SAS provided undisclosed air travel during UNC presidential search

Posted July 15, 2016

UNC President Margaret Spellings

— Software giant SAS used corporate planes to ferry members of the University of North Carolina Board of Governors around the state on four occasions during the controversial search process for a new UNC system president last year but failed to list all but one of those gifts on state-mandated lobbying disclosure forms, a review of emails, other public records and interviews by WRAL News has found.

The company also used one of its corporate planes to bring the board's choice for president, Margaret Spellings, into the state in October when she was first elected to UNC's top job. However, that trip would not have triggered reporting requirements because Spellings was not a state official at the time.

Ann Goodnight, a vice chairwoman of the search committee, is the senior director of community relations at SAS and is married to company founder and Chief Executive Jim Goodnight. The company has registered lobbyists hired to influence state policy and is generally prohibited from giving gifts, including travel, to public officials, such as members of the UNC system's top governing body. There are exceptions under the law, but all require public disclosure of such gifts.

"SAS obtained proper advance approval for the transportation and reported the July donation as appropriate," SAS spokesman Trent Smith said by email. "In reviewing this matter, we have learned that, due to an administrative oversight, the other transportation from last year was not reported in our later filings. We are filing an amendment as soon as possible to correct that. We will continue to refine our compliance system to improve future reports."

The UNC Board of Governors chose Spellings, a former secretary of education under President George W. Bush, to lead the system after a search marked by rancor and criticized by many as overly secretive. The choice of Spellings remains controversial, and the process was so sour that John Fennebresque resigned as chairman of the Board of Governors shortly after Spellings was named.

Spellings' work for Bush both in office and for his presidential library, which critics say betrays a partisan tilt, contributed to the furor surrounding her hire.

Both Jim and Ann Goodnight are active political donors and were both contributors to Bush's presidential campaign. However, both have given to Republican and Democratic candidates, although Ann Goodnight's federal giving leans heavily to GOP causes such as former U.S. Sen. Elizabeth Dole's campaign and a $33,400 contribution to the Republican National Committee in April 2015.

Goodnight said little in emails disclosed to WRAL News and did not respond to an email requesting comment for this story. A company spokesman said she would not be available to comment. Therefore, it's unclear if she favored Spellings or another candidate, and she did not address questions about whether the fact SAS provided meeting space and travel for the search process gave her any outsized influence over the process.

"I actually don't like this kind of thing that you're talking about," said Steve Leonard, an associate professor of political science who was chairman of UNC's Faculty Assembly during the search process.

Faculty members at the time decried their lack of input into the search.

"It think it's inappropriate for a corporation to do this sort of thing," Leonard said. "People working for the state should have to travel on the state dime like the rest of us."

That said, Leonard emphasized that he believes Ann Goodnight to be a person of "enormous integrity" who would not have used the flights to gain undue influence over the process.

"I don't believe they did anything nefarious," he said. "It's just bad practice."

Meeting with candidates

Members of the Board of Governors are appointed by the General Assembly through an arcane election process and are frequently political contributors, high-profile business leaders or both. They serve four-year terms and are covered by the state Ethics Act, which includes a ban on most gifts but allows exceptions under certain circumstances.

Following the conclusion of last year's presidential search process, WRAL News requested a month's worth of emails sent to or from members of the Board of Governors in the weeks before and after they made their decision. Emails regarding public business are public records, even if sent and received on private email accounts.

UNC provided those emails last week, more than seven months after WRAL News filed its request.

In general, those emails reflected a board that had become cautious about speaking about the search process or other substantive matters in writing. However, a group of emails in early October detailed logistical arrangements for the 11-member search committee to meet in Charlotte. It also indicated this was not the first time SAS had offered the service, following a Charlotte meeting on Sept. 1.

"Once again, Ann Goodnight and SAS have offered air transportation to Charlotte and return for your meetings October 7th and 8th," the search committee coordinator, Bart Corgnati, wrote to members. "It is expected that your departure from RDU will be approximately 9:00 a.m. on Wednesday, October 7, and your arrival back at RDU on Thursday at approximately 12:30 p.m."

Federal Aviation Administration records show that SAS owns four aircraft and has an ownership interest in a fifth, numbers confirmed by a SAS spokesman. Four of those five planes are jets, including a Boeing 737, according to the FAA.

Six of the committee's 11 members took up SAS on the offer to fly in October. They included Goodnight, Joan Perry, Hannah Gage, Frank Grainger, Craig Souza and Raiford Trask III.

Neither Perry nor Joan MacNeill, the chairwoman of the search committee, returned emails seeking comment for this story. Lou Bissette, the current chairman of the Board of Governors, did not return phone calls and email seeking comment.

In October, at the request of SAS, UNC General Counsel Thomas Shanahan wrote in an email that this flight was an exception to the ban on gifts to public officials such as the Board of Governors and was acceptable if disclosed.

"This will confirm that, pursuant to N.C. Gen. Stat. Section 138A‐32(f), the listed individuals are authorized to travel round trip from Raleigh, NC, to Charlotte, NC, and that the private flight and ground transportation are acknowledged as a gift accepted by or donated to the State," Shanahan wrote. "Specifically, these travel expenses would constitute expenditures appropriate for reimbursement by the University of North Carolina if incurred by the board members because they are traveling for purposes of an official meeting."

He went on to write that it would be SAS' obligation to disclose that gift through forms collected and posted online by Secretary of State's Office.

"We understand all reportable travel expenditures on behalf of designated individuals will be disclosed on SAS’ next lobbyist employer disclosure report," Shanahan concluded.

Not reported

A review of SAS lobbying disclosures forms shows the flights were never listed on any of the documents submitted in 2015. That sort of violation is punishable with a fine and could be the basis of a complaint to either the state Ethics Commission or the Secretary of State's Office.

Perry Newsom, director of the Ethics Commission, declined to answer whether the undisclosed flights might represent an ethics violation because the law prevents him from advising third parties about violations or matters that would conceivably come before the commission.

"They should have erred in the direction of disclosure," said Jane Pinsky, director of the nonprofit North Carolina Coalition for Lobbying and Government Reform, saying both SAS and the Board of Governors should have taken steps to ensure the flights and other transportation costs were disclosed. "It may be absolutely benign, but it should be public."

UNC spokeswoman Joni Worthington said that the company had provided a total of five flights that were "accepted as gifts or donations to the state in support of the Presidential Search process."

"All of the flights were in connection with official meetings. Members of the Presidential Search Committee, all covered persons under the NC Lobbying Law, were present on 4 of those flights, which we understand would be disclosable on SAS' lobbyist employer disclosure report," Worthington wrote. "In addition, SAS provided air transportation for Margaret Spellings on the day of her election by the Board of Governors. Because she was not a covered person under the law prior to taking office on March 1, 2016, this flight may not have been a reportable travel expenditure."

Rick Glazier, a former Democratic lawmaker who helped write the state's ethics and lobbying laws and now heads the liberal-leaning North Carolina Justice Center, said it was at least "problematic" that SAS had failed to report.

"It certainly wouldn't have been the process that I or most other legal counsel would have advised," Glazier said.

In most cases, state officials and board members would have traveled to Charlotte on their own and then sought reimbursement from the state.

"This is no different from the function of any other public board," he said.

Shanahan's note, Glazier said, reflected the tension between the board's public function and a desire for secrecy, a conflict that repeatedly rose and drew criticism – including a from Republican legislative leaders who led the push for a law requiring greater disclosure – throughout the process.

Glazier said he was unsure if the unreported flights represented more than a paperwork error, but he said it was another in the list of irregular practices that marked the search process.

"This would just be another part of the process added to the list of things that were not the way to do it," he said.


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