“Was Nikki Haley acting unethically? “Maybe,” said Scott English, who was chief of staff to former Gov. Mark Sanford, a Republican and Haley’s predecessor. “Was she acting unethically under the jungle rules of South Carolina politics at the time? never.”
The ethics controversy Haley has raised early on is a far cry from the legal quagmire embroiling her top rival for the Republican nomination, former President Donald Trump, who faces 91 criminal charges, including obstruction of justice and conspiracy to defraud the United States. Trump also faces civil penalties over a years-long fraud scheme involving his real estate business.
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However, Haley's actions violated ethical standards, according to Kedrick Payne, who runs the ethics program for the Campaign Legal Center, a nonpartisan watchdog group. In most states, at least some of its behavior was out of bounds, he said, because it created the appearance of a conflict of interest.
A basic tenet of most state ethics laws is that “you cannot obtain outside employment that would in any way interfere with your official duties,” Payne said.
In South Carolina, the ethics investigation into Haley undermined her image as a broom sweeper shaking up the political establishment – a character she is still cultivating. During her election campaign in New Hampshire on Saturday, Haley rejected the lack of support from politicians in her home state and in Washington as a result of her positions on transparency and ethics.
“I called out elected officials because accountability is important,” she said.
Questions about Haley's potential struggles revealed how her work in politics has produced financial dividends almost from the beginning of her career in public life.
In recent years, Healey has made millions from consulting fees, paid speeches, stock, and seats on corporate boards. The year before she ran for president, she earned about $2.5 million in income through speaking engagements alone, according to her financial disclosures.
This account of Haley's early ethical problems is drawn from testimony, files and exhibits released by the South Carolina House of Representatives in response to a public information request from New York timesIn addition to other documents, interviews and media accounts.
Haley's presidential campaign did not respond to questions about the controversy. She said at the time that she followed existing rules and called the episode an attempt by her political enemies to prevent her from fighting the pay-to-play culture in South Carolina.
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“I don't think I did anything wrong,” she told the ethics committee in 2012.
However, when she campaigned for a second term as governor, Haley worked to rehabilitate her image and ran on a promise to reform the state's ethics rules. Once re-elected, she signed a law banning secret sources of income such as the Wilbur Smith contract.
In 2010, at the instigation of her rival in her first run for governor, Haley disclosed her joint tax returns with her husband of six years. They show modest profits, thousands of dollars in penalties and interest on back tax payments, and nearly $21,000 in business losses from his short-lived business venture, according to published accounts and summaries of tax returns filed with House Ethics. Commission investigators.
Although Haley has repeatedly said presidential candidates should release their tax returns, she has not released hers, nor have her opponents in the GOP primary race.
When Hailey and her husband were young, she and her husband worked at her parents' clothing company, Exotica International, with her as the company's CFO and him in charge of men's clothing. But the Haley family's income from the store dwindled in 2006, two years before it closed. The couple, who were in their mid-30s, had two children. Nikki Haley's legislative job was just a part-time position. Michael Healy joined the South Carolina National Guard that fall, but he earned little at first.
Wilbur Smith's contract helped fill the financial gaps. Tax documents indicate that the engineering company's salary amounted to nearly half of her family's income of $64,000 in 2007.
One of the company's top executives testified that he could remember only one or two meetings with Nikki Haley, and that they never discussed government contracts. Haley said the House attorney advised her that she was not required to report the payments. She recused herself from voting on one of the company's projects out of an abundance of caution, but she voted on a second draft law that canceled the project. She testified that she saw no conflict in that vote.
Wilbur Smith terminated her contract in late 2008.
By then, Hailey was looking forward to something new. That summer, she asked Michael Bediger, then CEO of Lexington Medical Center, to hire her.
Haley said her parents were either losing their businesses or selling them, Bediger testified. Her job application listed her salary at Exotica as $125,000 and asked for the same amount. But her tax returns indicate that she received no more than $47,000 annually from the clothing company.
A senior aide told reporters that Haley did not fill out or sign the application, even though the application stated her written name represented a signature.
Bediger created a $110,000-a-year position for Haley to raise funds for the Hospital Foundation, a subsidiary of the hospital. At the time, she was a member of the powerful House Labor, Trade and Industry Committee and was also a majority member.
He told the ethics committee that he hired her for her communication skills and personality and relied on the recommendation of a consulting firm to determine her salary. A survey by the state Nonprofit Association found that her salary was two and a half times higher than the average for similar organizations.
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The job came with inherent ethical dilemmas. Lawmakers were once prohibited from serving as lobbyists, but now Haley wears two hats: as a lawmaker trying to help the hospital get state approval to open a heart surgery center, and as a paid employee of one of the hospital's affiliates.
Haley continued to work with other lawmakers on a plan to build support for the heart surgery center, according to emails. She also spoke to a state assembly official who has decision-making authority at the Centre, and reached out to hospital officials about the proposed project.
When asked about her dual roles, Haley, who disclosed her work at the hospital on her financial disclosures, told the ethics committee she kept her jobs separate.
“I have never had a legislative conversation that is in any way mixed with a constituent conversation,” she said.
Haley also brushed off concerns that her fundraising job opens a potential avenue for special interests who might want to influence her. It solicited donations from various corporate interests, including the Association of Financial Services Companies and the health insurance company Blue Cross Blue Shield of South Carolina.
To contact Blue Cross executives, Haley first reached out to a prominent lobbyist, Larry Marchant, she testified. Marchant told her that if the company contributed, she said, “You'll owe me,” to which she replied, “You know I don't work that way.”
The health insurance company's donations rose from $1,000 in 2007, the year before Haley joined the foundation, to $20,000 in 2010.
In January of that year, when Haley was running for governor, Marchant advised the company not to reduce its donation, writing to a company official: “I'm still rooting for Nikki if she wins the primary strongly.”
Blue Cross officials told the Ethics Commission that they conducted an internal investigation and determined that the donations were not an attempt to influence Healey, but an exemplary effort to build goodwill with the community.
Healey and Lexington Medical severed ties during her election campaign. As governor, she attacked the House ethics investigation as a distraction engineered by Democrats. Haley, a surprise witness in her own defense, accused the influential Republican lawyer who filed the initial ethics complaint, John Rainey, of being a “racist and sexist bigot” and suggesting that her family was connected to terrorists. Rennie later said that Haley, whose parents are Indian immigrants, had misinterpreted the remark.
The Republican-led committee rejected all charges without providing any explanation. Democrats argued that lawmakers did not fully investigate the allegations because they were loath to stand against a sitting governor.
In South Carolina, the incident was quickly overshadowed by a barrage of other corruption scandals. John Crangle, former president of South Carolina's Common Cause chapter, said Haley's behavior did not “smell nice,” but it pales in comparison to the felony convictions of six lawmakers, including the House speaker. It involves the misuse of campaign funds and payments from lobbyists.
The Center for Public Integrity, in a state-by-state survey of ethics rules, gave South Carolina an F rating in 2012, saying loopholes in the state were “big enough to dock a Confederate submarine.”
Shortly after the ethics investigation, Haley went on a whirlwind tour of the state to promote ethics reform. In 2016, she signed two bills requiring lawmakers to disclose the sources of private income, but not the amounts, and revamped the process for reviewing allegations.
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Krangle said the changes were not enough.
“Special interests want to invest large sums of money to buy off legislation and lawmakers, and Nikkei has never challenged this institutionalized system of corruption,” he said.
In her own account of her political rise, Haley did not mention her moral issues. In her 2012 memoir, she wrote that she believed allowing lawmakers to hide their sources of income — as she herself had done — was a mistake.
