The South Carolina Policy Council – the parent organization of The Nerve – and the South Carolina Public Interest Foundation have jointly filed a state ethics complaint against Scout Motors related to the $1.29 billion state appropriation last year for the company’s electric-vehicle assembly plant under construction near Columbia, according to a press release issued today.
The written complaint, which was submitted to the State Ethics Commission and included with the press release, asks the commission to investigate whether Virginia-based Scout Motors Inc., a company created in 2022 by German-based Volkswagen, violated state ethics law by failing to register as a lobbyist principal before the S.C. Legislature and Gov. Henry McMaster approved the appropriation, known as Act 3 of 2023.
The complaint cites findings in Nerve stories last year and this year about meetings or events involving Scout Motors officials or their representatives and McMaster, his staff or lawmakers before the appropriation was approved; and an earlier incentives proposal by the state of Mississippi.
The findings “raise legitimate questions about whether Scout Motors or its representatives engaged in direct communication with lawmakers and/or the governor regarding Act 3 of 2023 before the law was passed,” the complaint contends.
A main purpose of the state ethics law in question (Section 2-17-25(A) of the S.C. Code of Laws) is to “provide the public with advance notice of the identities of companies or organizations that plan to persuade state lawmakers and/or the governor to adopt their legislative agendas,” the complaint concludes.
The complaint and press release note that a lobbyist principal under state law is defined in part as someone who “directly employs, appoints, or retains” a lobbyist to “influence by direct communication,” among other things, the “action or vote” of the governor or lawmakers “concerning any legislation.” The law requires that lobbyist principals register with the Ethics Commission within 15 days of “employing, appointing, or retaining a lobbyist.”
Scout Motors first registered as a lobbyist principal with the commission a month after the $1.29 billion appropriation became effective on March 20, 2023, according to the complaint, citing commission records.
As The Nerve previously has pointed out, the appropriation works out to be approximately $240 for every man, woman and child in South Carolina.
The South Carolina Public Interest Foundation, based in Simpsonville and founded in 2005, is an “independent, nonpartisan private operating foundation dedicated to ensuring that South Carolina governments, agencies and officials act in strict compliance with the state Constitution and statutes,” according to its website. The South Carolina Policy Council, a nonprofit, nonpartisan research organization based in Columbia, was founded in 1986 on the “principles of limited government, free market enterprise, and individual liberty and responsibility,” according to its website.
Big taxpayer gift, few answers
As The Nerve previously reported, and as cited in the ethics complaint, the S.C. Legislature on March 15, 2023, gave final approval – just one week after it was passed by the Senate Finance Committee – to an amended joint resolution appropriating $1.29 billion in actual and projected state surplus funds to the S.C. Department of Commerce for “Project Connect,” the code name for the planned Scout Motors plant on an approximately 1,600-acre site at the town of Blythewood in Richland County.
The total appropriation included $1.09 billion for land acquisition and site improvements, a rail spur bridge, road access, soil “stabilization,” water and wastewater infrastructure, a training center and “any such other purpose as is necessary and recommended” by the Department of Commerce. Commerce was appropriated another $200 million to loan to Scout Motors for “additional soil stabilization,” to be “paid back in full.”
On March 20, 2023, McMaster signed the appropriation into law, effective that day. The law directed the state treasurer to transfer $1.2 billion to Commerce within five days of the law’s effective date, with the remainder of the appropriation to be dispersed within five days of the close of the state books or by Nov. 1, 2023, which ever occurred first.
The Nerve last June revealed details of the 192-page state incentives agreement with Scout Motors, which announced on March 3, 2023, plans to create a minimum of 4,000 jobs and invest a minimum of $2 billion, though, among other things, the deal would allow the company itself to create at least 400 jobs and invest at least $400 million over an eight-year period, allowing the differences to be made up by company “affiliates” and “counted suppliers.”
Up to 400 jobs could be “badge” workers, defined in the agreement as “cafeteria, security, and janitorial maintenance personnel.”
The Nerve on Jan. 9 this year sent written questions to Scout Motors president and CEO Scott Keogh asking, among other things, whether Scout officials or other company representatives discussed the appropriation with McMaster or his staff or lawmakers or their staffs before the legislation was passed. No response was given.
The Nerve sent written questions the same day to McMaster; Trey Walker, his chief of staff; and Brandon Charochak, the governor’s communications director, asking, among other things, whether the governor or staff members discussed the legislation with Scout officials or their representatives before the law’s passage.
“Of course, state officials discussed and negotiated an incentive package with Scout officials before the legislation was introduced and prior to Scout deciding on South Carolina in March 2023,” Charochak said in an email response on Jan. 12. “It would have been impossible or unnecessary to draft a bill otherwise.”
Charochak didn’t respond to a follow-up written question asking for clarity whether his email statement meant that Scout officials or their representatives specifically discussed the legislation with McMaster, his staff or lawmakers before the law was approved.
House Speaker Murrell Smith, R-Sumter, and Senate Finance Committee Chairman Harvey Peeler, R-Cherokee, didn’t respond to written questions sent to them in January.
The Nerve also sought comment that month from ex-House members Boyd Brown and Jim Merrill, who work for the Columbia-based lobbying firm, Tompkins Thompson & Brown, and were listed by Scout Motors initially on April 20, 2023, and on Jan. 5 and Feb. 22 of this year, as lobbyists for the company, along with Warren Tompkins and Michael Thompson, who also is a former House member. In text responses, Brown and Merrill directed The Nerve to contact Scout officials.
Online commission records show that last year, Scout Motors paid Brown, Merrill and Tompkins a total of $52,500.
Behind closed doors
The Nerve in its October story revealed, based on records obtained from the Governor’s Office and town of Blythewood under the state Freedom of Information Act, various closed-door meetings or events involving Scout Motors officials or their representatives, McMaster or his staff, or state lawmakers, including, as cited in the ethics complaint:
- Oct. 25, 2022: A private meeting in Washington, D.C., involving a Scout Motors official and representatives of the Governor’s Office and the S.C. Department of Commerce.
- Feb. 2, 2023: A private dinner at the Governor’s Mansion involving McMaster, Walker, Keogh and other company leaders, U.S. Sen. Lindsey Graham, and other state and local officials.
- Feb. 26, 2023: A private event at the Williams-Brice football stadium in Columbia, billed as a “Confidential Economic Development Dinner,” involving at least 31 invited guests, including McMaster and various staff members; Keogh, eight other Scout or Volkswagen executives, and a Volkswagen board member; and nine state lawmakers, including House Speaker Smith; Senate President Thomas Alexander, R-Oconee; and Sen. Peeler.
In addition, The Nerve reported that on Jan. 31, 2023, Smith and Peeler held a conference call on the project with the “Commerce team,” the identities of whom weren’t identified, according to a Governor’s Office timeline. On Feb. 14 and Feb. 16, 2023, Smith and Peeler met privately at the Governor’s Office with the “Commerce team,” the timeline noted.
In February this year, The Nerve revealed that the state of Mississippi, which, as also stated in the ethics complaint, was competing against South Carolina and other states for the project, had offered $150 million in state grant funding through special legislation, according to a company incentives wish list known as a “request for proposal” (RFP). The RFP was obtained from the Mississippi Development Authority under that state’s open-records law.
The listed deadline for the state of Mississippi to complete its RFP was Oct. 1, 2022 – 24 days before the private meeting in Washington, D.C., involving a Scout Motors official and representatives of the S.C. Governor’s Office and S.C. Department of Commerce.
JLL Inc., a Chicago-based, global real-estate services firm, also provided on behalf of Scout Motors a request for proposal to Richland County and Blythewood officials in December 2022, as the October Nerve story noted. The Nerve in January this year sent written questions to JLL officials about whether they discussed the $1.29 billion appropriation with McMaster or his staff, or state lawmakers or their staffs, before the law was passed, though no response was provided.
The incentives wish lists submitted to South Carolina and Mississippi included requests for cash grants, highway interchanges, a test track and commercial helipad, a truck staging area, a 40,000-square-foot training center along with taxpayer-funded employee training and recruitment, a state-constructed daycare center for employees, and various state and local tax breaks.
The South Carolina Policy Council last December published recommendations to improve transparency in the state incentives process, including holding public hearings on incentives prior to approval, and requiring independent, third-party reviews of proposed deals to determine true costs and benefits.
Ethics investigations
Under state law, the eight-member State Ethics Commission is made up of four appointees by the governor and two each by the Senate and House, with consent of the Legislature. No more than two of the governor’s appointees can be members of the governor’s political party, and the law requires that the House and Senate each make one appointment based on the recommendation of the members of the largest minority political party in their respective chambers.
Current lawmakers or ex-lawmakers out of office for less than eight years; relatives of lawmakers, the governor or other statewide elected officials; or those who registered as lobbyists within four years of being appointed to the commission aren’t eligible to serve on the commission, under the law. Their terms are for five years.
The commission, which currently is chaired by Scott Frick, is one of the state’s smallest agencies with a current total budget of about $2.6 million and 21 employees as of April 17, state records show.
Generally, after an ethics complaint is filed with the commission, the alleged violator is given the opportunity to file a formal response, according to the commission’s website. The commission’s executive director – currently Meghan Walker Dayson – reviews the complaints to determine whether there are sufficient facts presented to constitute a potential violation and warrant an investigation.
If an investigation is conducted, commission staff can interview witnesses, subpoena evidence and take depositions to determine the facts of the alleged violation, according to the website. When the investigation is completed, the commission reviews the evidence to determine if there is probable cause to hold a hearing on the allegations before a three-member panel of the commission. Hearings are similar to courtroom proceedings in which testimony is taken under oath, and evidence is presented.
The commission can take certain disciplinary actions upon a guilty finding of an alleged violation, such as issuing a public reprimand, ordering restitution or levying a maximum civil penalty of $2,000, according to the commission’s website.
Under state law, a person who fails to register with the Ethics Commission as a lobbyist principal can face a civil fine of $100 if no filing was submitted within 10 days of the established deadline, which can grow to a maximum of $5,000 if the required statement wasn’t filed after notice was given.
Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or
