Fund-raiser for Steele raises issue of propriety

THE BALTIMORE SUN

An association of minority contractors who could benefit from reforms in state procurement rules proposed by a commission headed by Lt. Gov. Michael S. Steele raised thousands of dollars for his campaign fund at a $500-a-plate reception it organized last month.

The Baltimore-based Maryland-Washington Minority Contractors' Association Inc. held the Jan. 8 reception and solicited additional contributions of $250, $500 and $1,000. Two members of the host committee for the reception - called "an Evening Reception for Lt. Governor of Maryland Michael S. Steele" - sit on the commission Steele chairs.

The commission, created in June by Gov. Robert L. Ehrlich Jr., has yet to issue a final set of recommendations. But drafts of its work propose significant changes designed to make it easier for minority contractors - such as those represented by the association - to obtain state work.

For example, one proposal calls for the state to offer "small business procurements" targeted to minority-owned and small businesses. Under the proposal, agencies that purchase a lot of goods and services would offer a minimum of two such contracts, with at least one of them in excess of $5 million, during a one-year test for the minority business program.

"Our members met at a general meeting, and we decided it would be a wonderful idea to help the lieutenant governor raise money," said Wayne R. Frazier Sr., president of the contractors' association. "I thought it was successful."

Frazier said the group received donations related to the fund-raiser through Jan. 13, but he said he did not know the total amount collected. Steele's most recent finance report shows about $83,500 in contributions during that time from a variety of sources, including some related to the reception.

Steele said that there was nothing improper about the event and that the proceeds will be disclosed by his campaign committee according to state laws.

Besides, he said, he is not making the final decisions on which of the commission's recommendations will be pursued.

"I'm in a position to forward recommendations to the governor, who then makes the decision. The recommendations are in the report. The recommendations reflect the need of not just one subgroup of contractors, but a reflection of the entire community of small businesses," Steele said.

"I have nothing to hide. I'm too highly exposed to do anything to try to hide. Don't even try to connect dots," he said. "It will be fully disclosed when we file the report."

James Browning, executive director of Common Cause Maryland, a political watchdog organization, said the lieutenant governor should never have accepted a fund-raiser from a minority business organization while reviewing the issue as the commission's chairman.

"That's terrible timing, and it could lead people to believe that Steele will owe them a favor in deciding their fate," Browning said. "It's clear that the campaign finance laws on the books don't work. There's always another committee or loophole."

Madison Powers, director of the Kennedy Institute of Ethics at Georgetown University in Washington, said, "I think the public ought to find it offensive, not because there is in reality a conflict of interest but because the appearances are disturbing."

Regan Hopper, Steele's spokeswoman, said the fund-raiser was held after the commission completed its work, so there was no conflict on the timing of the event. Moreover, state law does not prohibit such a relationship, she said.

"That's a perception issue, but there was nothing illegal or unethical about that," she said.

Frazier said he did not see anything inappropriate about the event. In fact, he added that he is troubled that the administration has not yet produced the report on minority businesses.

"I'm upset," Frazier said. "The review is over and we don't know what the hell is going on. We participated, and to this day we don't know the outcome."

A draft of the report obtained by The Sun showed that the commission was recommending Maryland offer small contracts that target minority and small firms - one of the top requests of minority business leaders.

The draft also recommends that the state mandate a training program for the heads of all agencies that award contracts, that the Governor's Office of Minority Affairs develop guidelines for the goals of the Minority Business Enterprise Program, and that the state initiate and maintain marketing and outreach programs to inform small and minority businesses of assistance available.

"People can draw their own inferences," said House Speaker Michael E. Busch. "Certainly, when you put yourself in that position, people are going to ask questions. What's your motivation behind it?"

Hopper, Steele's spokeswoman, maintains that the administration did nothing wrong and that a report will be made public when Ehrlich and Steele finish their review.

The Jan. 8 reception drew a crowd of 150 African-American businessmen, according to Frazier. All of the money went to Steele with nothing going to the contractors' association, Frazier said.

The reception's 23-member host committee included two members of Steele's commission, Luis Borunda and Garland O. Williamson, two Baltimore businessmen.

Frazier has been a long-time supporter of Gov. Robert L. Ehrlich Jr. Frazier led the Democrats for Ehrlich during the 2002 election.

Frazier's organization, which has featured Steele as a speaker and honoree for at least two events over the past year, failed to file state required paperwork in 2002, and its incorporation status was revoked by the state. Frazier said he was unaware that his corporate papers had not been filed.

During his campaign, Ehrlich pledged to clean up the "culture of corruption around Annapolis." And Steele publicly criticized what he described as conflicts of interest by Democrats.

During the 2002 gubernatorial campaign, Frazier was cited for exceeding the state's campaigning gift limit by giving more than twice the $10,000 cap for total contributions during an election cycle. And while he gave to Republicans and Democrats, Frazier became a strong, vocal supporter of the Ehrlich administration as the leader of the Democrats for Ehrlich.

After Ehrlich and Steele took office last year, Frazier featured the lieutenant governor as a guest speaker for a $100-a-plate breakfast on March 19. Media reports estimated that 500 people attended the event, which raised money for the association, not Steele.

The revelations about Steele's Jan. 8 event follow a report last week about another Ehrlich ally using questionable fund-raising tactics on behalf of slot machine gambling - one of the administration's leading proposals.

University System of Maryland Regent Richard E. Hug, who led Ehrlich's record-breaking fund-raising effort for the 2002 election, is raising money for a pro-slots group that is planning an ad campaign.

Several lawmakers called for Hug's resignation from the Board of Regents after it was revealed that he was soliciting contributions from racing interests to a group, called Citizens for Maryland's Future, which plans to mount a broadcast campaign to convince lawmakers to approve slots.

Ehrlich has said he saw nothing wrong with Hug's dual roles.

Sun staff writer David Nitkin contributed to this article.

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