Re­form laws spurred by scan­dals full of loop­holes

PACs, weak en­force­ment ren­der kick­back statutes al­most mean­ing­less, au­di­tor says

Santa Fe New Mexican - - FRONT PAGE - By An­drew Ox­ford

FBI agents raided the state trea­surer’s home. Then the calls for re­form be­gan.

It was 2005, and federal in­ves­ti­ga­tors ac­cused then-Trea­surer Robert Vigil of de­mand­ing kick­backs from pri­vate fi­nan­cial ad­vis­ers hired by the state gov­ern­ment to man­age New Mex­ico’s in­vest­ments.

Vigil main­tained that some of the pay­ments were merely cam­paign do­na­tions. His pre­de­ces­sor, Michael Mon­toya, pleaded guilty to a sim­i­lar ex­tor­tion scheme, say­ing cam­paign debt drove him to so­licit kick­backs from con­trac­tors.

FBI agents quoted Mon­toya as say­ing kick­backs were merely “the way we do busi­ness in New Mex­ico.” Some leg­is­la­tors sought to change that. They ap­proved re­form mea­sures in 2006 and 2007 that bar con­trac­tors from ply­ing politi­cians with cam­paign do­na­tions or other gifts while vy­ing for gov­ern­ment busi­ness. And the changes re­quired con­trac­tors to re­port do­na­tions they have made to pub­lic of­fi­cials.

But a decade later, those laws are full of loop­holes.

A re­cent re­view by the State Au­di­tor’s Of­fice found 2 in 5 gov­ern­ment con­tracts did not in­clude the pa­per­work con­trac­tors are re­quired to sub­mit re­port­ing their do­na­tions to pub­lic of­fi­cials. For about a decade, the stan­dard forms even in­cluded in­ac­cu­rate lan­guage. And The New Mex­i­can has ob­tained doc­u­ments show­ing how cor­po­ra­tions, along with po­lit­i­cal ac­tion com­mit­tees, can skirt the rules al­to­gether.

“This is the weak­est part of all our cam­paign fi­nance rules, which is ironic be­cause it is the first part we tried to fix after the trea­sur­ers’ scan­dal,” State Au­di­tor Tim Keller said.

He de­scribed en­force­ment and com­pli­ance of the laws as so poor, the statutes them­selves are al­most mean­ing­less.

The 2006 and 2007 laws had two main com­po­nents. From the mo­ment a busi­ness gets the chance to bid on a gov­ern­ment con­tract to the mo­ment the con­tract is awarded, the

com­pany, its rep­re­sen­ta­tives as well as rel­a­tives of board mem­bers are banned from giv­ing money or other gifts to pub­lic of­fi­cials who might be in a po­si­tion to in­flu­ence con­tracts. The mea­sures also are de­signed to bring more trans­parency by re­quir­ing com­pa­nies bid­ding for busi­ness with a state or lo­cal agency to file a form with that agency de­tail­ing any do­na­tions it has made to pub­lic of­fi­cials dur­ing the pre­vi­ous two years.

But in June 2015, the In­ter­state Stream Com­mis­sion asked engi­neer­ing firms to sub­mit pro­pos­als for de­sign­ing part of a big and con­tro­ver­sial project that could ul­ti­mately di­vert the Gila River. Sev­eral com­pa­nies submitted bids.

As the com­mis­sion weighed which con­trac­tor to hire, a po­lit­i­cal ac­tion com­mit­tee linked to one of the com­pa­nies sent a $1,000 do­na­tion to Su­sana PAC, a po­lit­i­cal ac­tion com­mit­tee tied to Gov. Su­sana Martinez.

The com­pany, AECOM, re­ceived the con­tract in May 2016. The Cen­ter for Bi­o­log­i­cal Di­ver­sity, which has been track­ing the project, cried foul, say­ing the do­na­tion was il­le­gal un­der the part of the decade-old laws de­signed to pre­vent pay-for-play deal-mak­ing.

The do­na­tion was a pit­tance for Su­sana PAC, which raised nearly $330,000 dur­ing that six-month pe­riod. And both Su­sana PAC and AECOM’s po­lit­i­cal ac­tion com­mit­tee re­ported the do­na­tion in rou­tine reg­u­la­tory fil­ings.

Even so, the do­na­tion pointed to loop­holes in the law.

The New Mex­i­can has ob­tained let­ters show­ing that the State Au­di­tor’s Of­fice raised con­cerns about the con­tri­bu­tion ear­lier this year. The In­ter­state Stream Com­mis­sion replied that the do­na­tion did not come from AECOM but from its po­lit­i­cal ac­tion com­mit­tee. And the money did not go to a pub­lic of­fi­cial but to a po­lit­i­cal ac­tion com­mit­tee, though it was one linked to the gov­er­nor.

Be­cause the money did not go straight from a con­trac­tor to an of­fi­cial, the state’s pur­chas­ing law did not ap­ply, the com­mis­sion said, echo­ing ar­gu­ments AECOM’s own lawyers made in a let­ter to the com­mis­sion.

A spokesman for the com­pany said it de­fers to the In­ter­state Stream Com­mis­sion and de­clined to com­ment fur­ther.

“It’s dis­turb­ing,” said Dede Feld­man, a for­mer Demo­cratic state se­na­tor from Al­bu­querque, who spon­sored the re­form laws.

Po­lit­i­cal ac­tion com­mit­tees, now ma­jor play­ers in Amer­i­can pol­i­tics, were not as sig­nif­i­cant when the law passed, Feld­man said.

And the idea that po­lit­i­cal ac­tion

com­mit­tees could fall out­side the law al­to­gether could make it ob­so­lete.

“That cer­tainly was not the in­tent of the law, and it’s a huge loop­hole,” Keller said.

Se­nate Ma­jor­ity Leader Peter Wirth, D-Santa Fe, ar­gues that law­mak­ers have to keep up with chang­ing prac­tices.

“Hav­ing worked on cam­paign fi­nance re­form for many years, one of the things I’ve learned is that groups on both sides are al­ways push­ing for ways to get around the law,” he said, adding that the Leg­is­la­ture should re­visit the 2007 statute.

But even if leg­is­la­tors tighten the law, gov­ern­ment agen­cies will still have to en­force it.

The State Au­di­tor’s Of­fice pub­lished a re­port on the state’s pur­chas­ing prac­tices last month and found many agen­cies are not re­quir­ing con­trac­tors to sub­mit re­quired doc­u­ments. Even if agen­cies col­lect all the re­quired pa­per­work, they are not ver­i­fy­ing whether it is true, the re­port said.

The other part of the 2006 and 2007 laws re­quires, for ex­am­ple, that con­trac­tors re­port po­lit­i­cal con­tri­bu­tions when sub­mit­ting a bid for gov­ern­ment busi­ness.

The State Au­di­tor’s Of­fice re­viewed 54 pro­cure­ment files from 2014 and found that 23 did not in­clude cam­paign con­tri­bu­tion dis­clo­sure forms. Part of the prob­lem may be that the state agency that cre­ated the forms in­cluded in­ac­cu­rate word­ing for about a decade.

A ver­sion of the form drafted by the De­part­ment of Fi­nance and Ad­min­is­tra­tion in 2007 and avail­able on its web­site as re­cently as June 2017 said only con­trac­tors bid­ding on con­tracts for par­tic­u­lar ser­vices needed to file the dis­clo­sure.

But the law is broader, re­quir­ing dis­clo­sures for each con­tract.

Since the au­dit, the state’s pur­chas­ing of­fice has de­ter­mined that the cam­paign con­tri­bu­tion forms must be col­lected with ev­ery con­tract.

The De­part­ment of Fi­nance and Ad­min­is­tra­tion up­dated its form this month to re­flect what the law ac­tu­ally says.

Even when agen­cies col­lect the forms, they do not nec­es­sar­ily ver­ify whether the in­for­ma­tion is cor­rect, ac­cord­ing to the state au­di­tor’s re­view.

The of­fice raised con­cerns, for ex­am­ple, that the In­ter­state Stream Com­mis­sion did not flag AECOM’s do­na­tion.

But the In­ter­state Stream Com­mis­sion replied that it is not re­quired by law to dou­ble-check, which ad­vo­cates ar­gue is an­other short­com­ing of the statute that leaves it, in Keller’s words, “marginally ef­fec­tive.”

Scan­dals in­volv­ing two for­mer state trea­sur­ers, Robert Vigil, top,

and Michael Mon­toya, above, helped prompt re­form laws in 2006 and 2007.

NEW MEX­I­CAN FILE PHOTO

FBI agents re­move some doc­u­ments and other ev­i­dence at the State Trea­surer’s Of­fice in 2005. The scan­dals in­volv­ing then-Trea­surer Robert Vigil and his pre­de­ces­sor sparked cries for re­form, but a decade late, laws en­acted by the Leg­is­la­ture in 2006 and 2007 are easy to get around.

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