Haley Barbour Secretly Guaranteed Loan to Super PAC, FEC Says

Money & Politics Report provides comprehensive behind-the-scenes coverage of campaign finance, lobbying, and government ethics issues at the federal, state, and local levels.

By Kenneth P. Doyle

Nov. 15 — Haley Barbour, the prominent Republican lobbyist and former Mississippi governor, provided collateral for a $250,150 bank loan used by a super political action committee that helped Sen. Thad Cochran (R-Miss.) hold onto his Senate seat in 2014.

Barbour’s role in securing the loan for the super PAC, called Mississippi Conservatives, was revealed in documents released by the Federal Election Commission Nov. 15. Previously, the super PAC had concealed his identity as the guarantor of the loan, although it reported a direct contribution of $25,000 from Barbour in 2014.

The FEC fined the Mississippi Conservatives super PAC $19,000 for violating campaign finance disclosure rules by keeping secret for more than two years Barbour’s involvement in securing the bank loan. The FEC found no violation and levied no penalty against Barbour or anyone else involved in the matter, besides the super PAC and its treasurer, Brian Perry.

Spokespersons for Barbour and the Mississippi Conservatives super PAC didn’t respond immediately to requests for comment.

Violation Said to Be Inadvertent

Officials in charge of the super PAC contended they did not intend to violate the law or FEC regulations but inadvertently failed to disclose initially that the bank loan was secured with collateral, according to an FEC conciliation agreement settling the matter. The super PAC officials further contended that they failed to disclose Barbour as the person who pledged the collateral for the loan because they “misinterpreted the relevant reporting requirements.”

The FEC enforcement case was designated Matter Under Review (MUR) 6823.

The Mississippi Conservatives super PAC was advised by Barbour’s nephew, Henry Barbour. It raised and spent nearly $3 million as part of a successful effort to turn back a primary challenge to Cochran, the veteran Republican senator from Mississippi. The challenge came from state Sen. Chris McDaniel, a conservative Republican backed by Tea Party groups.

Barbour served as governor of Mississippi from 2004 to 2012 and as chairman of the Republican National Committee from 1993 to 1997. He also worked for years as a lobbyist and co-founded the Washington lobbying firm BGR Group.

‘In-Kind Contribution.’

Barbour’s pledge of security for the loan to the super PAC from Trustmark National Bank of Jackson, Miss., “was an in-kind contribution from Haley Barbour” to the Mississippi Conservatives super PAC, according to the FEC-approved conciliation agreement settling the enforcement matter. Federal campaign finance law required that Barbour be disclosed as a contributor to the super PAC in April 2014, when the bank loan was made, the FEC settlement said.

Mississippi Conservatives reported the existence of the Trustmark loan, but failed to disclose that the loan was secured by collateral, failed to identify Barbour as the the person who provided a certificate of deposit as security for the loan and failed to state accurately that Trustmark had a perfected security interest in the collateral.

A complaint against the Mississippi Conservatives super PAC was filed with the FEC in 2014 by a Tea Party super PAC that supported McDaniel and opposed Cochran’s re-election. The super PAC, called the Tea Party Patriots Citizens Fund, said the pro-Cochran super PAC violated federal law when it failed to disclose information about who was guaranteeing the bank loan, which was listed in reports filed with the FEC.

Martin: Two Years to Tell Truth

Jenny Beth Martin, chairman of the Tea Party super PAC, said the FEC’s enforcement action proved her group was correct in charging that the rival super PAC set up to block McDaniel’s challenge to Cochran violated federal law.

“It has taken two years and legal action before these people were required to tell the truth and cough up the facts,” Martin said in a statement e-mailed to Bloomberg BNA by attorney Cleta Mitchell of the firm Foley & Lardner. “We are disappointed that former Gov. Haley Barbour failed to come forward at the time and publicly acknowledge that he was the source of the $250,000 funds for their super PAC.”

Had the Tea Party group not researched the matter and filed an FEC complaint, the information regarding this illegal scheme would never have been revealed, Martin said, adding that the group was “sorry that the voters of Mississippi didn’t have the information when it mattered, in the 2014 primary election.”

Despite the Mississippi Conservatives super PAC’s contention that its failure to disclose Haley Barbour’s role was based on its misunderstanding of the law, Martin said her group also believed that the FEC let Barbour and his nephew off the hook for what was clearly “an intentional effort to violate the law and to file false FEC reports.”

The Republican political establishment went to “extreme lengths” in 2014 to block McDaniels’ challenge to Cochran, Martin said. She compared the episode to the “kind of political misbehavior by political insiders that gave rise to our Tea Party movement ... and the election of Donald Trump last Tuesday.”

Outside Spending of $12 Million

The FEC complaint came during a Senate Republican primary race in Mississippi in which nearly $12 million was spent by super PACs and other groups backing Cochran or McDaniel. Cochran’s backers included the Mississippi Conservatives PAC and the U.S. Chamber of Commerce, while McDaniel’s supporters included the Tea Party super PAC, as well as the Club for Growth and the Senate Conservatives Fund.

The Tea Party Patriots PAC said in a complaint filed by attorney Mitchell that federal campaign finance law required that the name of the person guaranteeing a bank loan to the Mississippi Conservatives PAC had to be disclosed. The complaint said that Cochran’s supporters were deliberately refusing to disclose information required by law to be publicly reported to the FEC. Mitchell, in a 2014 letter supplementing the complaint, cited FEC regulations requiring disclosure of the identity of a the “endorser” or “guarantor” of a bank loan to a PAC.

The complaint also noted that initial reports filed by the Mississippi Conservatives super PAC indicated that the bank loan wasn’t secured at all. After questions about the loan were raised in news reports, the PAC filed an amended report saying the loan was secured by collateral but not disclosing information about who provided the collateral.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

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