Dealing with Wheeling
"Wheeling" is a term I just discovered. The context is that NJ governor Chris Christie made a campaign
promise to deal with "wheeling," and
then failed to, according to <a href="http://www.nj.com/opinion/index.ssf/2014/04/a_chris_christie_reversal_o…; target="”_blank”">a
South Jersey <i>Times</i> editorial yesterday</a>. Here's how the
editorial describes the practice (many NJ local governments prohibit or limit contributions from their contractors):<blockquote>
It goes like this: Smith County has a fat consulting contract with
Joe Blow Associates. Instead of giving $10,000 to the Smith County
Republicrats, Joe Blow sends a $10,000 check to the Jones County
Republicrats. Suddenly, a $10,000 “clean” donation from “Jones
County Republicrats” appears in the Smith County incumbents’
campaign fund.</blockquote>
<a href="http://www.northjersey.com/news/politics/wheeling-is-used-to-avoid-ban-…; target="”_blank”">A
2009 Hoboken <i>Record</i> article</a> describes a real-life situation:<blockquote>
Hoboken ... has one of the toughest "pay-to-play" bans in the state.
Contractors can't get government work there if they give more than a
combined $800 to local campaigns.
... A constellation of North Jersey donors dumped $19,000 this year
into to the New Frontier Committee, a little-known political action
committee, [which] then donated the money to [a Hoboken mayoral
candidate] in his time of need. ... But the New Frontier route also
served another purpose — it allowed donors to finance the race
without risking their ability to win future city contracts. It was
legally clean.<br>
<br>
Among New Frontier donors was CMX Inc., a South Jersey
engineering firm that was recently awarded a $100,000 city
contract. Ken Long, a CMX official, denied giving money to New
Frontier to skirt Hoboken's ban. Long could not say exactly why
the company donated to New Frontier, but said that officials
contribute to those who are "supporting" the kind of
"broad-based good government that we support."</blockquote>
Wheeling can also involve PACs and candidate committees, as well as party committees at every level, including
legislative leadership committees. It is political money
laundering that serves the same purpose as giving money to
individuals, who then fraudulently make contributions under
their names. Often, both types of money laundering are done by the
same individuals and entities who seek special benefits from the
officials who are ultimately receiving the contributions.<br>
<br>
What makes wheeling worse than many other kinds of ethical
misconduct is that it is a form of institutional corruption.
That is, it involves more people than the contractor or
developer and the official. Whether it is a form of influence or
pay to play, it involves various individuals and groups of
individuals, all of whom have to engage in ethical misconduct, and keep it secret,
for the plan to work. It creates or maintains poor ethics environments and, thus, leads to more ethical misconduct by more people.<br>
<br>
According to <a href="http://www.nj.com/times-opinion/index.ssf/2012/03/opinion_nj_must_still…; target="”_blank”">a
2012 <i>Times of Trenton</i> editorial</a>, "in 2002, close to $3
million was wheeled from three sources (George Norcross [a
political power broker], [just retired state senator] John Lynch
and [U.S. senator] Jon Corzine) into the final month of the
Bergen County executive race, altering the outcome. The
Legislature decided to prohibit wheeling [among county party
committees], but only before June 30, ensuring that party bosses
would not suffer from outside influences in their tightly
controlled primaries while allowing them to affect general
elections in November."<br>
<br>
According to <a href="http://www.state.nj.us/governor/news/news/552010/20100908b.html" target="”_blank”">a
2010 press release from Gov. Christie</a>, he proposed to end
wheeling by "eliminating many of the exemptions on contribution
limits for county or municipal political committees ... [by
curtailing] the unlimited transfer of campaign money between
committees and from committees to candidates in different parts
of the state, which can unfairly impact local races."<br>
<br>
A city or county can only pass laws that affect its own
candidates, but this can be enough to prevent wheeling. For example, after what happened in
Hoboken (described above), the city passed a very simple
anti-wheeling law:<blockquote>
No candidate or candidate committee for any Hoboken elective
municipal
office shall accept any monetary or in-kind contribution, in
excess
of $500 per election, directly or indirectly, from any
committee.</blockquote>
The limit before this bill was passed was $8,200. The problem
with this law is that, although enforcement includes quadruple
damages, it is enforced by the city clerk, a political office.
Although Hoboken citizens and groups are allowed to sue, they
can sue for compliance only, not for damages. In addition, a
penalty can be assessed only if it can be proven that accepting
an illegal contribution was willful and intentional. Candidates
can usually say it was a mistake, and simply return the money. It is better to have an independent individual or body provide oversight and handle enforcement.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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