If you make a cash deposit of $10,000 or more, your bank has to inform the federal government, under a law designed to detect money laundering and tax evasion. If you deposit the cash in multiple slightly smaller amounts in order to evade detection — a process called structuring — you could be looking at the inside of a federal prison cell for 5 years. Twice that long in egregious cases.
The same idea in a S.C. anti-corruption law prohibits state and local agencies from dividing large purchases into smaller purchases so they can buy them from anyone they please rather than putting them out to bid. Unfortunately, the state procurement code doesn’t include criminal penalties.
Reporting by The Post and Courier’s Uncovered partner, the Greenwood Index-Journal, demonstrates that the Legislature needs to make dividing purchases to evade procurement requirements a crime — at least in egregious cases. And boy have we just seen an egregious case. Several, actually, all at the same school for troubled youth that, facing obsolescence, dreamed up a plan to transform itself into the “Governor’s School for Agriculture at John de la Howe.”
The transformation had the blessing of the Legislature, and has cost $5 million so far for renovations. And school officials had no interest in obeying the state procurement law, which is designed to ensure government agencies get a good deal for the taxpayers rather than a good deal for themselves, their relatives and cronies, by requiring purchases of more than $10,000 to be put out to bid and larger contracts to be approved by independent state officials.
The Index-Journal identified about a half-million dollars in renovation expenditures of less than $10,000 each; that’s probably not all the illegally divided projects, since officials have refused to provide some of the documents and answer questions. Several larger purchases for paint and concrete work appeared to be divided in a way to stay below a $50,000 threshold that requires the agency to go through a more extensive bidding process and requires contractors to pay a bond and be approved by the state Division of Procurement Services.
Among the apparently illegally divided purchases:
• Three companies were paid $120,000 spread out over more than 30 purchases to renovate bathrooms in decrepit dormitories.
• A painting contractor was paid $94,000 over more than 20 contracts.
• A flooring contractor received more than $50,000 across 12 payments.
• A drywall company received eight payments totaling $58,365.
• An electrical company was paid nearly $30,000 over nine purchase orders.
• Another company received $45,000 in 13 payments for renovations and carpentry.
• A window company received four payments totaling a little more than $20,000.
That looks like at least nine violations of state law; maybe it’s 100 or so. By either count, it is not possible to imagine that this was an accident. These were deliberate violations of state law by people who understood what they needed to do to evade it. It doesn’t take a cynic to wonder if that skill is why the school made Scott Mims the highest-paid facilities maintenance manager in the state salary database, or why Facilities Director Ken Durham makes even more.
Mr. Mims and Mr. Durham are both local elected officials, and an earlier investigation by The Post and Courier found that Mr. Mims had a close relationship with a contractor he hired to do some of the work, likely in violation of state ethics laws.
The only penalty when an agency evades the bidding process is revoking its authority to make purchases without the approval of the state Procurement Services Division — which state officials had to do to the school 11 years ago. That needs to happen again. Immediately. But that shouldn’t be the end of this matter.
Mr. Mims and Mr. Durham should be terminated. If they didn’t realize they were violating the law, they’re too ignorant to remain on the payroll. And although we think the Legislature should narrow the state’s breathtakingly expansive common-law misconduct in office provisions, the fact is that the state Supreme Court has declared those provisions state law, and it’s hard to imagine that the division wasn't a violation. Attorney General Alan Wilson should investigate — perhaps with the help of the new forensic auditor the Legislature is about to provide funding for SLED to hire — and bring charges if possible.
The Post and Courier’s earlier reporting also revealed that former interim President Sharon Wall negotiated a contract to continue paying the consulting group that had dreamed up the governor’s school idea — and then went to work for that group. That sounds like a violation of state law, and the State Ethics Commission should investigate.
Finally, the governor appoints the John de la Howe trustees and has the authority to remove them for “good cause.” The trustees were either complicit or ignorant of the procurement scheme, and the former president's self-dealing. And they've done nothing to correct the problems that have been revealed over the past six weeks. They should be replaced unless they can prove that they were deceived — and in that case only for long enough to allow some continuity, to prevent anyone in what appears to be a corrupt management culture having too much say over the direction of the school.
With a clean slate of trustees and procurement officials, perhaps the new governor’s school can right itself. But lawmakers need to keep a close eye and be ready, if problems persist, to shut the place down — which probably should have happened years ago.