SHADOW CASH: Investigating loopholes that can keep S.C. election money in the dark

Updated: Apr. 7, 2021 at 6:45 PM EDT
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HORRY COUNTY, S.C. (WMBF) – South Carolina’s ethics laws are supposed to keep political campaign spending accountable and transparent for the public.

But WMBF Investigates found that an unknown number of dollars used to influence an election can’t be tracked because a state agency can’t legally enforce one of its laws.

Campaigns spend hundreds of thousands of dollars every election cycle to promote their candidate. Organizations, such as political parties and committees, can raise and spend money to help support certain candidates as well.

WMBF Investigates came across a loophole in the law during the process of looking into a tip. It involved a Horry County political organization that allegedly had thousands of dollars in credit card spending unaccounted for.

When we started digging, we found that tracking those financials wasn’t so simple.

The State Ethics Commission works to keep South Carolina’s elections transparent by enforcing financial campaign disclosure laws and ethical rules of conduct. This includes candidates for an elected office, those who are already in office, and those organizations who seek to help these candidates win.

But WMBF Investigates found when sifting through the commission’s Public Disclosure and Accountability Reporting system, that years of campaign finances were never disclosed by political parties to the state agency.

Turns out, that’s because the commission can’t force them to.

In 2010, a federal court case, South Carolina Citizens for Life v. Krawcheck, ruled that the definition of “committee” in the state’s campaign practices law was “facially invalid” because it was found to be “unconstitutionally overbroad.”

“It was perhaps violating the First Amendment free speech protections of some of these organizations, by subjecting them to some pretty arduous regulations regarding campaign finance,” explained Dr. Drew Kurlowski, a political science professor for Coastal Carolina University. “And the court essentially put this back into the hands of our state legislature and said, ‘You all need to come up with a new definition of what constitutes a new committee.’”

That was over 10 years ago. And currently, “committee” still remains the same definition.

The law states that “committee” is defined as an association, club, or group of people that seeks to influence an elective office using certain specified amounts of funding.

It includes party committees, and non-candidate committees, and any organizations that come together to influence an election.

But because this statute has been ruled unconstitutional, the State Ethics Commission can’t do its full job.

“With no definition, it essentially means that no one is subject to these regulations,” Kurlowski explained.

WMBF News wanted to figure out why this gaping hole has been hanging open. Our investigation found it hasn’t been without at least some effort to fix it.

In late 2012, then-Gov. Nikki Haley launched South Carolina’s Commission on Ethics Reform. It was a comprehensive review put together to help review and improve South Carolina’s transparency laws.

Its findings were reported in 2013, and settling this definition of “committee” was one of the priorities.

“The definition that we recommended at that time in 2013, we knew that that would pass constitutional muster because it was a definition that the state of North Carolina had used,” explained James Burns, who served as counsel to the Commission on Ethics Reform.

To legally fix the definition, the panel recommended that “committee” be defined as a group that accepts and spends anything of value and is at least:

  • Controlled by a candidate
  • A political party
  • Or has the major purpose to support or oppose one or more clearly identified candidates.

And this fix, along with 22 other recommendations, was taken to the General Assembly. Burns said some of these changes made it into the state’s ethics law. But this was not one of them.

“They wrote the law, and if they want the law enforced, they need to correct this deficiency,” Kurlowski said. “I can’t even begin to speculate as to why they wouldn’t want to do that.”

We asked South Carolina State Sen. Greg Hembree, who represents Horry and Dillon counties, why this change still hasn’t happened. He was one of the sponsors of a massive bill in 2015 that tackled a lot of reforms to our state’s ethics laws.

Hembree said a lot of the pieces in that bill did pass, but this was one of the “most glaring things that we failed to do.”

“The intention was to have this fight another day, which many of us have attempted to bring to the floor, without success so far,” Hembree said.

He said he’s seen some degree of bipartisan opposition to reforming this, saying that interest groups also work to influence against it.

“(Interest groups) prefer to keep it secret - that way they don’t have to disclose how much, they don’t have to disclose who is giving them the money, they don’t have to disclose where they’re spending the money,” Hembree said. “And it gives them a real competitive advantage when you try to influence an election.”

Hembree agreed that organizations seeking to influence an election on a specific candidate should have to disclose contributions and expenditures. But he said, sometimes things don’t play out as they should in the General Assembly.

“It seems that this policy is so clearly the right thing to do; it’s just the right thing to do, that it shouldn’t be this hard,” Hembree said. “But I’ve learned that in legislation, things that are sometimes very obvious sometimes take a long time to get done.”

But until something changes, the State Ethics Commission’s hands are tied, and political organizations can choose to disclose these funds more-or-less as a courtesy - but there’s nothing forcing them.

“As of right now, the (State Ethics Commission) - is not necessarily toothless, because it still has plenty of oversight responsibilities,” Kurlowski explained, “But at least with respect to parties and political committees, it is in fact ill-equipped to deal with the potential for malfeasance in our elections.”

The State Ethics Commission is being audited by the Legislative Oversight Committee. On Thursday, leaders will be fielding recommendations from the public on what improvements can be made.

A future meeting will allow for the commission itself to testify on changes they feel need to be made - and it’s expected that fixing this definition will be brought to the table.

WMBF Investigates will be tracking the progress that state legislators make to verify that political organizations are held responsible for the dollars used to impact your vote.

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