News: CJ Exclusives

UNC president’s ethical challenges

Bowles has business relationship with NCSU trustees chairman

UNC President Erskine Bowles stumbled into some ethics issues when he joined the N.C. State University Board of Trustees in supporting first lady Mary Easley’s pending $180,000-per-year, five-year employment contract at the university.

Bowles has a business relationship with NCSU Board Chairman D. McQueen Campbell, and Campbell’s company has used Bowles’ position as UNC president in real estate investment promotional material. State law prohibits a public official from knowingly allowing his public position to be used in advertising activities that might generate financial gain for him or others.

Bowles turned down repeated requests for an interview about Ms. Easley’s pay, his relationship with Campbell, and the promotional material. Through a spokesperson, Bowles said he was unaware that Campbell’s company used his name and title in promotional material.

Campbell played a key role in a real estate transaction in 2005 in which Gov. Mike Easley and Mrs. Easley bought a Carteret County waterfront lot in the Cannonsgate development for $549,880. News stories indicated the lot was worth much more, and one year after the purchase, county tax officials appraised the lot at $1.2 million. It was also in 2005 when NCSU first employed Ms. Easley and the governor reappointed Campbell to the NCSU Board.

Carolina Journal first reported the real estate deal in April 2006. The Charlotte Observer followed with a similar story in June adding that Raleigh real estate broker D. McQueen Campbell, ”a longtime friend and campaign contributor,” introduced Easley to the investment opportunity.

NCSU Provost Larry Nielsen hired Ms. Easley in 2005 at $80,000 per year. He eventually raised her pay to $90,000 and then to $170,000 July 1. She will continue to have a light teaching load and supervise a speakers program. Nielsen said her position has not been studied by a human resources professional.

Carolina Journal Online published the story about Ms. Easley’s pay increase July 2, and other media quickly picked it up. The Board of Trustees conducted a regularly scheduled meeting July 8. Shortly after the meeting NCSU posted a message from Nielsen stating, “The NC State Board of Trustees has unanimously endorsed Mrs. Easley’s new position and compensation level, as has the Chancellor. President Bowles has said, ‘I join the Board of Trustees in expressing my delight that Mrs. Easley will consider continuing her public service through her work at NC State.’ ”

Each school in the UNC system has a board of trustees, but Bowles and his 32-member UNC Board of Governors oversee the entire system. That board is scheduled to review Ms. Easley’s employment situation at a meeting Sept. 12.

The “Rock Star of Real Estate”

In addition to running his Raleigh-based company, Campbell Property Group, Campbell is the director of acquisitions for a group of waterfront development and financing companies headed by William G. (Gary) Allen, an N.C. native who now lives in Florida.

Allen’s companies developed Cannonsgate, where the Easleys own a lot. They are also developing two other waterfront communities in North Carolina — the Summerhouse on Everett Bay in Onslow County, and Cutter Bay in Pamlico County.

An eight-page document available on the Internet, “The Current — Waterfront Land Fund Management Investors Source for News, 2007 Year End Report,” is a promotional piece produced by Waterfront Land Fund Management, one of Allen’s companies. (See the report.)

Page 6 is devoted entirely to describing Campbell’s role in the organization. “Nothing gets past McQueen Campbell. Particularly if its waterfront property. As Director of Acquisitions for Waterfront Communities, McQueen is responsible for the company’s pipeline of potential properties and serves as the eyes and ears of Waterfront’s real estate interests,” the document says.

On the following page is an article about Allen’s $2 million gift to UNC Chapel Hill. “UNC President Erskine Bowles, who happens to be a Waterfront investor, has dubbed Gary the ‘Rock Star of Real Estate’ in part because of his company’s average annual growth rate of 36 percent,” the report says. “Gary’s organization is in a league of its own when it comes to sales,” Bowles says.

The final page, titled “2007 pictures of the Year,” contains two more pictures of Bowles and refers to him as “UNC President and WLIF I investor.”

Ethics laws

Bowles and Campbell are both specifically covered by the State Ethics Act. As a board chairman, Campbell has an important role in the administration of the State Ethics Act.

The act requires each board to “periodically remind public servants under that person’s authority of the public servant’s duties to the public under the ethical standards and rules of conduct,” including “the duty of each public servant to continually monitor, evaluate, and manage the public servant’s personal, financial, and professional affairs to ensure the absence of conflicts of interest or appearances of conflict.”

At the beginning of any board meeting, “the chair shall remind all members of their duty to avoid conflicts of interest and appearances of conflict” and to “inquire as to whether there is any known conflict of interest or appearance of conflict with respect to any matters coming before the board at that time.”

Documents indicate that Campbell participated in a discussion of Ms. Easley’s position and salary and her subsequent unanimous endorsement by his board. If Campbell is a close friend of the governor and Ms. Easley, he has a potential conflict of interest.

Bowles appears to have two ethical issues. He has already endorsed a decision made by Campbell’s board before the Board of Governors took independent action.

In addition, Bowles appears to be in violation of a specific provision of the act. The act states that a covered person “shall not mention or permit another person to mention the covered person’s public position in nongovernmental advertising that advances the private interest of the covered person or others.”

Bowles responds through university spokesperson

Bowles delivered the following written explanations through UNC Vice President for Communications Joni Worthington:

“President Bowles has considered your request but does not intend to make any further comment about Mary Easley’s position or proposed compensation until it is considered by the Board of Governors at its September meeting.

“With regards to the related concerns you raised with me, he did ask that I reiterate that he had no advance knowledge of or involvement whatsoever in NC State’s decision to hire Mrs. Easley or in the setting of her salary. He has had no discussions at all about this matter with any member of the NC State Board of Trustees. He first learned about Mrs. Easley’s new contract in the newspaper and asked his chief of staff to look into it to make sure that this particular personnel action had been handled just like any other personnel matter would have been. No exceptions.

“When we subsequently learned that NC State had inadvertently been misinterpreting the Board of Governors’ salary policy, President Bowles instructed the chancellor and provost to review all such personnel actions, including Mrs. Easley’s. Mrs. Easley was not to be treated any differently that any other employee.”

When CJ questioned Worthington further about his business relationship with Campbell and the use of Bowles name and position in promotional material, she provided another written response.

“Some time ago, President Bowles purchased a limited partnership interest in one of many real estate blind pools established by Waterfront Properties to purchase raw land. He has many similar investments with other companies. At the time he made this particular investment, he was not even aware that McQueen Campbell worked for Waterfront Properties; although had he been aware of it, it would not have affected his investment decision.”

“President Bowles was never consulted by Waterfront Properties about the use of his name, University title, or photo in company materials and was unaware that they were included in an investor newsletter published late last year. Having now seen it, he has asked that it please not happen again.”

Don Carrington is executive editor of Carolina Journal.