Gov. McCrory criticizes Observer prison story

Gov. Pat McCrory said a story published Saturday wrongly implied that his administration did something illegal or improper when the governor personally intervened on behalf of a friend and political donor seeking to renew $3 million in prison contracts over the objections of top prison officials.

In a statement issued Saturday, McCrory’s office complained about “distorted” headlines, cropped photographs and some information in the articles, which ran on the front pages of The Charlotte Observer and the Raleigh News & Observer.

The articles detailed how the McCrory administration renewed private maintenance contracts for a company owned by Graeme Keith Sr., a prominent Charlotte real estate developer and retired banker,and his son and business partner, who have given $12,000 in campaign contributions to McCrory.

None of McCrory's criticisms appeared to challenge the central point of the story: As governor, McCrory helped arrange, and then attended, a meeting with top prison officials in which Keith, a political donor and friend, lobbied for dramatically expanding prison maintenance contracts across the state.

A memo from the meeting says the donor went so far as to stress that he had contributed “a lot of money” to political candidates and it was time that he got something in return. The company’s existing contract for three prisons was extended at the end of last year over the objections of top prison officials.

The FBI has interviewed key participants in the matter.

"This story is based on public records and interviews with members of the governor's own administration," said Observer Executive Editor Rick Thames. "None of his objections dispel the facts that make it highly relevant."

The Charlotte Observer and N&O are owned by McClatchy and often work together on stories, as they did on the story published Saturday.

McCrory said Saturday that the newspapers “clearly attempted to give the impression that something improper or even illegal was done. Clearly, just the opposite occurred.” He said his administration went through “an ethical process and made a sound, business-like decision that was in the best interest of public safety as well as the taxpayers of North Carolina.”

Here’s a look at the criticism from McCrory’s office:

▪ That the headline “McCrory held meeting to extend donor’s contract” was “absurd and false.”

In its statement, McCrory’s office complained that the meeting was not conducted to decide the contract extension and that the headline gives the false impression that The Keith Corporation got the meeting as a result of campaign contributions.

The contract was not extended at the meeting, and the story didn’t say that it was. The newspapers reported that the meeting put into motion the events that led to the contract being extended after prison officials had planned to let it expire.

According to a prison department memo, Graeme Keith opened the Oct. 28, 2014 meeting by stating “he had been working on this project ‘private prison maintenance’ for over ten (10) years and during that time had given a lot of money to candidates running for public office and it was now time for him to get something in return.”

Secretary of Public Safety Frank Perry, a retired high-ranking FBI official, was at the meeting and said the memo was accurate. Perry said Graeme Keith made similar comments to him in another meeting and on the telephone.

In an interview Friday, McCrory said he did not hear Keith make the comments about political contributions. The governor said he believed the prison officials at the meeting were telling the truth when they said they heard Keith say he deserved the contract because of his political contributions.

At the meeting, Keith made a proposal to extend the contracts at three prisons and expand the company’s work to all 57 state prisons. After the meeting, Keith emailed Perry asking that the existing contracts be extended.

▪ The governor’s office complained about this headline: “Over objections of prison staff, Charlotte developer Graeme Keith got extension of $3 million-a-year maintenance deal.”

The governor’s office said the headline omits the fact that McCrory asked State Budget Director Lee Roberts to review the data and make a recommendation on how to resolve a dispute between Department of Public Safety and the Keith Corporation.

The headline is accurate. Perry, Commissioner of Prisons David Guice and other prison officials objected to the renewal of the contract. The article discussed Roberts’ role in-depth, relying on public records and three interviews with Roberts; it included information about McCrory asking him to figure out whether public or private maintenance provided the best value.

▪ The governor’s staff objected to a headline stating “A governor’s testimonial” above a graphic showing part of a promotional slideshow The Keith Corp. posted on the internet.

In the 2011 tribute, McCrory praises Graeme and Greg Keith for “adhering to the the highest standards of ethical and moral integrity.”

“The comments about Keith Corporation were from Pat McCrory when he was a private citizen and not holding any elected office,” McCrory’s office said in its statement. “It’s obvious the use of “Governor” was another attempt to mislead their readers and to further promote a false narrative that something improper was done.”

The governor’s office did not complain about a sentence in the article that incorrectly suggested that McCrory was mayor when he made the tribute. McCrory wrote the testimonial after he'd left the mayor's office and before he became governor. That sentence will be corrected in Monday’s paper.

▪ McCrory also complained about this sentence in the article: “The Office of State Budget and Management used metrics preferred by the Keith Corporation in the OSBM analysis.”

The metrics center on measuring the square footage of the prison buildings. The Keith Corp. used gross square feet – the area of all the buildings on the prison grounds. The state budget office adopted this method. The governor’s office said the use of gross square footage is the industry standard.

Prison officials used net square feet, primarily because the prisons maintained by The Keith Corp. each have 30,000-square-foot buildings that are empty and unused, roughly 6 percent of the total square footage. The buildings were to house inmate-staffed factories, but the plans were shelved during the economic downturn. The buildings are empty, have gravel floors and need virtually no maintenance.

McCrory's statement said "cropped photographs" were among the misleading elements of the story. For its front page, editors of The Charlotte Observer ran a file photo of McCrory and Keith together. It cropped out the images of two other people who were not associated with the story.

"If that's what the governor found objectionable, we make no apologies for being sensitive to two people who had nothing to do with this issue," Thames said.

Alexander: 704-358-5060

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