Corporations doing business with the Maryland government donated millions of dollars to a national organization headed by Gov. Martin O’Malley even as the state awarded them billions of dollars in contracts, according to an organization whose chairman is expected to run for governor as a Republican this year.
“This is disturbing to anyone who takes a look,” said Larry Hogan, chairman of Change Maryland, which authored the report. Hogan served as former Republican Gov. Robert L. Ehrlich’s Secretary of Appointments, and was a member of Ehrlich’s Cabinet.
The 15-page report highlights donations that Change Maryland says were made by 28 companies to the Democratic Governors Association since O’Malley was named its chair in 2010. It cites as its source federal political action committee filings.
United Healthcare Services donated $650,000 to the organization. Since 2008, it has been paid more than $2 billion in state contracts. Most recently, the state awarded Optimum/QSSI, a subsidiary of United Healthcare Services, an emergency contract to fix the state’s failing health insurance benefits exchange website.
Hogan said that contract alone raises conflict of interest issues because United Healthcare also offers plans through the state exchange.
Another company, Medco/Express Scripts, donated $302,000 from 2011 to 2013. In February 2012, the state Board of Public Works, which is chaired by O’Malley, awarded the company a $2.3 billion contract to manage state employee and retiree prescription drug plans, according to the report.
ACS State and Local Solutions, which was later purchased by Xerox, donated $90,000 to the association. The state has paid the two companies $355 million since 2008 related to speed cameras. The companies have also been represented by lobbyists such as Sean Malone and consulting firm Kearney O’Doherty Public Affairs. Both Malone and Steve Kearney were senior aides to O’Malley.
In another instance, Beowulf Energy LLC and its subsidiaries reportedly donated $70,000 to the association. In July 2011, the Board of Public Works approved the lease of 250 acres of former state prison land for the construction of a solar energy farm. Beowulf is also vying for wind power contracts with the state. Michael Enright, a long-time friend and former chief of staff to O’Malley, is managing director of the company.
Nina Smith, an O’Malley spokeswoman, downplayed the report as politically motivated.
“Any allegations made should be viewed through the prism of this gentleman looking at a run for office,” Smith said. “There is a procurement policy in place. These procurement officers are career employees.”
But O’Malley also has political ambitions on a national level including a possible run for president in 2016. And in July 2012, as he was nearing the end of his two-year term as chairman of the governors association, he issued a press release touting record-breaking fundraising for the group.
Hogan said that in raising that money for the association, O’Malley raised his national profile with other Democrats who may be in a position to help him in 2016.
Hogan, in an interview, said the report shows a pattern in which O’Malley circumvents state laws prohibiting state contractors from donating to elected officials. He called for an independent investigation of the donations.
“There’s no smoking gun, but can a reasonable guy look at these things and see O’Malley’s guy is down there and these donations are being made?” Hogan said. “We don’t know how it happened but we do know millions of dollars were donated by state contractors. In many cases these things were right before or right after contracts were being awarded or big political favors were being handed out. It’s really outrageous amounts of money.”
“We work extremely hard to keep the DGA activities separate from state activities,” Smith said.
The report raised a number of questions for Jennifer Bevan-Dangel, executive director of Common Cause Maryland. One of the biggest concerns was the direct connections between the O’Malley administration and lobbyists for the companies that donated and the executive director of the Democratic Governors Association who was formerly a senior aide to O’Malley.
“It really speaks to the close nexus of the donations being made to the connections to the governor’s office,” Bevan-Dangel said. “It’s hard to argue there is a firewall here.”
Smith, the O’Malley spokeswoman, acknowledged that even if there is an appearance of impropriety, the awarding of state contracts is all above board. There was no quid pro quo, she said.
“The appearance isn’t ideal but there is a process,” Smith said. “Some companies donated and got contracts. Some didn’t and didn’t get a contract. It isn’t a guarantee.”
Bevan-Dangel said that she believes the Change Maryland report reveals some serious issues, even if it was politically motivated.
“It really speaks to a reporting loophole that the state legislature needs to address,” she said. “This is a major issue in a state where the governor has so much authority over setting the budget and who gets contracts. It really does raise some concerns.”
Bevan-Dangel said the report highlights a need for the state to examine how money flows into third-party accounts and whether it affects how contracts are awarded.
“It’s money that is changing hands that isn’t accounted for and isn’t in the public eye,” Bevan-Dangel said. “Whenever you lack transparency, you have problems.”