Nikki Haley’s Pay-to-Play Politics

Nikki Haley’s Pay-to-Play Politics

South Carolinians are beginning to feel duped by their new governor’s cronyism.



South Carolina Governor Nikki Haley’s star has maintained a rather controlled burn across America’s conservative galaxy in the lead-up to the 2012 elections, and the national narrative providing much of its thrust has focused on her personal biography and the hypnotic allure of a new kind of identity politics in the Old South.

Increasing talk of this rapidly rising Tea Party governor—at 39 the youngest in the nation, and South Carolina’s first female and ethnic minority chief executive—as vice presidential timber is no surprise. Indeed, it’s been an easy sell: a suburban, stiletto-heeled daughter of Sikh immigrants from India takes on the good old boys, and, presto, we have a fresh-faced free-market force for the conservative cause. “I think I am very aware that I am the flavor of the month,” Haley said on a recent radio show when the talk turned to the GOP veepstakes.

And why not? Even before she moved into the governor’s mansion five months ago, the three-term state legislator had charmed the national press, earning hagiographic coverage in many of the nation’s leading magazines. Newsweek put Haley on its cover before her election as “The Face of the New South.”

But Haley has been navigating a series of land mines—IRS disputes, questionable business deals and appointments, multiple adultery allegations—any one of which threatens to blow up her political career. “I believe she is the most corrupt person to occupy the governor’s mansion since Reconstruction,” declared John Rainey, a longtime Republican fundraiser and power broker who chaired the state’s Board of Economic Advisers for eight years. A 69-year-old attorney, Rainey is an aristocratic iconoclast who never bought the Haley myth. “I do not know of any person who ran for governor in my lifetime with as many charges against him or her as she has had that went unanswered,” he told me on a recent afternoon at his sprawling horse farm outside the small town of Camden. “The Democrats got Alvin Greene; we got Nikki Haley. Because nobody bothered to check these guys out.”

Inside the Favor Factory

When Haley took office in January, her backbencher status gave her no support structure in state government. Since then she’s appointed a surprising number of cronies and loyalists to bureaucratic functions in order to construct such a network. Many state boards have staggered terms to prevent unilateral decimation of institutional knowledge, but because former Governor Mark Sanford left so many appointees in place when their terms expired, there was a glut of personnel for Haley to dispense with as she pleased. At an early stage in the bloodbath, the capital city daily newspaper, the State, pointed out that of the fifty-nine she had already replaced, twenty-six were donors to her campaign.

Such wholesale housecleaning was not only sharply at variance with what the last GOP governor had done when taking over from a member of the same party; it also reeked of the kind of favor trading Haley had run against on the stump. “She was the Tea Party candidate, and she was gonna sweep the good old boys out,” Clemson University political scientist David Woodard said about Haley’s appointments at the time. Woodard is also a Republican consultant who wrote Why We Whisper: Restoring Our Right to Say It’s Wrong with South Carolina senator and Tea Party darling Jim DeMint. “In effect, she does the same sort of cronyism that is characteristic of previous governors,” said Woodard.

Meanwhile, Haley’s approach to the process offended the state’s genteel Southern traditions. In March, without announcing it, Haley quietly excised the most generous benefactor of the University of South Carolina, billionaire financier and philanthropist Darla Moore, from the school’s board of trustees, replacing her with a campaign contributor and little-known lawyer from Haley’s district. When the alternative weekly Free Times broke the news of the move—which led to student protests and a broader public backlash—Haley was deceptive about her reasons for having made the change.

Haley’s office initially said she had wanted a “fresh set of eyes” on the board; Haley later told Washington Post columnist Kathleen Parker that she’d ousted Moore—who’d given $70 million to the university whose business school bears her name—for not returning Haley’s phone calls and postponing a meeting. E-mails and correspondence from Haley’s office, later made public, revealed, however, that Haley had chosen Moore’s replacement a month before trying to meet with her.

If her university board pick was tone deaf, Haley’s choices for top political positions were outrageous. To chair the state’s revenue-projecting Board of Economic Advisors—one of the highest positions in state government that doesn’t require Senate confirmation—Haley appointed Chad Waldorf, co-founder of a barbecue chain called Sticky Fingers. Waldorf also happens to be co-founder of a group that paid for a $400,000 pro-Haley ad buy during her gubernatorial primary campaign; the ads were pulled off the air by a judge who said the group appeared to have improperly coordinated with her campaign.

Meanwhile, after Haley lifted a hiring freeze set by Sanford, the Department of Parks, Recreation and Tourism created a job for the wife of Haley’s chief of staff, Tim Pearson. Pearson, who is being paid $125,000—$27,000 more than the man who held the post in Sanford’s office—is a former Sanford aide who managed Haley’s campaign.

Haley has ended up on Think Progress’s list of pay-to-play governors who solicited money to fund inaugural parties from corporations with vested state interests. One of them was Boeing, which last year moved an expansion from unionized Washington State to South Carolina, a right-to-work state, which earned the airline manufacturer a lawsuit (still pending) from the National Labor Relations Board. Haley has lately made national news by asking the GOP presidential candidates to stick up for Boeing.

Perhaps most disturbing, however, is her hiring of Christian Soura, 32, who moved to South Carolina to take an unannounced job in the Haley administration at a salary of a dollar a year. The former secretary of Pennsylvania’s Department of Administration under Democratic Governor Ed Rendell, Soura, whom Haley calls “Mr. Fix It,” is tasked with setting up a similar department in the Palmetto State.

A bill currently moving through the state legislature would make the department a cabinet agency under the governor, allowing a governor-appointed director to oversee much of state administration. In early June, after the legislature adjourned without passing it, Haley ordered legislators back to Columbia for an emergency special session, without pay, in an attempt to bully them into passing the bill. It was a strident power play that offended legislative leaders in both parties and led the Senate president, a fellow Republican, to sue her in order to block it. The State Supreme Court quickly sided with him, ruling that Haley had acted outside her constitutional authority.

While the dollar-a-year arrangement gives Soura access to state government, he’ll draw his real compensation from a newly created think tank, the South Carolina Center for Transforming Government, which doesn’t have to disclose its funding.

The murky nature of Soura’s presence has caused headaches for the new state treasurer, Republican Curtis Loftis. Loftis accuses Soura of undermining his authority, violating established protocols and circumventing the treasurer’s office by contacting services that determine the state’s credit rating behind Loftis’s back. “We don’t have any knowledge of who’s paying him or what his motives are,” a frustrated Loftis said recently. “We have an unknown dollar-a-year man.”

The Minefield

During her gubernatorial campaign, Haley ran on a platform of transparency and accountability, but since taking office she’s refused every sit-down interview request with the State, one of South Carolina’s largest newspapers. Print and TV reporters throughout the state have complained about her administration’s press relations. Like her mentor Sarah Palin, Haley avoids the local press but frequently appears on Fox News. And she used a legislative exemption to keep private her taxpayer-funded e-mails after reporters requested them in the wake of allegations that she’d had an extramarital affair.

On the stump, Haley campaigned for more income disclosure laws, saying the public has a right to know what special interests are paying lawmakers. In a speech before Palin endorsed her on the Statehouse steps, Haley said, “When you see who’s paying your legislators, you will start to see why policies move the way it has [sic].” However, Haley failed to report in her own ethics filings that she had accepted more than $40,000 in consulting income from an engineering firm with business before the legislature. Neither Haley nor the firm will say what she did to earn the money. “She is a well-connected person who knows different things and different people, and that’s why we hired her, and I’m going to leave it at that,” Robert Ferrell, the man who hired her, told me. Ferrell is the firm’s southeast region business development manager.

Then there’s the $110,000 fundraising job that the CEO and president of a hospital in Haley’s district created for her while she was a sitting lawmaker, despite her lack of fundraising experience. The job came during a time when the hospital was looking for approval from state lawmakers to build a heart surgery center. To make matters worse, on a routine 2008 application for the post, Haley wrote that she’d been earning $125,000 from her family’s clothing store, Exotica International. That’s drastically more than what she told the IRS that year, when she reported earning only $22,000 from Exotica. Haley denies that she filled out that particular page of the application. But the hospital says no one on its end did, and it would have been incredibly hard for a third party to have done it because of the personal information involved.

Though not a certified CPA, in her campaign Haley frequently cited her skills as an accountant. Yet she consistently blew the April 15 deadline on her family income taxes, racking up more than $4,000 in penalties since 2004. More curious, in 2006 Haley and her husband, Michael, claimed only $40,269 in combined income. This was while the couple was paying a $289,000 mortgage, driving a luxury SUV and raising two children.

Affairs of State

Two men have signed sworn affidavits alleging they had sexual affairs with the married mother of two, stemming from 2007 and 2008, respectively. She has denied them and has agreed to resign as governor if either is proven. Questions about her private life might best remain a family matter except that both men have high political profiles, and one is writing a tell-all book about his relationship with Haley. Will Folks, a former spokesman for then–Governor Sanford who worked for Haley in 2007, is a political consultant who runs a popular South Carolina blog, FITSNews. He is coy about his book contract but has released a steamy excerpt on his website. “If she were to appear on a national ticket, it would be the end of that ticket,” Folks told me.

Still, like so many Palmetto State chief executives before her, Haley seems to be angling for a spot on a national ticket. She is already penning her memoir. “Every governor we’ve had since Carroll Campbell has had national aspirations, but with her it’s more naked and obvious,” says Brad Warthen, a Columbia advertising man who until 2009 was the longtime editorial page editor of the State. Warthen endorsed Haley in two legislative elections and chronicled her rise beginning about seven years ago. In that time, he says, she has morphed from a naïve newcomer, to a politician he thought could become a good force in the legislature, to something approaching megalomania.

“I think she’s had her head turned by discovering where demagoguery will get you,” Warthen told me. “I don’t think that’s totally who she was before. I think she has developed in this direction. It’s a B.F. Skinner behavioral reinforcement thing; she has been rewarded and rewarded and rewarded. This has worked for her. And she continues to charm the national media. Because you know what? They don’t care. It’s just a story.”

But the story that’s been told nationally has a different tint in Dixie, one that belies any claim that white voters in South Carolina, which is nearly one-third black, have cast aside hang-ups over race by electing Haley. During her campaign, she embraced the most conservative ideas right down the line: laissez-faire capitalism, hostility to social programs and labor unions, cutting taxes, starving government.

“Nikki Haley could have been perceived as a black person in South Carolina because of her skin color and her eyes and so on, but she’s gone out of her way to say indirectly, ‘I’m not black, I’m white. I dress white, I talk white, I have white friends, I have white ideology,’” says John Crangle, a retired lawyer and political science professor who has run the state chapter of Common Cause for twenty-five years. “The subtext of everything she says is that we need to do less for black people in South Carolina, and that appeals to your traditional white Southerners—the same people who voted for Nixon and the same people who are the base of the Republican Party now. But it also appeals to all these retirees that come in because they don’t want to pay taxes.” In the Palmetto State, it seems, an antigovernment stance that by default is anti-black still plays well at the polls—especially when peddled by a minority politician. (In November, in the same election that sent Haley to the governor’s mansion, ultraconservative Tea Partier Tim Scott became the first black Republican elected to Congress from South Carolina since Reconstruction.)

At a roundtable for reporters before the first GOP presidential debate of 2012, held in Greenville on May 5, the Canadian magazine Maclean’s asked Haley if she was interested in being vice president. “No, everybody wants to talk about VP with me, and what I tell them [is] they need to be focused on the top of the ticket,” she said. “We don’t have the luxury of talking about VP right now.”

But one day soon they will, and Haley’s name will continue to come up. “She’s in the South, and she’s a female governor,” says Woodard, the political scientist. “She has to be mentioned when you talk about ticket balancing. I’m sure she knows that.” He adds that her national libertarian backers are probably helping to push for it.

In late April, at a stop in Florence, during a series of speeches Haley was giving to commemorate her first 100 days, she told the small crowd, “There really are no mistakes we have made.” It was an astonishing claim, given the nearly daily reports of infidelity, dishonesty, conservative cronyism and pay-to-play politics. But the people of South Carolina are beginning to realize they’ve been duped. The question is whether the rest of the nation will get that same privilege.

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