Gov. Pat McCrory sold his stock in Duke Energy over a six-day period in mid-April this year, a move he said Thursday was motivated by repeated media coverage of protests challenging the governor to fully describe and sever his ties to his former employer.
McCrory misstated the timing of those sales in public ethics forms he filed April 15 and in May that were supposed to disclose what stocks he owned at the end of 2013. He said Thursday that it was a mistake made in an attempt to be clear that he no longer owned stock in the company, which was under pressure to clean up a massive spill of coal ash into the Dan River in Eden.
He said his general counsel, Bob Stephens, “misread” the disclosure form.
McCrory, a Republican, said he had committed no violations of ethics laws, and he criticized The News & Observer, which first reported the story and placed it at the top of Thursday’s front page.
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“We haven’t broken any rules or ethics violations or anything,” the governor said. “We were trying to tell the truth.”
Two days after he sold the last of his stock, the governor announced an “action plan” to tackle toxic coal ash at Duke’s power plants across the state, his highest-profile response to the spill that occurred in early February.
The company had forecast billions in cleanup costs if the state required it, and debate raged about whether shareholders or Duke customers should pay.
Since the spill, the company’s stock price has traded between $68.71 and $74.80. It closed Thursday at $72.08.
Bob Hall, executive director of Democracy North Carolina, has been active in criticizing McCrory’s connections to Duke. He said the timing of McCrory’s stock sale was concerning.
“It looks like he’s trying to get rid of the stock both for the April 15 deadline and to say my hands are clean as I come forward with this plan, my plan for cleaning up,” Hall said.
Lawmakers have discussed but not passed major coal ash reforms.
McCrory said Thursday that his Duke Energy stock sale was timed only in response to critics who had been expressing concern about a possible conflict of interest between his role as public servant and his years of work as a manager at Duke, which included a personal investment of more than $10,000 in company stock that he declared in his 2012 ethics disclosure forms.
The governor recalled watching TV in what he described as “the 15th news report of protesters asking me to sell” his Duke stock. He said he started “divesting” the next day because his “integrity was being challenged” and he wanted to put “this thing to bed.”
In the first half of March, a group called Progress NC Action led a series of protests asking McCrory to “come clean” on his ties with Duke, including about his stock holdings and campaign funding. One rally included about 100 protesters outside the Executive Mansion in Raleigh. The group’s executive director, Gerrick Brenner, said it was hard to believe a lawyer for the governor would make a mistake interpreting the ethics forms.
“This comes down to either startling incompetence, or an intentional effort to deceive the public,” he said. “This failure to properly disclose a conflict of interest deserves further scrutiny.”
‘It is confusing’
On April 15, the day after his sales were complete, McCrory filed an ethics disclosure covering the 2013 calendar year that said he did not own Duke stock as of Dec. 31.
That wasn’t the case; Stephens said in an interview he thought the form was asking for a disclosure as of April 15. The governor said he wanted to be transparent – and let the public know he was no longer a shareholder.
Two weeks later, his office publicized the absence of Duke on the disclosure report, saying it “eliminates the often repeated, ridiculous and false, partisan left-wing attacks challenging the intent of our decisions and policies.”
This week, McCrory amended the filing to reflect what it asks for, which are his holdings as of Dec. 31. Public officials who “knowingly” do not disclose information on the ethics disclosure form can face criminal penalties.
McCrory signed the form as true. He had taken the State Ethics Commission’s required training on the ethics law in July 2013, according to records.
If he had filed the form correctly in April, as he now has, “It would have looked like I owned the stock when, in fact, I divested from it” at the time the report was filed, McCrory said.
Stephens said the forms should be updated to provide more clarity about the time frame covered. “It is confusing,” Stephens said.
The form asks for disclosures in a series of categories, such as real estate and stocks, “as of December 31st of the preceding year unless another time period is specified in the question.”
The specific questions for each category ask for information in the present tense, such as “Do you ... own interests (generally stock) valued at $10,000 or more in a publicly owned company?” Stephens said it would be better if the time frame were included in each question.
McCrory will not say how much stock he owned. Duke Energy offers employees company stock among investment choices in its 401(k) retirement plan. The company’s top executives also receive stock grants as part of their compensation. Spokesman Tom Williams said he could not comment on how McCrory obtained his Duke stock.
On Wednesday, a spokesman would say only that McCrory had sold the stock sometime between Feb. 14 and April 15. On Thursday, communications director Josh Ellis narrowed that. “The stocks were sold between April 9 and April 14,” Ellis said.
Stephens said the sales were in multiple transactions over that period but could not explain “why brokers do that.”
Vacancy on commission
Meeting with reporters outside an education event, McCrory said he was “amazed” at questions about the disclosures.
“There were so many media reports of me being requested to sell the energy stock to clear any possible conflicts of interest – I actually did it,” McCrory said.
Oversight for ethics matters in North Carolina rests with the bipartisan, eight-member State Ethics Commission. Its chairman, former Judge John M. Tyson, resigned his position last week to seek a seat on the state Court of Appeals.
That leaves the commission with four Democrats and three Republicans. Its acting chairman is a Democrat and lawyer, Jane Finch. Finch, who could not be reached, has been on the state’s ethics board or commission since 1993. Also on the commission is former state Democratic Party Chairwoman Barbara Allen.
The replacement for Tyson’s seat will be decided by House Speaker Thom Tillis, a Republican.
But McCrory, as governor, has the authority to choose the chairman from any of the commission members.
Perry Newson, the ethics commission’s executive director, said in a brief interview that it was premature to discuss whether the commission would review the issue of McCrory’s filings. Staff writer Craig Jarvis, researcher Peggy Neal and Charlotte Observer staff writer Bruce Henderson contributed.