State Politics

Serving two masters? Most Council of State candidates say no

North Carolina State Treasurer Janet Cowell attends a Council of State meeting on May 5, 2015, at the Administration Building in Raleigh.
North Carolina State Treasurer Janet Cowell attends a Council of State meeting on May 5, 2015, at the Administration Building in Raleigh.

State Treasurer Janet Cowell drew ethical questions when she decided to serve on the boards of two publicly traded companies – earning $125,000 in retainers plus restricted stock – while she remains in office for the rest of this year.

Amid scrutiny over whether those multiple roles pose potential conflicts of interest, 17 of 20 candidates for statewide elected office in North Carolina’s executive branch say that, if they are elected or re-elected, they wouldn’t serve on a corporate board.

Whether shy from the criticism that followed Cowell’s moves or just as a matter of principle, the Council of State incumbents and challengers said they wouldn’t do it even if the State Ethics Commission cleared it ahead of time, as it did for Cowell, a Democrat.

“Even if an organization like the Ethics Commission gives their approval to serve on corporate boards, it doesn’t pass my smell test,” said Chuck Stuber, a former FBI agent who is the Republican candidate for state auditor. “I can promise that you won’t see me requesting any advisory opinions from the Ethics Commission on any such matters.”

That’s how most of the candidates say they feel. Lt. Gov. Dan Forest, a Republican, declined to say what he would do. State records show Forest, an architect who reports that his compensation has been deferred while in office, has a financial interest in two real estate firms; there is no indication that he serves on a corporate board. Michael LaPaglia, the Republican challenger for secretary of state, could not be reached.

Insurance Commissioner Wayne Goodwin says he would not join a corporate board under any circumstances. Goodwin, a Democrat, is one of four owners and directors of a historic building in Rockingham that leases offices space.

A treasurer is more exposed to potential conflicts of interest than other elected officials, as the office controls an $86.6 billion pension fund, administers state retirement plans and oversees public debt management. For those reasons, critics say it could be considered bad public policy regardless of who is in the office.

A former banker for Lehman Brothers, Cowell announced in October that she wouldn’t run for a third term. In February, she joined the board of Morrisville-based ChannelAdvisor, an e-commerce technology company. This month, she was elected to the board of James River Group Holdings, a specialty insurance company based in Bermuda with its U.S. headquarters in Raleigh.

Cowell signed a pledge to recuse herself from matters involving those companies. The Ethics Commission determined in February that state law didn’t prevent her from serving on corporate boards, nor from accepting compensation, travel expenses and food related to that service.

The commission did warn that she could not take any official action that might benefit the companies or be detrimental to their competitors.

All of the 10 statewide-elected officials who make up the Council of State are up for re-election this year.

No way

In their emailed answers to the survey, the candidates were clear, and sometimes emphatic, that they wouldn’t serve on a corporate board.

State Auditor Beth Wood says it would be fraught with conflict, noting her office can audit a wide range of organizations that deal with public funds.

“If I were to sit on a corporate board, there is a chance I might be called upon to audit/investigate an organization on whose board I sit or that I may be asked to audit/investigate a group that does business with that organization,” said Wood, a Democrat.

Stuber, the Republican candidate for state auditor, stressed that his view wasn’t a criticism of Cowell, whom he doesn’t know, but rather an assessment of what he would do as a former federal agent trained to avoid conflicts of interest.

Labor Secretary Cherie Berry said she wouldn’t serve on a corporate board, but credits Cowell for asking the Ethics Commission whether it was OK before accepting her appointments.

“She did the right thing,” Berry said. “We have to trust the Ethics Commission to make the right decision.”

Too busy

Most of the responding candidates said the reason they wouldn’t sit on corporate boards was because they’d be too busy with their day jobs.

State Sen. Buck Newton, the Republican candidate for attorney general, explained it this way: “The Attorney General has one client: the people of North Carolina, and it quickly becomes problematic if the A.G. also serves other clients like a corporation.”

Mark Johnson, the Republican challenger for superintendent of public instruction, said carrying out his reform agenda would be a big enough job.

“More of the same can no longer be the only option for N.C. students and educators, so I will not have time to sit on a corporate board while focusing 100 percent on leading the Department of Public Instruction through the changes necessary to improve education in N.C.,” Johnson said.

Changed his mind

Democrat Dan Blue III, running for Cowell’s seat, initially said serving on outside boards would have to be considered on a case-by-case basis and cleared by the Ethics Commission. But last week he issued a statement saying: “I pledge not to seek or accept outside compensation or service on a corporate board if elected treasurer.”

His opponent, Republican Dale Folwell, said from the outset: “I will tell you that I don’t need a law to tell me right from wrong. I pledge to never take outside compensation in this form – nor have I ever as a public servant for the state of North Carolina.”

Gov. Pat McCrory’s communications director, Josh Ellis, said the governor would not serve on a corporate board while in office, and he noted that McCrory announced his resignations from two boards prior to taking office.

“The scope of elected office didn’t allow him the time to take on other commitments,” Ellis said by email.

McCrory is well aware of the potential for conflicts. The Associated Press reported McCrory was on the board of directors of an online mortgage broker until shortly after taking office in 2013. He received a six-figure stock payout from the firm and didn’t disclose on state ethics reports the full extent of the payments, The AP reported. McCrory disputed that.

A spokesman for Attorney General Roy Cooper, a Democrat who is challenging McCrory, said he would not serve on any corporate board while in office.

Craig Jarvis: 919-829-4576, @CraigJ_NandO

Council of State candidates

▪ Governor: Gov. Pat McCrory (R) and Attorney General Roy Cooper (D).

▪ Lieutenant governor: Lt. Gov. Dan Forest (R) and former legislator Linda Coleman (D).

▪ Attorney general: State Sen. Buck Newton (R) and former senator Josh Stein (D).

▪ Secretary of state: Secretary Elaine Marshall (D) and Michael LaPaglia (R).Insurance commissioner: Commissioner Wayne Goodwin (D) and Mike Causey (R).

▪ Superintendent of public instruction: Superintendent June Atkinson (D) and Mark Johnson (R).

▪ Treasurer: Former Division of Employment Security Assistant Secretary Dale Folwell (R) and Dan Blue III (D).

▪ Auditor: Auditor Beth Wood (D) and Chuck Stuber (R).

▪ Labor commissioner: Commissioner Cherie Berry (R) and former Raleigh Mayor Charles Meeker (D).

▪ Agriculture commissioner: Commissioner Steve Troxler (R). Walter Smith (D).