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U.S. Rep. Deal faces ethics complaint from watchdog group

CREW accuses Gainesville congressman of illegally lobbying on behalf of car salvage business

POSTED: August 26, 2009 11:15 p.m.
SCOTT ROGERS/The Times

Newly inspected vehicles are parked Monday afternoon at Gainesville Salvage and Disposal. Co-owners Nathan Deal, a U.S. representative, and Ken Crogan have had a contract with the state of Georgia for more than 10 years to provide space for state inspectors to inspect rebuilt vehicles.

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A political watchdog organization filed an ethics complaint Wednesday against U.S. Rep. Nathan Deal, claiming the Gainesville congressman violated House rules and federal law by intervening with Georgia political leaders to save a program that benefits him financially.

Deal, in a letter to his constituents, has denied that he did anything wrong, and went so far Wednesday as to welcome an investigation of his actions.

"I welcome the opportunity to defend myself and my office from this allegation that has been made," read a statement the congressman released Wednesday afternoon. "The implication that I intervened with state officials to benefit myself is completely outrageous and false. I look forward to a speedy resolution as not to distract from my duties and service to the 9th District of Georgia."

Citizens for Responsibility and Ethics in Washington filed the complaint against Deal with the Office of Congressional Ethics, alleging he used his position as a member of Congress to protect his personal business, according to a news release.

The organization based its complaint on a report that appeared Sunday in the Atlanta
Journal-Constitution. The report implied that Deal pulled strings with help from Lt. Gov. Casey Cagle to save a state inspection program that earns Deal up to $150,000 a year.

Deal and business partner Ken Cronan are co-owners of Gainesville Salvage and Disposal. The business is primarily an auction yard for totaled vehicles, but twice a month serves as a site for state employees to inspect rebuilt vehicles — a deal they have had with the state since shortly after Gainesville Salvage and Disposal opened in 1990.

Deal has served in the U.S. House of Representatives since 1992. Prior to that, he served in the state Senate from 1980 to 1992.

The state does not pay Gainesville Salvage and Disposal to use the business’ bay area for inspections of salvaged vehicles, Deal said, but the business charges vehicle owners $100 to use the site for the inspection. The fee in Gainesville is the highest of all the state’s inspection sites.

CREW claims that using his congressional power through Cagle, Deal pressured Georgia Revenue Commissioner Bart Graham, who oversees the state’s salvage inspection program, to reconsider a proposal to eliminate the $1.7 million funding for the program from the state budget and privatize the program.

Deal did have Cagle arrange meetings to discuss the future of the salvage inspections program on at least two separate occasions between January 2008 and March 2009. Deal said the purpose of the meetings was to gather information on Graham’s intentions with the inspection program, not to pressure the commissioner. But Graham contends that he did feel challenged.

Since 2008, Graham has proposed changes to the state’s salvage inspection program to make it more competitive.

First, in 2008, he considered expanding the number of inspection sites through a competitive bidding process. During that year, he met twice with Deal and Cronan. In January 2008, Deal and Cronan arranged a meeting through Cagle to discuss a matter concerning insurance companies, but Graham said the men were also interested in discussing his plans.

During a separate meeting on June 30, 2008, Deal and Cronan wanted to discuss the possibility of allowing inspection sites like Gainesville Salvage and Disposal to house state inspectors full-time, Graham said. The state would pay the inspectors, but the inspection sites would reap the benefits of the business, Graham said.

The idea was proposed as a cost-saving measure to the state; the state could save money on gasoline if inspectors did not have to drive to inspection stations or other non-dealer sites to perform inspections.

"I felt that would have a conflict, having a state employee that served as an inspector being hosted on a full-time basis by a de facto agent of the state," Graham said. "...I told the group in that meeting that we had the (attorney general’s) guidance letter, telling us that we did need to have a more competitive environment than we have today."

Graham’s budget proposal for 2010 eliminated funding for the state salvage inspectors program in an effort to privatize it. Graham said he decided to privatize the program when he was forced to cut 10 percent of his department’s budget, a net reduction of approximately $12 million. Graham has said the program is revenue neutral, but Deal said the salvage inspection program generates revenue for the state — between $1 million and $1.2 million.

Deal and Cronan again met with Graham in March 2009, a meeting set up by Deal’s chief of staff, Chris Riley. Riley arranged the meeting through the lieutenant governor’s office using his congressional e-mail account.

Graham said the congressman came to discuss the effect of privatizing the salvage inspection program.

"I took it as a challenge," Graham said.

The purpose of the meeting, according to Deal, was to make sure that the proposed, privatized salvage inspection program would continue to put safe vehicles on the road.

"Our concern was if you don’t have a pretty tightly monitored inspection program, you’re going to have people just ... sign something to get the $100, $50 or whatever, and they don’t particularly care whether you’ve got stolen parts or whether the car’s put together properly or not," Deal said.

Deal said he was also concerned about constituents who might lose their jobs. On that list of constituents, Deal includes employees of Gainesville Salvage and Disposal that have been hired to deal with the increased load on inspection days, potential customers and state inspectors.

He said to that point, the revenue commissioner had been unresponsive to station owners’ inquiries about the changes in the program. Cronan, who also serves on a statewide board of salvage dealers, said other dealers he knew were not getting any answers, either.

"(Cronan) never received any official communication from the Department of Revenue as to what they were doing, when they were doing it or even why they were doing it," Deal said.

Graham said the information about the changes was part of the public budget hearings, and that he met with those who requested meetings on the issue, though there were only a few.

"Our intent was very open and very disclosed from the very outset," Graham said.

Also, Graham said private inspectors will be trained as well, if not better, than state-hired inspectors.

Deal was satisfied after the meetings and said he had no problem with Graham’s plans to privatize the program.

"After we talked to (Graham) and he said this is what he intended to do and he was going to have standards attached to it, we said ‘fine, we have no problem with that if you want to proceed forward,’" Deal said.

The money for the salvage inspection program was later replaced in the 2010 budget, though Graham said he was not aware until the final budget was passed. Cagle’s office said it was replaced because the Department of Revenue could "not sufficiently demonstrate how cutting this program would benefit the state’s taxpayers."

Graham said Wednesday he does not know how Deal and Cronan — or any shop designated as an inspection site — ever became designated as inspection sites. He said there is no written documentation of how the stations were ever chosen.

However, the former chief of inspections for the state’s Salvage Program, Donnie Pierce, said the process was simple. The state took volunteers, because when the program started in 1989, most people did not want to shut down their business for a day to serve as an inspection site, he said.

"They didn’t think there was any money in it," Pierce said. "So these were people, when the stations were established, it was basically people in the industry that just volunteered their site. And at the time, they got like $35 a car, but no one knew if it would go anywhere."

Whether or not the issue between Deal and Graham was resolved, CREW says that when Riley arranged the meetings between himself, Cagle and Graham using his U.S. House e-mail account, he may have committed a federal crime.

Deal, however, said Riley’s actions were perfectly legal. Riley was using his congressional e-mail account to coordinate the congressman’s schedule, Deal said.

"We’ve asked legal counsel ... (and) they say that’s appropriate," Deal said.

Deal is seeking the Republican nomination for governor in 2010. He called reports that he used his congressional resources for personal business an attack from one of his opponents in the gubernatorial race.

"Obviously, it will probably be a campaign ad sometime down the road, if somebody wants to try to use that, yeah." Deal said.

He would not say, however, which opponent would do such a thing.

"I have a pretty good idea, but I’m not going to say," he said.

Deal called any allegation that he inappropriately used his political clout to schedule meetings with Graham about the program "absolutely false." and "absolutely ridiculous."

"I think the sad part of the whole thing is that nobody else could get a meeting; nobody else could get a returned phone call; nobody else could get an answer," Deal said. "Apparently, the commissioner didn’t like giving anybody an answer. He obviously didn’t like having to give me an answer."



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