John Hood's Syndicated Weekly Column
RALEIGH – Wouldn’t you know it? Two of North Carolina’s most ethically challenged politicians, former Agriculture Commissioner Meg Scott Phipps and current Congressman Frank Ballance, were recently back in the news on the same day, with the same sad story of high hopes and promising careers gone awry.
Phipps was in state court facing several charges having to do with her testimony to the State Board of Elections about campaign irregularities. The prosecutors allege that she willfully participated in a cover-up of the irregularities that led her to lie under oath and obstruct the board’s investigation. Phipps’ response is that she didn’t know what was going on within her campaign and departmental staff, and was a victim rather than a perpetrator.
Proving, once again, that necessity really is the mother of invention.
Ballance’s testing ground wasn’t a court of law but the court of public opinion. A long-awaited report from the office of State Auditor Ralph Campbell was released Oct. 22 and sparked the kind of media scrutiny and public opprobrium that, in all honesty, should have adhered to his story long ago. The John Hyman Foundation — a nonprofit chaired by Ballance, a longtime state senator before being elected to Congress in 2002 — received more than $2 million in state dollars from 1994 until last year. The money was supposed to fund substance-abuse programs, but Campbell’s auditors found a nest of shoddy bookkeeping and shady relationships among Ballance, his family members and political supporters, and the state-funded foundation.
While serving as one of the leaders of the legislative committee with oversight over the grants, Ballance chaired the recipient nonprofit, served on the board of deacons of his own church, from which the nonprofit rented space, and steered thousands of dollars to political supporters through “mini-grants” to churches and by employing campaign aides as foundation staff. Some of the Hyman funds flowed to Ballance’s daughter, for computer work that she did not complete. Some of the funds flowed to Ballance’s mother, whose day-care center received a “mini-grant.” And some of those funds actually flowed to Ballance himself, as the owner of the building from which his mother’s day-care center rented space.
Kinda makes your head spin, doesn’t it?
Campbell’s findings go beyond conflicts of interest, however. The Hyman Foundation went for years without filing legally required reports to the state and the Internal Revenue Service. It violated its own policies by paying board members to attend meetings. It appears to have spent much of its state money on activities with little or nothing to do with substance abuse. And perhaps most troubling of all, the foundation wrote checks on one of its bank accounts, deposited the checks into another of its accounts, and booked the transaction as an expenditure for “operating costs” for the mini-grant program it was (poorly) operating.
Since the Hyman Foundation’s staff, rent, and other overhead expenses had already been paid for – indeed, overpaid for – this transfer of funds appears to be a misappropriation of state grants for purposes unknown. The state auditor, at least, believes that this money and all other state funds not expended for their intended purpose should be refunded. That comes to about $239,000.
Will Ballance return the money? His own response to the state audit contained no answer to this question. Instead, it relied on the tried and true formulation that “errors were made,” by unnamed individuals, because of “shortsightedness” and “overwork.” Also, the congressman again resorted to blaming “persons seeking to hurt our efforts in order to satisfy their own political agenda” for the “misconceptions” that had led to the audit.
This hardly suffices as a serious response to some very serious findings by North Carolina’s state auditor. Ralph Campbell and his staff are to be congratulated for a fine job done in difficult circumstances (they were only able to evaluate the past 34 months of the foundation’s operations, in part due to the fact that Ballance and his staff had kept such slipshod records).
The common denominator between the Phipps/State Fair case and the Ballance/Hyman case is hubris. They were attorneys with both the knowledge and the opportunity to conduct themselves and their public business responsibly and legally. One seems destined to join the ranks of convicted criminals. The other is now under investigation by the FBI and SBI, so we’ll see.
Whatever the ultimate disposition of the cases, the conclusion that the taxpayers of North Carolina most deserve here is that their money no longer be awarded to private companies or individuals on the basis of personal or political influence.
Hood is president of the John Locke Foundation, publisher of Carolina Journal.com, and host of the new statewide program “Carolina Journal Radio.”