Ethics office: Former Rep. Deal acted improperly by continuing side business

Former Rep. Nathan Deal (R-Ga.), a candidate for governor, far exceeded House limits on earned outside income and used his staff to help maintain a stream of income from a no-bid state business deal, according to an Office of Congressional Ethics (OCE) report.

The OCE released the 138-page report on its months-long investigation on Monday. The probe focused on allegations first reported by the Atlanta Journal-Constitution that Deal and his business partner made hundreds of thousands of dollars from a vehicle salvage and disposal business, called GSD, and that Deal used his office resources, including his chief of staff’s time, to prevent Georgia state officials from making changes to the state vehicle inspection system that would hurt the business and revenue streams from it.

In 2008 Deal made at least $75,000 in earned income, the OCE found, nearly triple the limit of $25,830. He listed $50,000 to $100,000 in unearned income from the salvage business on his financial disclosure form. However, he described the same income as earned wages on his 2008 personal income tax forms.

The OCE report also notes that Deal received W-2 forms from GSD in 2006, 2007 and 2008 so there’s “substantial reason to believe Representative Deal violated the House Ethics Manual’s directive to disclose all earned income.”

Deal has denied any wrongdoing and is calling the investigation a political witch hunt.

“This has always been a political witch hunt fueled by Democrats who fear that [former Gov.] Roy Barnes will lose the governor’s race to Nathan Deal,” Harris Blackwood, Deal's campaign press secretary, said in a statement. “In its own report, the Office of Congressional Ethics admits that its efforts were incomplete and it does not conclude that Mr. Deal did anything wrong. That’s because Nathan Deal did nothing wrong.”

Blackwood goes on to point out that the business in question existed before Deal won his congressional seat and that each year he received House ethics committee approval to continue it.

The OCE is a quasi-independent investigative unit created in 2008 to help police the activity of House members and staffers and make recommendations for dismissal or further investigation to the ethics committee. It does not have the power to issue subpoenas or exact punishment, leaving those matters up to the ethics committee.

Deal resigned his House seat an hour after he voted no on the healthcare reform bill March 21. The House clerk recorded the resignation just minutes before the stroke of midnight. The next day was the deadline for the ethics committee to determine whether it should issue a report.

The ethics committee usually dissolves an ongoing investigation into a member of Congress who resigns because its jurisdiction only covers sitting House members. It has made exceptions, as in the case of former Rep. Mark Foley (R-Fla.), who was accused of making improper electronic communications with former House pages. In that high-profile case, the ethics committee issued a report after Foley resigned his seat.

The OCE’s board last week voted to release the report even though the ethics committee can no longer take any more action against Deal.

“Providing information to the public, improving transparency, is a central element of the OCE’s mission,” said spokesman Jon Steinman. “The OCE board's unanimous vote to release its report in this matter is, in letter and spirit, a fulfillment of that mission.”

The ethics committee reportedly also was looking into the matter. It had not made any public announcements about the probe and did not form an investigative subcommittee to delve into the matter, a sign that an investigation has reached a serious stage.

Deal and a business partner have co-owned a vehicle salvage company in Gainesville, Ga. since 1988. The business, GSD, assists auto insurance companies in the disposal of damaged vehicles by acting as a broker and facilitating the auction of salvaged cars and billing the insurance companies for conducting the auction.

For nearly 20 years, GSD was involved in on-site inspections of rebuilt, salvaged vehicles. In 2008, the company conducted the most inspections, assessed the highest fees and generated the most revenue ($288,500) than the other five stations operating in Georgia that year, the OCE found.

But Revenue Commissioner Bart Graham’s plan threatened that income by replacing state inspectors who rotated throughout certified inspections stations with private inspectors, and allowing any auto shop to open an inspection station, throwing out previous rules limiting the number of stations within a certain area. The commissioner described the plan as eliminating “regional monopolies.”

Deal attended meetings on the state vehicle inspection program with Georgia officials, telling the OCE he did so not as a private citizen but as a “public servant.” No other Georgia members of Congress did so and the program was strictly a sate issue, the OCE found.

In addition, Deal’s chief of staff also attended the meetings on the vehicle inspection program and instructed his staff to use a House e-mail account to send e-mails related to the meetings, an apparent violation of rules barring the use of official resources for outside business purposes, the OCE found.

Graham told the OCE that he met with Deal and his business partner to discuss his desire to keep a permanent state inspector at GSD. Graham rejected the request as inappropriate because he believed it would create a conflict, as no other station would receive the same treatment.

The interactions grew hostile at a third meeting with the revenue commissioner, which Deal conceded was granted likely at the request of the Lt. Gov. Casey Cagle. Graham said Deal brought along a state legislator and said Deal and his business partner “hot-boxed” him and “treated him as if he were a witness under cross-examination.”

Deal and his business partner told the OCE they were concerned about the safety of drivers on Georgia roads and thought the current inspection system should not be changed to allow private inspections to replace state-employed and authorized inspectors.

This article was updated at 4:23 p.m.