Md. GOP paying Steele to consult

Democrats say fees raise ethics questions

`I have to take care of my family'

August 27, 2002|By David Nitkin | David Nitkin,SUN STAFF

The Maryland Republican Party is paying Michael S. Steele $5,000 a month in consulting fees under an arrangement that began shortly after his selection as gubernatorial candidate Robert L. Ehrlich Jr.'s running mate.

Although the payments appear legal, Democrats said the GOP's contract with Steele raises ethical questions and suggests the party might be subsidizing the living expenses of a candidate for statewide office.

"It looks to me like they've hired themselves a candidate," said David Paulson, a spokesman for the state Democratic Party.

Steele - who held the unpaid position of Republican Party chairman when he was tapped to run for lieutenant governor - defended the consulting arrangement yesterday, saying he negotiated the deal as a way to continue working on party issues while he campaigns. The contract was not a condition of his candidacy, he said.

FOR THE RECORD - An article in yesterday's editions incorrectly described Michael S. Steele's status as a lawyer. Steele, a Republican candidate for lieutenant governor, passed the Pennsylvania bar exam in 1992 and is licensed to practice law there.
The Sun regrets the errors.

"I have a consulting business. I have consulting clients. I have to take care of my family," he said. "The state is paying [the salary of Lt. Gov. Kathleen Kennedy Townsend] while she is running for governor. So what's the difference?"

But Paulson said "there's something obscene" about the arrangement. "They are paying a guy to be on this ticket whose very presence is being used by Ehrlich and Republicans as a show of diversity," he said of Steele, who is black. "They are the ones who call it the `opportunity ticket.' We just didn't know how much of an opportunity it was."

Ehrlich announced July 1 that Steele, 43, would be his running mate, and Steele promptly took a leave of absence as party chairman. Campaign finance records show that he received his first $5,000 consulting payment from the GOP on July 26.

Paul Ellington, executive director of the state Republican Party, said Steele will keep getting checks through the end of the year, making the potential value of the contract at least $30,000. Neither Ellington nor Steele would release a copy of the contract yesterday.

Ellington said Steele is being paid to work on party operations and raise funds. He was hired because his interim replacement as chairman, first vice chairman Louis M. Pope, was not prepared to fill all the responsibilities of the top slot on short notice, Ellington said.

"The first vice chair felt more comfortable if there was some continuity," he said, adding that the party has hired consultants during previous changes of administration.

Steele gave a different version of his responsibilities, saying his main function would be to implement a 10-year strategic plan he helped design. He said he is on the phone daily with party officials, even as he campaigns.

A graduate of the Johns Hopkins University and Georgetown University's law school, Steele has previously said the consulting business he founded in 1999 has struggled. He told the Washington Post last month that many clients have not paid their bills and that the unpredictable life of an entrepreneur has put stress on his family.

Financial disclosure statements filed with the State Ethics Commission show that Steele has borrowed $35,000 through a line of credit against his home in Largo, and that a retirement account is worth only $239. Although he worked as an attorney with a Washington law office for six years, he has not passed the bar in any jurisdiction.

Steele said yesterday that the party was not the only source of income for his consulting firm, The Steele Group LLC, but he declined to disclose other clients.

Leading Republicans said yesterday that they did not know about the arrangement, and reaction was mixed.

"What the public doesn't quite appreciate is that committing yourself to run for public office on a full-time basis takes away opportunities for supporting yourself," said Del. Robert L. Flanagan of Howard County. "When you are somebody who is not on a retirement income, not on a trust fund, not on a public salary, it can undermine your ability to financially care for your family. So I'm not upset by a creative effort to enable Michael Steele to be on the ticket."

Robert P. Denise of Oxford, a Republican contributor who donated $4,000 to the party during the current four-year election cycle, was "surprised" to learn from a reporter about the consulting arrangement, and said he wanted to hear more about it from Ehrlich and Steele.

"I think it is silly to invite that kind of criticism," Denise said. "If he needed money, I would have thought they would have found some other way to pay him."

Candidates for office are not prohibited under state law from receiving money from political parties for services, said Ross Goldstein, director of candidacy and campaign finance for the state election board.

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