Believe it or not, Washington just took a significant step forward last week in fighting corruption, and North Carolina is getting left behind. D.C.’s blow to cronyism came via the Trump administration, with a directive from Attorney General Jeff Sessions to Department of Justice staff to cease requiring donations to third parties in lawsuit settlements.As corruption goes, second only to getting bags of cash for yourself is getting money for your friends. That is a practice Sessions is ending at the federal level. No longer will the feds be able to sue a corporation, then require, via a legal settlement, that a third party receive the penalty funds instead of the government.Here’s an example of how the scheme worked. (It’s an example with a North Carolina connection, but there are plenty of others.)First, the DOJ under Obama sued banks following the subprime mortgage crisis, including Bank of America. Then, the two reached a settlement which included money for consumer victims and the government. But, according to a Congressional investigation into these settlements, also included were stipulations that BoA donate money to nonprofit groups, including $1.5 million to the National Council of La Raza, a left-wing group. There were no strings attached to the money or oversight of its use. And last and I’m sure this is pure coincidence La Raza “receives millions in government grants each year and between 1989 and 2014, the organization’s political action committee, its employees, and their family members made approximately $100,000 in campaign contributions, predominantly to Democratic politicians,” the report said.Trump and Sessions could have merely turned the tables and started funneling money to right-of-center groups, so it is good to see them abandon the practice entirely. Third-party donations spiked under Obama, but he did not invent them. In fact, before anyone outside of Chicago had heard of Obama, North Carolina’s very own Mike Easley was putting in place a golden goose for Democratic politicians right here in North Carolina.As this page has detailed, when Easley was running for governor he negotiated a $65 million settlement with hog-farming companies to address water-quality concerns. As part of the settlement, the hog producers contribute up to $2 million annually to fund “environmental enhancement” projects. And the settlement makes clear who gets to pick the recipients of the $2 million: “The funds will be paid to such organizations or trusts as the Attorney General will designate.”Some may be thinking about North Carolina’s constitutional provision that mandates that all penalties and fines be given over to the public schools. (That’s in Article IX, Section 7.) But Mike Easley was sneaky, and claimed that since the settlement was “voluntary,” the law does not apply.That interpretation is in dispute, but what is indisputable is that Roy Cooper has been the chief beneficiary of the slush fund that Easley set up. For 16 straight years, Cooper has been able to dole out the money to favored groups. At least one of those groups and I’m sure this is pure coincidence then paid for TV ads critical of then-Gov. Pat McCrory during the 2016 gubernatorial campaign that pitted McCrory against Cooper.Easley’s multi-year settlement scheme makes Obama’s money-funneling look like child’s play. Obama’s DOJ got a one-time shot at helping its political friends. But Easley was setting up a little tin box that was magically replenished every year. And every year, the A.G. gets to reward his friends. Or not. Haven’t been a good boy this year? Don’t come asking for more dough.Sessions has stopped these shenanigans at the federal level, and now that Cooper has moved on to the governor’s mansion, Attorney General Josh Stein has the ability to stop them in North Carolina. Francis X. DeLuca of the conservative-leaning Civitas Institute has sued the attorney general’s office over the slush fund, and the matter will come before a judge on June 27.Stein’s hands are clean, and he can agree unilaterally to amend the settlement to direct the funds to the public schools as the constitution directs and as good government requires. Then he should disavow all future slush funds, as Sessions has.As I have noted before, slush funds always give the appearance of, and usually are, vehicles for corruption. It’s time to end them in North Carolina.Drew Elliot is a member of the North State Journal’s editorial board, separate from the news staff. Unlike other newspapers, the North State Journal does not publish unsigned editorials; the author or authors of every editorial, letter, op-ed, and column is prominently displayed. To submit a letter or op-ed, see our submission guidelines.
