicit and bundle campaign checks?
On the same day, February 3, the Hunt campaign logged in 15 contributions related to employees of the Ferry Division based in Morehead City. Some donors affiliated with the Division gave their contribution to Division Director Jerry Gaskill. He and his wife Charran sponsor a major Democratic Party fundraising, the “Downeaster Fish Fry,” which attracts hundreds of supporters. Charran Gaskill confirms that she and her husband “both have people bring checks to us, and money to us, because they know — we make no bones about it — we are Jim Hunt people, just like we have people bring us money for Beverly Perdue.” She points out that they live in a remote section of Carteret County, making it hard for people to attend fundraising events, and that’s why “you might have a whole lot of people down as giving checks to Jerry or myself.”
She says she prepares a list of the donors’ proper and familiar names, keeps a copy for her files, and sends the list with the checks to the appropriate candidate — which could help explain why they arrive on the same day. She can’t recall Ferry Division employees being on the list, but a review of campaign records since 1993 shows thousands of dollars arriving on the same day at the Perdue or Hunt headquarters from the Gaskills and other Ferry Division-related donors.
There are many obvious problems with state employees, especially supervisors, soliciting contributions from other employees. In April 1995, after news accounts of on-the-job fundraising by an employee in the Agricultural Department, Governor Hunt announced his campaign would no longer seek or accept contributions from rank-and-file state employees. However, Democracy South has readily identified many employees who made contributions beyond this date, including eight from the Ferry Division who gave $1,650 on October 25, 1996 — not counting the $1,000 that day from Charran Gaskill.
** Promotions & Jobs Linked to Donations. During Gov. Jim Martin administration, the Ferry Division was investigated for being riddled with political favoritism, and the division director (Jerry Hardesty) was replaced. At that time, state Auditor Edward Renfrow cited the division as “a political dumping ground.” Is the division again infused with politics, with jobs or promotions influenced by political loyalty or political donations?
A Ferry Division employee who recently left says, “The Ferry Division is one of those places where you don’t work unless you know the right person. That part of the Department of Transportation is THE place where they put you if they need to either pay or repay a political favor [especially] if you need a job and don’t have many skills.”
That employee said he gave his contribution to Joyce Chadwick, a 21-year veteran in the Division, Democratic Party activist and mother of the current mayor of Beaufort, R. Hunting Chadwick Jr. The Chadwick family donated a total of $7,500 to the Hunt re-election campaign, and in January 1996 Joyce Chadwick received a substantial salary boost and reassignment as Ferry Division Operations Manager. She insists there is no connection between her donations and her pay increase.
An analysis of personnel records shows that of the 80 state employees connected to the February 3 contributions, more than one-third received pay changes and/or job reassignments within several months of the contribution. How pervasive is the connection between political donations, new hires, promotions, and reassignments (“transfers” or “reallocations”) within DOT? Is the entire Department “a dumping ground” for patronage jobs? Do employees feel pressured to make donations, or do they think they can advance their own careers by giving?
** Board Appointments Linked to Contributions. It appears that Mr. Cartrette believed he could essentially purchase a seat on the Board of Transportation (BOT) — an impression apparently reinforced by a call he received from DOT Secretary Garrett, who chairs the BOT. Why is there such a strong impression that the ticket to a seat on the BOT is a substantial political donation?
For decades, there has been a remarkable correlation between BOT members and the top donors or fundraisers for the person who appoints them. An Institute for Southern Studies report in 1992 found that appointees of Gov. James Martin from 1985 to 1992 raised or donated $3.5 million for statewide or federal Republican candidates and the Republican party. House Speaker Harold Brubaker recently appointed 26-year-old Charles E. “Chip” Shelton Jr. to the board; Shelton’s father, a former BOT member and major developer, donated $25,000 to the Brubaker-controlled Randolph County Republican Party in April 1996.
According to Democracy South, no single board of gubernatorial appointees is tied to so much political money. The governor’s current 21 appointees and their families donated at least $250,000 to his 1996 reelection (not counting the DOT secretary). Their fundraising ability is impressive. One member, Lyndo Tippett, served as finance chair of the state Democratic Party for the 1996 election. In the same cycle, BOT member Douglas Galyon of Guilford Mills helped raise $59,000 from company employees and their families for the Hunt campaign and more than $100,000 for other state candidates and the Democratic Party.
Here’s an interesting example of how interlinked the position of BOT member and political donor are — and how easily the lines seem to blur between public servant and partisan operative: On December 22, 1994, the Hunt campaign logged in $69,200 in contributions from then-DOT Secretary Sam Hunt, Mrs. Sam Hunt, Deputy Sec. Garland Garrett, and 13 BOT members or their spouses — the highest amount taken in on any day in 1994. The money (including 11 checks for $4,000 each) came soon after the Board held its two-day December meeting, annual Christmas party, and get-together with the Governor at the Mansion. Were DOT employees and state resources involved in soliciting and bundling those BOT contributions or others made later? Do BOT members co-mingle their state responsibilities with partisan fundraising activity? Does the structure of an appointed board, with no basic qualifications but with enormous power, promote a system permeated with patronage and political favoritism?
** Road Projects Linked to Contributions. The attached copy of “Highway Robbery,” a 1992 report published by the Independent Weekly and Institute for Southern Studies, indicates that many of the problems discussed above are not peculiar to Democrats. It also documents specific road projects influenced heavily by political favoritism, despite objections by DOT technical staff, other state agencies, and local governments.
Political influence in roadbuilding seems to continue today, whether in the Rams Club road in Chapel Hill or the $1 million in road projects near BOT member Carroll Edwards’ wood pallet factory, which is the subject of an internal DOT investigation. If you are interested, the N.C. Alliance for Transportation would be happy to identify specific DOT projects that its members believe are heavily influenced by political factors and patronage rather than by objective need.
Local elected officials even report receiving directives from DOT staff and BOT members indicating their priorities are irrelevant unless they match BOT desires (e.g., BOT member Douglas Galyon’s 1997 letter to the Orange County Commission.) Decisions about priority funding for road projects appear so arbitrary and politicized that some local officials now believe political contributions can make an important difference. Bill Blevins, a member of Sparta’s town council, joined a Jim Hunt fundraising blitz in his county by making a $1,000 donation. Blevins says the fundraising was part of the county’s on-going effort to secure money for another part of a by-pass around Sparta. It’s another way to “get his attention,” Blevins says, and “show our support” so the road can be built faster.
There are many other examples of donors with a strong stake in roadbuilding joining together to bundle contributions for the Hunt campaign. One such group of developers, real estate owners, and business leaders in Wilmington gave $40,750 on one day. In Ashe County, the Vannoy families donated a total of $28,450 for Hunt’s 1996 race. The Vannoys’ companies are heavily involved in road building, construction and commercial development, and they are at the center of a proposed highway that leads to their upscale golf course and residential development, Jefferson Landing. “A lot of us around here call the Highway 16 project a $22 million driveway to Jefferson Landing,” says Lou Zeller of the Blue Ridge Environmental Defense League. “It’s no secret why this thing is being pushed.”
Why is there such a widespread perception that roadbuilding priorities are so political? Does DOT have objective criteria for investing millions of tax dollars? What are the factors that cause DOT management and BOT members to deviate from those criteria? How can new procedures be installed to shield DOT priorities from undue political influence?
** Contract Recipients Frequent Political Donors. These same questions about the lack of objective procedures and the need for shields against political favoritism also apply to DOT’s practices related to awarding contracts, buying property, hiring consultants, designating right-of-ways, and purchasing materials. Is the latitude DOT now has to spend large amount of money without going through the state contract office justified?
The case of Charles Grady provides a recent example of political clout influencing a DOT purchase. In July 1997, Charles Grady pled guilty to using his insider connections as a BOT member to override DOT staff opposition to purchasing a parcel of property his real estate firm represented; DOT eventually purchased the property and mysteriously increased its purchase price from $320,000 to $450,000 — with Grady’s firm receiving a $45,000 commission.
The record of politics and dealmaking in awarding contracts goes back many years. In 1980, a bid-rigging scandal among North Carolina highway contractors resulted in jail terms and large fines. Several of the executives and families involved in that scandal are again major recipients of highway awards — and major donors to political campaigns. For example, Barnhill Contracting in Tarboro has received $330 million in DOT contracts in the past six years; Barnhill family members and top company executives donated at least $35,000 to Hunt’s 1996 campaign.
Is it realistic to imagine that such high-dollar political giving has no influence in an agency run by political operatives? Or do these donors view their contributions as an investment in “a good business climate” and “a seat at the table” where good ole boys divide up billions in tax dollars? Is that why contractors and developers fill the ranks of Jim Hunt’s top political donors (as they did for Jim Martin before him)?
Some states, such as Kentucky, bar owners and executives of businesses that receive state contracts from making political donations. Would such a law help depoliticize the contract-award process at DOT? Have other states developed procedures that minimize political favoritism and short-circuit the good ole boy network?
** DOT Waste Due to Politics. Finally, we ask that you estimate the dollar savings to North Carolina taxpayers if political patronage were eliminated in the structure and operation of the Department. For one estimate of this number, we turned to Billy Rose, who worked at DOT for 27 years, including 12 years as Highway Division administrator. He estimates that about 10 percent of the DOT’s budget is spent on roads designed (or redesigned) not for the public interest but to satisfy “political favoritism or just plain old greed.” That amounts to about $200 million a year.
As one step to help remove the political influence, Rose points out that the Luther Hodges administration replaced the Board of Transportation in the 1950s with an eight-member policymaking group representing the entire state, not districts. Rather than meddle in specific road projects or control slush funds, board members only set policies, which DOT professionals then used to determine the merits of individual projects. After Hodges left office, that structure was changed to the current arrangement, which we believe promotes a culture of political hustling and good ole boy favoritism.
The problems we see are not simply the result of individual people or of one party, but are systemic in nature and require systemic solutions. We are asking your office to examine fully the current policymaking and management system, how it supposedly functions on paper and how it operates in real life. We believe a comprehensive audit will document the need for dramatic, far-reaching changes from top to bottom. Thank you for your interest. We stand ready to assist you in any way you deem appropriate.
John Locke Foundation
NC Alliance for Transportation Reform
NC Alliance for Democracy