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A loophole in pay-to-play?

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In North Carolina, among the ideas under consideration as part of ethics and campaign finance reforms is to limit what state contractors can give to candidates' campaigns, thus cutting down on the notion that a company has to "pay" in order to get state business.

The state House has already approved a pay-to-play bill, and Gov. Bev Perdue recently included support for the idea in her "good government" plan. (See item No. 1)

But is there a loophole?

In Hawaii, state legislators approved a law five years ago aimed at curbing pay-to-play politics. But a recent report in the Honolulu Advertiser shows that donors linked to state and city contractors are again pouring big money into major political races.

Hawaii state law bars contractors from contributing directly to candidates running for state or county offices. But these donations are allowed because they were made by subcontractors, company employees and their relatives, the newspaper reported.

It says: "An Advertiser study of more than 2,300 contributions made during the second half of 2009 found that employees of government contractors, their subcontractors and relatives of company officials gave more than $300,000 to Honolulu Mayor Mufi Hannemann and gubernatorial candidate and former U.S. Rep. Neil Abercrombie."

In the bill under consideration in North Carolina, campaign donations would be prohibited from any "entity affiliated with a vendor." That might seem to cover subcontractors. But it doesn't.

The proposed law defines such entities as officers, directors, partners and managers of the companies doing business with the state. Not employees, or subcontractors.

UPDATE #1: One of the sponsors of the N.C. bill, the Republican leader in the House, Paul Stam, said he sees no reason to update the bill based on what has happened elsewhere.

"I wouldn't call that a loophole," Stam wrote in an e-mail message. "That connection is too attenuated to impact the real issue — which is the prevention of corruption. If you wanted to include employees of subs why not subs of subs and their cousins as well. Actual quid pro quo pay to play is a crime now and remains so whether it is offered by subs or in-laws or  a man in cloak and dagger suit."

UPDATE #2: Policy officials who work for Purdue apparently also identified the employee gap as a potential issue. In a Dec. 21 memo obtained by The News & Observer, her policy office questioned that part of the pay-to-play bill.

"The current bill needs more fleshed out definition of 'entity affiliated with a vendor' -- i.e. question about managerial capacity and who that would apply to," the memo says.

— J. Andrew Curliss


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About the blogger

J. Andrew Curliss covered state and local politics and government for The News & Observer for more than a decade before joining the investigative team in December 2008. Contact him at or 919-829-4840. Follow him on Twitter: @acurliss.