Firms vying for state contracts fund O'Malley-led group

Companies seeking lucrative state contracts and business deals in Maryland made five- and six-figure contributions in recent months to a Democratic governors group led by Gov. Martin O'Malley, federal records show.

Firms making large gifts to the Democratic Governors Association in the last six months of 2011 include bidders for a $2.4 billion state employee health contract, a $56 million deal to rebuild highway rest stops and the license to run Baltimore's slots casino.

O'Malley, who has been the association's chairman since December 2010, has said the contributions have nothing to do with his decisions as governor. "We work very hard to keep the DGA activity and the state activity separate," said O'Malley spokesman Rick Abbruzzese.

Indeed, at least two of the contributors seeking state contracts have not won the support of the O'Malley administration.

But the head of a government watchdog group says the contributions are nonetheless troubling.

"I certainly think citizens have a reason to be concerned that these contributions are intended to influence outcomes," Susan Wichmann, executive director of Common Cause Maryland.

"Companies, especially if they're giving out of their own corporate treasuries, are intending to curry favor," she said.

The contributions to the association from July 1 to Dec. 31, 2011, are listed in a report released this week by the Internal Revenue Service. The report shows:

•Maryland-based Catalyst Rx, which is fighting to keep a $2.4 billion state prescription drug contract, gave $100,000 in October. It marked the first time the company has contributed to the Democratic governors group, IRS records show.

•Caesars Entertainment, which is trying to win a state license to open a casino in Baltimore, contributed $50,000 in late December. The company previously has directed its gifts to the DGA's Republican counterpart.

•Another Maryland firm, HMS Host, gave $35,000 to the Democratic group in 2011. The donations came as state officials were considering whether to let the company continue to run two rest stops on Interstate 95.

•Gulfstream Park Racing Association Inc., owned by Maryland horse racing magnate Frank Stronach, donated $200,000 to the DGA in November. Stronach was the beneficiary of state legislation in 2011 that sent $6 million in state slots revenue to prop up racing at Laurel Park and Pimlico Race Course. The tracks stand to get another $6 million through legislation this year.

The donations follow a pattern, reported last year in The Baltimore Sun, of companies with interests before Maryland government giving large amounts of money to the governors association after O'Malley took its helm.

During the first half of 2011, Exelon, the energy giant seeking state approval to merge with Constellation Energy, gave $250,000 — an amount 10 times greater than it had given the group in the past. It gave another $10,000 recently. Energy Answers, a waste-to-energy firm, gave $100,000 on the same day in May that O'Malley announced he would sign a controversial trash-burning bill worth millions to the company.

Contributions to the association — designed to help elect Democratic governors nationwide — don't benefit O'Malley directly because he is barred by term limits from seeking re-election. But his leadership of the association has enhanced his reputation as a possible candidate for higher office, political analysts say.

The Republican governors have a similar group. Both can accept unlimited donations — campaign finance limits do not apply — though the associations must disclose contributors twice a year and can't coordinate directly with individual gubernatorial campaigns.

O'Malley chaired the Democratic group for the first time last year, and he was re-elected to a rare second term in December.

In the last six months of 2011, the group raised $8.5 million. In total, the DGA pulled in $19.5 million last year, an amount that O'Malley said was record-breaking for that period in a four-year election cycle.

In the most recent report, the standout check came from Stronach's Gulfstream Park Racing Association, a Florida-based company. The $200,000 gift was the third-largest donation during the period.

Stronach representatives did not respond to requests for comment this week.

His horse racing interests have long been intertwined with Maryland state government. He's raised the ire of state lawmakers by threatening to cut racing days. O'Malley's administration has in recent months played referee between the state's track owners and its horsemen and breeders, helping them work out differences with the aim of increasing the number of racing days.

The General Assembly approved a measure last year that earmarked about $6 million in state funds to pay for day-to-day operating costs at Pimlico in Baltimore, the home of the Preakness, and Laurel Park in Anne Arundel County.

Other gambling interests also filled the DGA's coffers. William Rickman, a longtime O'Malley donor and the owner of the Ocean Downs casino on the Eastern Shore, gave the association $25,000. In a brief telephone interview, Rickman declined to discuss his motivation for giving. "I do it," he said. "I just do it. We have a lot of different companies."

Another gambling company that gave money has aspirations to do business in Maryland: Caesars Entertainment made a $50,000 gift on Dec. 20, its first check to the governors group, according to IRS records.

The firm is seeking a license from a state board to build a "world-class" casino in Baltimore. In November, about a month before writing the check, Caesars officials told a state board they intend to build a 3,750-slot machine gambling palace ringed with restaurants and bars.

Greg Miller, a spokesman for the company, did not respond to emails.

Donald C. Fry, who chairs the state commission charged with awarding gambling licenses, said the donation won't help the firm's chances. "We would have no knowledge of any sort of contribution," Fry said. "That would have no impact."

Two firms gave money as they were lobbying to keep large state contracts slated to be finalized this month. In both cases, state officials have signaled they will not favor the donor companies.

A $2.4 billion contract that Catalyst Rx wants to win is scheduled for a vote by the Board of Public Works on Wednesday. O'Malley presides over the three-member panel.

The Rockville-based company has held the contract to manage prescription drug benefits for 200,000 state workers, retirees and their families since 2006. But the state Budget Department is recommending the pact be given to rival Express Scripts, which offered a lower bid. Express Scripts did not donate to the DGA.

Chris Burns, a spokesman for Catalyst, said the company operates nationally and the donation was not related to the Maryland contract battle. "While I appreciate that one could draw that conclusion, they are not at all connected," Burns said.

The $100,000 check was the first time the company donated to the DGA, IRS records show.

"As part of our commitment to making sure that folks have access to high-quality and affordable prescription benefits, we work with leaders in all state governments as they deliberate and think through policy decisions," Burns said.

Another company vying for a contract, HMS Host of Bethesda, gave $35,000 in two checks last year, IRS records show. The first, for $10,000, was made on May 9. The second, for $25,000, came on Nov. 22.

The company has been trying to win a $56 million contract to rebuild Maryland House and Chesapeake House on I-95. Transportation officials are recommending that the Board of Public Works approve a contract with Areas USA, a Florida-based company that has not donated to the DGA.

The contract is set to be formally awarded at the end of the month.

Susan Goyette, a spokeswoman for HMS Host, said the company paid $25,000 to participate in a series of four CEO Round Table events where she said "business leaders and governors meet to discuss business growth."

"HMSHost has long been a contributor to each political party and to each association of governors — all are strong supporters of business growth in the U.S.," Goyette said.



Baltimore Sun reporter Michael Dresser contributed to this article.

More info

For a database of DGA donors, go to baltimoresun.com/data