Ethics panel: Pols must disclose investment totalsTexas officials and PACs reported almost $100M in unspent donations at the end of 2007, but that amount may be more because of investments.
By Laylan Copelin
Wednesday, June 11, 2008
Texas officials, candidates and political committees were sitting on almost $100 million in unspent political donations at the end of 2007.
Was that amount actually larger?
Amid speculation that not all the money is being reported to the public, the Texas Ethics Commission adopted a rule Tuesday that politicos must include the present value of investments they make with their campaign donations, including stocks, bonds, mutual funds and other investments "that can be readily converted to cash."
"A candidate or officeholder can invest a candidate's money, and the gains might never be reported," Natalia Luna Ashley, the agency's general counsel, told the commission Tuesday. "Those gains can sometimes be hundreds of thousands of dollars."
Five years ago, state lawmakers lifted the veil on one of their closely held secrets: the size of their political war chests. The law specifically required the disclosure of the total amount of money, including interest and income, maintained in accounts where political donations are deposited.
The Ethics Commission almost immediately began fielding questions about whether the law meant disclosing the value of investments, too.
State Sen. Rodney Ellis, a Houston Democrat who authored the legislation, said he intended all investment totals to be disclosed. To think otherwise, Ellis said, was "just wishful thinking. This rule eliminates wishful thinking."
One prominent Capitol player has objected to the rule.
In a letter to the commission, Mike Toomey, an Austin lawyer, lobbyist and former chief of staff to Gov. Rick Perry, said the rule goes beyond legislative intent and "would impose additional burdens" on candidates.
He underscored that the law is limited to accounts where the donations are deposited.
"The proposed rule would require candidates to disclose and report investments that need not be, and are often not, maintained in an account," Toomey wrote. "For example, stocks, bonds and Treasury bills are often not maintained in any type of account but are physically possessed by the owner."
Toomey did not return a phone call Tuesday seeking comment about whether he was representing a client on the issue.
It's unclear whether the rule will have a major impact.
Few politicians acknowledge investing their donors' money in stocks or riskier investments. Most stick to certificates of deposits or other interest-bearing accounts.
(Six years ago, a spokesman for then-Attorney General John Cornyn, who was making his first run for the U.S. Senate, let slip that Cornyn had incurred $40,000 in paper losses by investing his political account in the market. The brouhaha blew over without the Legislature restricting how the donations can be invested.)
Spokesmen for Perry ($2.7 million cash on hand), Attorney General Greg Abbott ($7.2 million) and House Speaker Tom Craddick ($4.1 million) said the rule would not affect the officials because they limit their investments to interest-bearing accounts that are already included in their campaign totals.
Ellis, an investment banker, is a prominent exception to lawmakers who put the money only in interest-bearing accounts.
He has increased his political account to $1.9 million, in part by investing in the stock market since 1989, including a $10,000 investment in tech company stock during the Internet boom.
Today, Ellis has an investment firm manage the account.
"It might be down $100,000," Ellis said. "I just call Smith Barney, and they tell me what it's worth."
Craig McDonald of Texans for Public Justice, which is an advocate for campaign finance reforms, praised the new rule by the Ethics Commission.
But he said the Legislature should require more.
"We ought to see what they are investing in," McDonald said. "What if they have conflicts of interest?"