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Friday, Jun 09, 2006
Posted on Sun, May. 14, 2006
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EXCLUSIVE | THE HUNLEY: Government by Stealth
DAY 1 OF 3

How senator steers sub under radar

Hunley costs spiral to nearly $100 million as McConnell helps funnel money its way

By JOHN MONK
jmonk@thestate.com
Sen. Glenn McConnell in Charleston in 2004, when he and thousands of other Civil War re-enactors escorted the Hunley crew members’ remains to a grave site in Magnolia Cemetery.
FILE PHOTOGRAPH / THE STATE
Sen. Glenn McConnell in Charleston in 2004, when he and thousands of other Civil War re-enactors escorted the Hunley crew members’ remains to a grave site in Magnolia Cemetery.

The cost of preserving and promoting the Hunley submarine has soared to nearly $100 million — thanks largely to a powerful politician’s behind-the-scenes work to steer public money toward his pet project.

The Hunley is one of South Carolina’s biggest financial undertakings in modern times. Not counting university expansion projects, the Hunley ranks behind only a few large road and bridge projects. It even exceeds the $62 million State House renovation in the 1990s.

Glenn McConnell, president pro tem of the state Senate, is the Hunley’s biggest booster. He also has been the driving force behind the spiraling price tag for the preservation and promotion of the Confederate sub.

McConnell has pieced together the money, keeping the project out of the public arena and away from State House debate.

And he has personally authorized much of the spending of the project’s public money in an arrangement the state’s comptroller general says is “obviously outside the framework the state has provided for disbursement of public funds.”

Few politicians or state policymakers know how much money is involved — or how much of it is coming from taxpayers.

It’s a classic case study in hidden government, said John Crangle, head of the citizens watchdog group Common Cause.

“It’s a stealth strategy,” Crangle said. “The whole scheme involves rivers of underground money flowing to the Hunley from many sources, and the obvious intent is to not let people know.”

The $97 million for current and planned Hunley projects far exceeds McConnell’s estimate in the late 1990s. Then, McConnell was trying to get the sub raised from the Atlantic seabed where it had lain since 1864.

“We have looked at figures somewhere, we think, between $5-10 million to conserve it, to house it and to endow it,” McConnell, R-Charleston, said at an Oct. 30, 1997, meeting.

McConnell and other Hunley supporters predicted back then that private donors would pay much of the sub’s costs.

But more than 85 percent of projected costs are expected to be paid by taxpayers, according to a State newspaper analysis.

McConnell has used his considerable influence to:

• Personally approach agency heads, college presidents and mayors to ask for services, parking spaces and health insurance for Hunley workers. He has acted as a super agency head, collecting money from other state agencies instead of going through the public Legislative budget process. What has come before the Legislature has been fragmented and difficult for lawmakers to track.

• Help arrange for Clemson University to take over the sub’s preservation at a time when federal grants are dwindling and visitors to the Hunley’s conservation lab are falling off. To help pay for it, Clemson plans to tap into state money designated for university research projects that have the potential to attract high-tech and medical jobs.

• Act as Hunley paymaster, apparently without any clear legal authority. McConnell has personally authorized the transfer of millions in public money from the State Budget and Control Board to a Hunley foundation whose members he has appointed for 10 years. No other lawmaker has such access to state accounts, access the state’s comptroller general said is outside the state’s normal framework for disbursing public money.

• Neutralize senators who might question Hunley spending. McConnell protected other senators’ pet projects in exchange for favorable votes on Hunley issues. Crossing McConnell on Hunley funding, one lawmaker says, “is not worth the scars.”

The Hunley, the first submarine to sink an enemy ship in battle, was raised off the Charleston coast in 2000 and placed in a new lab in North Charleston at a cost of $6 million to taxpayers. Its insides have been emptied of artifacts. And its 40-foot, corroded-iron hull is ready for preservation, a process expected to take years.

The 58-year-old McConnell, a libertarian who often criticizes government spending, is the gatekeeper and main source of information for the Hunley. He is quoted in hundreds of articles and television broadcasts.

McConnell several years ago largely gave up his law practice. He spends much of his time and energy now on the Hunley project. He has continued to help run his Confederate memorabilia shop in North Charleston, which describes itself on its Web site as the nation’s largest Civil War store.

McConnell declined comment for this article, despite repeated requests. He said The State had a “negative outcome in mind.”

‘RESPECT AND FEAR’

The senator is one of the most powerful state lawmakers in the past century and can do much as he pleases, said Rep. Doug Jennings, D-Marlboro.

“McConnell relies on the politics of respect and fear,” said Jennings, 49, who as a young man was a law clerk for the last Senate giant, the late Sen. Marion Gressette, D-Calhoun.

Like Gressette, McConnell is both Senate president pro tem and Judiciary Committee chairman. The two posts allow McConnell to control the fate of many legislative bills. He also is viewed as the unmatched master of complex Senate rules.

People respect McConnell because he plays fair and grants favors, Jennings said. “But they are afraid of getting in his way on anything he wants.”

An avid Civil War buff, McConnell helped lead the failed 1990s drive to keep the Confederate flag atop the state Capitol.

He sometimes talks as if the eight-man Hunley crew, whose remains were found inside the sub, were still alive.

“Those fellas will not have to spend another night in the Atlantic Ocean,” McConnell said in August 2000 as the Hunley was brought up, according to the book “Raising the Hunley,” by Brian Hicks and Schuyler Kropf.

In 2003, McConnell explored having the Hunley crew’s remains lie in state in the state Capitol — an honor rarely bestowed, even upon South Carolinians. None of the Hunley crew members was from South Carolina.

Protests made McConnell drop his bid.

Crew members were buried in Charleston after six days of parades, church services and cannon firings in April 2004. McConnell, dressed as a Confederate general, delivered the eulogy.

To McConnell, memorializing the Hunley is the “hallmark of his public service,” according to a recent press release from Clemson.

In March at Clemson, McConnell spoke for an hour without notes to 150 students and faculty members.

He praised the “sleek, hydrodynamically designed vessel” and its brave crew. He spoke of how the citizens of Charleston suffered from the Union bombardment in the same way the citizens of Stalingrad and Leningrad suffered during World War II. He talked of the reconstruction of the Hunley crew’s faces and how the sub’s raising was a technological feat. He got a standing ovation.

Sen. John Courson, R-Richland and a Hunley Commission member, praised McConnell’s efforts.

“The Hunley would still be sitting off Charleston, under eight feet of sand, if it hadn’t been for Senator McConnell’s leadership. æ.æ.æ. I’ve often said that Senator McConnell is in love with an inanimate object — the Confederate sub, the H.L. Hunley.”

Today, the Hunley mixes money, politics, science and history. It is three stories:

• How a government project can start off small and end up spawning bureaucracies that cost taxpayers tens of millions

• How in a poor state, with billions needed for worn-out school buses, run-down schools, unsafe bridges and roads, and jobs creation, a powerful politician can steer tens of millions toward a pet project

• The story of a man — McConnell — and the boat he loves.

NO PUBLIC DEBATE

Most money allocated to the Hunley has avoided usual budget channels.

“Why don’t you get an appropriation for the (Hunley) Commission? That would certainly relieve a lot of pressure and, in my opinion, be entirely appropriate,” then-College of Charleston president Alex Sanders wrote to McConnell on Dec. 8, 1998.

McConnell had asked Sanders to provide free parking for Hunley workers while they were using college offices. Sanders refused, saying the spaces were for students. McConnell got his spaces instead in the form of city spaces, from Charleston Mayor Joe Riley.

Unlike many projects, whose expenses are known and debated, much Hunley funding is fragmented, tucked away in various state agencies’ budgets:

• The Department of Public Safety each year provides $100,000 for a highly trained, armed guard for the Hunley lab, which is open to visitors on weekends. DPS also monitors the Hunley 24 hours a day via closed-circuit television.

• The state agency in charge of land at the former 1,600-acre Navy base in North Charleston donates a building used to house and study the Hunley. The lease of the Charleston Naval Complex Redevelopment Authority building is valued at $300,000 per year, according to a Hunley foundation audit.

• The Department of Archives and History has five Hunley employees on its payroll. Their total salaries this year are $204,266.

• The College of Charleston has four Hunley workers on its payroll. Their total salaries this year are $239,320.

The Hunley foundation, called the Friends of the Hunley, reimburses the College of Charleston and the archives department for the Hunley employees’ pay.

Routing their pay through state agencies enables Hunley workers to receive state health and retirement benefits, which aren’t available through the foundation.

The employees are “a special kind of state employee” with a special temporary status, according to State Budget and Control Board spokesman Mike Sponhour — among the 2,000 such workers the state employs.

The Hunley project’s bookkeeping, like its funding trail, is fragmented.

The foundation’s audit records, for example, don’t specify the cost of the armed guard. Other spending details show up only on IRS tax forms.

The State for several months compiled and compared those records and added to them the figures for Clemson’s North Charleston campus and the proposed museum.

The newspaper filed Freedom of Information requests with more than 20 state agencies. But without a complete formal financial audit in which all records are made public, it’s difficult to be certain that all Hunley funding has been included.

What The State found — the most complete public Hunley tally to date — includes:

• $42 million to be spent for a proposed Hunley museum in North Charleston

• $35 million to be spent on the first phase of a Hunley-centered campus built by Clemson, also in North Charleston• About $17 million spent since 1998 on raising, excavating, preserving and promoting the Hunley. About $9.3 million of that is from direct federal and state government support; $2.3 million is from in-kind state government services. Most of the $5 million balance spent comes from private donations, tours and the sale of Hunley merchandise.

• About $3.5 million in state money being spent to buy a Civil War collection of 10,000 paintings, maps, books and other objects destined for the museum.

Few in state government have any idea of costs of various Hunley projects in the pipeline.

“I don’t have a clue,” Gov. Mark Sanford said last week.

Informed that projected costs were $97 million, Sanford said that sort of uncoordinated spending is a prime example of state government dysfunction.

“The left hand doesn’t know what the right hand is doing,” Sanford said, adding he was not commenting on the merits or demerits of the Hunley projects.

Sanford is not alone. A dozen influential lawmakers interviewed said they had no idea how much the Hunley was costing. Lawmakers who didn’t know included three members of the Hunley Commission: Reps. Kenny Bingham, R-Lexington; Dan Cooper, R-Anderson, who also is House Ways and Means Committee chairman; and Sen. John Courson, R-Richland, chairman of the Senate Education Committee.

the influence

McConnell has used his insider knowledge and the power of his position to get money in a variety of ways:

• In 2001, McConnell tucked the commitment for a $3.5 million Civil War collection into the state budget without any debate.

A reporter discovered the appropriation after the budget passed. Some lawmakers objected, but no attempt was made to cancel the purchase. The state is making payments over several years.

• McConnell’s biggest coup was helping Clemson take over the multimillion-dollar Hunley preservation project.

McConnell helped Clemson for more than a year, according to internal e-mails and letters provided by Clemson to The State through Freedom of Information Act requests. With McConnell’s help, Clemson agreed to start a $35 million Hunley-centered campus in North Charleston devoted to historic and materials preservation.

Clemson has agreed to spend $3 million right away to upgrade the deteriorating Hunley lab. Clemson also is expected to pay about $800,000 a year toward the project. A state panel in September awarded $10.3 million to Clemson for the Hunley takeover. The State Budget and Control Board still must give that final approval.

• In 2002, McConnell persuaded the South Carolina Educational Television network to cancel $128,000 in invoices for film work for the Friends of the Hunley, according to ETV documents.

“I would like to know why I was not informed of this request of the Friends of the Hunley to pay for documenting the project,” McConnell wrote ETV chief Moss Bresnahan on Oct. 4, 2001.

On Jan. 21, 2002, Bresnahan wrote McConnell, saying ETV often billed for its work. He told McConnell the foundation had a contract and had promised to pay.

In a March 20, 2002, letter, McConnell advised Bresnahan to cancel the contract. “Once that step is taken I think that we can discuss the costs that were incurred by ETV and attempt through the (state) budgetary process to make ETV whole,” McConnell wrote.

ETV canceled the invoices. Officials said they didn’t know whether McConnell got them extra money the next year.

In an interview, Bresnahan said McConnell had convinced him it was proper not to charge the Friends of the Hunley. McConnell argued the filming educated the public about a worthwhile topic, Bresnahan said.

ETV officials couldn’t recall canceling invoices in other cases. But since then, it has performed some film services free for other agencies, Bresnahan said.

the FOUNDATION

McConnell has long stressed that little public money would be spent on the Hunley.

“We’re doing this on a volunteer basis,” he said in 1995, pointing out that a Hunley committee — appointed by state lawmakers and of which he was a member — would not accept expense money for travel or meals.

In 1996, McConnell got the Legislature to turn the informal committee into the Hunley Commission, with legal custody of the sub plus responsibility for its preservation and for recommending a permanent home.

McConnell was elected the commission’s first chairman. In the past 10 years, he has been its only chairman.

After the news of the Hunley’s discovery was broadcast in 1995, some people sent in donations. How to handle the money became an issue.

With the Hunley Commission’s approval, McConnell set up the Friends of the Hunley in 1997. The quasi-private foundation is charged with overseeing the preservation work and managing Hunley money. Under foundation bylaws, McConnell, as Hunley Commission chairman, appoints all board members, with the consent of other commission members.

On Oct. 16, 1995, McConnell’s assistant, John Hazzard V, wrote the State Budget and Control Board, asking it to set up a Hunley account to be used by the foundation and the commission for private donations.

“The fund should be also designated so that the monies received by private donation can be disbursed without legislation,” Hazzard wrote.

As time went on, and apparently without any clear legal authority from the Legislature, the Budget and Control Board set up other Hunley accounts for McConnell and the commission. And the foundation began to collect and manage public money, as well.

Into these accounts flowed more than $6 million in state and federal money from 1999 to 2005, according to Budget and Control Board records.

McConnell over the years personally has approved the transfer of millions in public money to the Hunley foundation, documents show.

MOVING THE MONEY

That personal involvement has no legal foundation, experts say.

According to records, McConnell moved the money in this way: He would receive a letter from the Hunley foundation asking for money. Then he would write the Budget and Control Board, directing state officials to send money to the foundation.

Sometimes McConnell’s requests for cash were supported by invoices and specific documentation; sometimes they were not.

For example, on Nov. 23 of last year, McConnell wrote a letter to the Budget and Control Board, asking it to pay $148,500 to the Friends of the Hunley. The state sent the check.

McConnell included with the letter invoices requesting $91,500 for a “sr. conservator” and $42,000 for a “conservator.” He did not reveal names, Social Security numbers or addresses of the two individuals who were to receive “$91,500 and $42,000.”

Frank Fusco, the Budget and Control Board’s executive director, declined to answer questions as to why the board allows McConnell power over such large state accounts when there is no clear legal authority for it.

Sponhour, Fusco’s public relations director, said Hazzard’s 1995 letter asking the board to set up an account for private donations is the only written communication the board has from the Hunley Commission concerning the establishment and workings of the Hunley accounts.

A general provision allows the Budget and Control Board to provide bookkeeping services to other government entities “as will in its opinion promote efficient and economical operations.” Sponhour said that’s the provision under which the Budget and Control Board is operating.

But there’s no specific legal provision allowing McConnell to be paymaster for the foundation.

The Hunley accounts have never been independently audited by the state, said State Auditor Tom Wagner Jr. But they are among the thousands of state accounts from which a sampling of transactions are taken annually as part of a larger audit.

“It’s going to be the luck of the draw each year as to whether the auditor actually looks at Hunley accounts,” Wagner said.

Wagner said to his knowledge McConnell’s money-approving authority is unique.

In all, more than $8 million has been sent from the accounts to the foundation, records show.

Richard Eckstrom, the state’s comptroller general, said he was disappointed to learn the Hunley project is being financed through accounts that allow a senator to authorize spending.

“It’s obviously outside the framework the state has provided for disbursement of public funds,” said Eckstrom. That framework and its numerous safeguards exist to protect the public, he said.

“It’s very unfortunate to have these side arrangements,” he said.

McConnell should not be wearing so many hats, said Jim Kent, a professor of management at New York’s Marist College who has done consulting work for a dozen state governments, including South Carolina’s, as well as for several emerging nations.

An expert in legislative process and ethics, Kent said McConnell’s role in transferring money is highly unusual. McConnell is a member of the legislative, not executive, branch of government. Legislators don’t have the authority to direct state money.

What’s more, Kent said, McConnell “has control over this money but no accountability for it.” He said the Legislature should have set up a specific fund for the Hunley and put the fund under a state agency’s control.

“The central principle of fiscal accountability is ‘everything should be on the books,’” he said. “Every transaction ought to be transparent. That is not what is going on here.”

FOUNDATION AUDITS

The Hunley foundation itself is audited each year. The audits, which are made public, give general information and few details.

For example, they don’t say how much the foundation pays the Columbia public relations firm of Richard Quinn Sr. to do fundraising and promotional work each year as well as answer media queries.

That information can be obtained, however, from the foundation’s IRS 990 tax forms. In 2002, 2003 and 2004, the foundation paid the Quinn firm a total of $880,198. Foundation spokeswoman Raegan Quinn, a daughter of Richard Quinn Sr., provided the information to The State for 2005, saying the foundation paid the Quinn firm another $226,000.

Nor do foundation audits reveal how many people work on the Hunley project. Raegan Quinn provided that, however: 11 full time and two part time.

The employees’ total 2005 salaries are about $478,000. That doesn’t include the $100,000-a-year allocation for the guard provided by the Department of Public Safety.

Since 1998, the foundation has taken in, and spent, about $17 million in public and private money, combined records show.

Sen. Bill Mescher, R-Berkeley, said he would prefer to have the Hunley’s cost more readily accessible so people would “know how tax dollars are being spent.

“It’s not in the budget. It’s not in there as a line item,” he said.

The lack of easily available, complete records means no one intelligently can discuss the Hunley, critics say.

“It makes it impossible to find out facts to make good decisions,” said attorney Jim Carpenter, who is involved in a lawsuit against the Hunley foundation. “You cannot have a meaningful debate on a project’s cost.”

Carpenter’s client, Ed Sloan of Greenville, has filed a Freedom of Information lawsuit to force more disclosure of how public money is being spent on the Hunley.

The S.C. Supreme Court is deliberating the case.

Praise and criticism

Many lawmakers praise McConnell for his Hunley work.

Sen. John Land, D-Clarendon, who disagrees with McConnell on many issues, admires him for getting the Hunley raised and for his creative financing.

But, says Land, perhaps it’s time to revisit how the Hunley is overseen.

Sen. Darrell Jackson, D-Richland, said even senators who might want to challenge McConnell on Hunley funding don’t. McConnell is powerful and would fight back fiercely, Jackson said.

“It’s like, ‘Let him do his thing.’ He’s passionate about it — it’s not worth the scars,” Jackson said.

Senators know if they help McConnell with the Hunley, he won’t scuttle their projects. For example, McConnell helped the Black Caucus get from $3 million to $5 million in state lottery money each year for the state’s historically black colleges, Jackson said.

“It was mutually understood we would respect each other’s passions and not try to derail them,” Jackson said.

Crangle, head of the citizens watchdog group, said the Hunley’s millions are marked by a lack of transparency and accountability and by “subterranean funding.”

He said the project raises questions about priorities.

“This state has serious problems with education, law enforcement, transportation, the criminal justice system — and then we spend that type of money on something like this?” he asked. “You have to question people’s judgment.”

Crangle likens McConnell to the powerful senators of old South Carolina, who behind the scenes did as they pleased.

“This is a testimony to the power McConnell has accumulated over the years and his ability to game the system,” said Crangle, who has studied the Legislature for 20 years.

“No one else in the General Assembly could pull off something like this.”

Reach Monk at (803) 771-8344.