Transparency experts: Michigan not immune to Baltimore-style kickbacks

Baltimore City Hall
Baltimore's City Hall | Wikimedia Commons

An ongoing scandal over questionable payments for a children’s book written by Baltimore Mayor Catherine Pugh serves as a useful reminder of Michigan’s weak financial disclosure laws, according to the state’s transparency advocates.

On Monday Pugh, a Democrat, announced she was taking a leave of absence, citing a “health matter,” as the Advance’s sister publication, Maryland Matters, reported. Pugh has spent the last several weeks facing a maelstrom of questions about payments she received from a health insurance company that bought thousands of copies of the aforementioned children’s book. The company, Kaiser Permanente, reportedly was, at the same time, seeking a contract to provide health benefits to city employees.

Baltimore Mayor Catherine Pugh
Baltimore Mayor Catherine Pugh at her 2016 inauguration. | Wikimedia Commons

While the scandal in Baltimore might be playing out 600 miles from Lansing, it’s hardly an impossible, or even unlikely, scenario here in Michigan. Michigan is one of only two states that exempts lawmakers from mandated personal financial disclosures.

Bills have been introduced in previous legislative sessions to end this practice. Former state Sen. Steve Bieda (D-Warren), who was term-limited this year, championed the cause for years but never was successful in passing legislation. No bills have been introduced yet this year.

To Craig Mauger, executive director of the Lansing-based watchdog group Michigan Campaign Finance Network (MCFN), the Baltimore situation shows that it’s often impossible to know how a particular legislator might benefit from laws they’re voting on, He also said the public might not be aware of the unique methods that lobbyists and other stakeholders can utilize to influence politicians.

“I think it’s pretty apparent that interest groups and groups that have financial matters before lawmakers and regulators, we’re seeing increasingly that they will use just about any means necessary — any tool that they can possibly take advantage of — to gain leverage with lawmakers,” Mauger said.

Mauger notes that direct campaign contributions are fairly easy to track, but there are other ways, such as charitable donations within a particular lawmaker’s district, that can secure influence.

A gift in the form of purchasing a large quantity of an official’s book, as has been alleged in Baltimore, is a very real possibility for Michigan’s politicians, Mauger said. A key solution, he said, would be to require officeholders to disclose information about their personal finances — and allow citizens to judge for themselves whether elected officials are benefiting financially from their offices.

“The financial disclosure is a critically important piece because right now we’re operating on a ‘trust me’ method,” Mauger said. “It’s basically like, ‘Trust me, nothing is happening here, but you don’t actually need to see any of the information.’”

“That’s problematic because the public doesn’t have a lot of trust right now and they’ve been given a reason for that,” he continued. “We’ve seen documented cases in our state where officeholders in our state were voting on things which would have benefitted them financially.”

Mauger cites former state Rep. Pat Sommerville (R-New Baltimore), who during the 2015-16 legislative term introduced an amendment to legislation that was seeking to set up regulations for ridesharing services like Uber and Lyft.

Sommerville’s amendment would have allowed the companies to pick up passengers from Michigan’s airports. Sommerville, however, also was a driver for Uber at the same time that he was recommending regulations that would be of benefit to him personally, according to MCFN reporting.

Michigan's Capitol
Michigan Capitol, March 22, 2019 | Susan J. Demas

Sommerville denied at the time that there was any conflict, reportedly saying, “I didn’t think I was doing it enough to make it a conflict.”

Aside from exempting state-level officeholders from financial disclosure, Michigan also is one of just two states to exempt both the governor’s office and the Legislature from open records requests.

That state of affairs could be coming to an end, however, as bills to reform and expand the scope of Freedom of Information Act (FOIA) requests passed the state House last month and have some level of bipartisan support.

Financial disclosure, however, has flown under the radar a bit more. Last month, Secretary of State Jocelyn Benson voluntarily released the personal financial information of both she and her husband and urged legislators to do the same, as the Advance previously reported.

Democratic legislative leaders appear to support Benson’s call for greater transparency, both in terms of FOIA and financial disclosure. Senate Minority Leader Jim Ananich (D-Flint), in an emailed statement, said passing a law would make for the “quickest, most effective way” to accomplish this.

“I have long supported measures that shine a light on the people’s government, including opening up FOIA and personal financial disclosure,” Ananich said. “It doesn’t have to be a one-or-the-other situation – we can and should handle both this session.”

Ananich voluntarily disclosed his personal finances on WKAR in 2015, but didl not require it of the rest of his caucus.

Likewise, Ananich’s counterpart in the House, Minority Leader Christine Greig (D-Farmington Hills), said she wants to see bipartisan support for financial disclosure for elected officials.

House Minority Leader Christine Greig
Christine Greig

“[F]inancial disclosure and transparency policies only work when everyone plays by the same rules,” Greig wrote to the Advance. “This shouldn’t be a partisan issue, which is why

the Legislature should pass financial disclosure requirements so elected officials at every level and of both parties are subject to the same standards.”

House Speaker Lee Chatfield (R-Levering) and Senate Majority Leader Mike Shirkey (R-Clarklake) could not immediately be reached for comment on Tuesday.

For Mauger, the absence of strong legislation for officials’ personal finances means that Michigan will preserve its reputation as one of the country’s worst when it comes to transparency. And that’s largely to the benefit of monied interests, said Mauger.

“The moral of the story is if you are an interest group in Michigan and you want to … use your financial resources to try to gain access or influence with a lawmaker, there’s a myriad of ways for you to do that and without anybody knowing about it,” Mauger said.

Nick Manes
Nick Manes covers West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels. His byline also has appeared in Route Fifty and The Daily Beast. When not reporting around the state or furiously tweeting, he enjoys spending time with his girlfriend, Krista, biking around his hometown of Grand Rapids and torturing himself rooting for the Detroit Lions.

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