RALEIGH -- The state secretary for Health and Human Services has continued to receive checks of about $3,000 a month from his former lobbying firm even as the firm helped land $30 million in no-bid contracts from the agency.
Lanier Cansler, a former Republican legislator from Asheville, says he stepped away from any role in awarding the contracts to avoid a conflict of interest. He said that before he returned to government service, he sold his stake in Cansler Fuquay Solutions, the lobbying firm he helped found in 2005. Cansler said the monthly checks are payments and interest for his share of the company, which he sold to his partner.
In a complaint filed with the state Ethics Commission this week, Richard Morgan, the former co-speaker of the state House, said that the continued payments violate a state law that forbids government officials from enriching themselves through their duties.
"The money travels in a circle," said Morgan, a Moore County Republican now campaigning for the state Senate. "Delegating to someone you hire and control isn't a recusal - it's a dodge. It's like Mike Easley appointing the trustees of N.C. State University, telling them to hire his wife, then saying they made the decision."
Cansler said that he has done nothing wrong and that Morgan has a beef against him going back more than a decade, when the two served together in the state House.
"I've been completely open about all of this," Cansler said Thursday. "I've complied with every ethical requirement under state law. I'm confident there are no ethical violations."
The issue revolves around two no-bid contracts awarded to the Carolinas Center for Medical Excellence, a firm the state hired to help determine whether Medicaid recipients are qualified to receive in-home nursing care or specialized outpatient therapy.
The programs are expensive, and Cansler has made it a priority to save the state money by making sure services go only to those entitled to them.
Cansler Fuquay Solutions is the lobbyist for CCME.
On state ethics forms filed in February 2009, Cansler disclosed that Cansler Fuquay owes him money from the sale of his share of the business and that the debt would be paid over time. He did not disclose on the form the amount of his regular payments from Cansler Fuquay. He said Thursday that amount totals about $36,000 a year.
A certified public accountant, Cansler said he was not required to disclose the repayment arrangement at all, but did so only out of an "abundance of caution."
The ethics form requires officials to disclose income. The repayment of principal from a debt is not income, Cansler said, only the interest earned on the note is. He said his former firm pays him 6 percent interest on the debt.
'Governor was aware'
Chrissy Pearson, a spokeswoman for Gov. Beverly Perdue, said the governor knew about Cansler's arrangement with his former lobbying firm before appointing him.
"The governor was aware of the secretary's prior business arrangement, as was everyone else because he disclosed them freely from day one," Pearson said. "A plan was in place before he even began work to recuse himself as was appropriate. As far as the governor knows, he has done just that."
Cansler's lobbying ties were raised as a potential ethical issue almost from the moment Perdue, a Democrat, announced his appointment in January 2009.
In addition to his relationship with CCME, Cansler also worked for ValueOptions and Computer Services Corp. , companies that have DHHS contracts valued in the hundreds of millions.
Stacey A. Phipps, an attorney for the Ethics Commission, wrote to Cansler in a Dec. 30, 2009, letter that the payment of the debt presents "the potential for a conflict of interest."
As long as Cansler recused himself from decisions involving current and past clients of his former firm, Phipps advised, he would not violate ethics rules.
Cansler says he did right
Cansler said Thursday that he has recused himself in every case, including the no-bid contracts to CCME. A deputy secretary handled the negotiations, and they were given final approval by the state Department of Administration.
"I had nothing to do with any part of the process," Cansler said. "I didn't even know they had done them until they were pretty much done."
Morgan said that argument doesn't hold up. He is making the issue a focus of his campaign for the state Senate.
Morgan is running for the Moore and Harnett county state Senate seat held by GOP Sen. Harris Blake. Morgan has created a television ad that accuses Cansler of participating in a "pay to play" scheme.
"You are supposed to divest yourself of those types of potential conflicts," Morgan said. "It's an embarrassment to Bev. The timing on it is right in the middle of when she's talking about more transparency and cleaning up government and stopping corruption, and Bev, now's the time to do something about it, with all due respect, governor."
Staff writer Mark Johnson contributed to this report.
