Texas Insurance Commissioner Raises Campaign Money From Insurance Industry

With key endorsement in play, Perry appointee solicits funds for South Carolina governor.
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Texas Insurance Commissioner Eleanor Kitzman has been on the job less than three months, but it appears she already has an affinity for the pay-to-play political culture of Gov. Rick Perry’s administration.

On Sept. 20, Kitzman headlined a political fund-raiser where she helped tap the insurance industry—the very companies she’s charged with regulating—on behalf of long-time friend and former boss, South Carolina Gov. Nikki Haley, according to a copy of an invitation obtained by The Texas Observer. (View the text of the invitation email here.)

The event—held at the corporate headquarters of the auto insurer Ethos Group in Irving, Texas—attracted a number of insurance executives ready to open their checkbooks, according to Gov. Haley’s campaign records. It also included Barry Goldwater Jr., president of a Washington, D.C., consulting firm that represents the insurance industry, according to the invitation. It’s rare for a political appointee—Kitzman was appointed by Perry in late July—to participate in raising campaign money from the industry he or she regulates.

“It stinks. There’s no doubt about it,” says Alex Winslow, director of Texas Watch, a consumer protection watchdog group that has advocated for tighter regulation on the insurance industry in Texas. “It is completely inappropriate for the insurance commissioner to be headlining a fundraiser hosted at an insurance company headquarters.” He likened it to a shakedown operation.

Kitzman didn’t respond to repeated requests for comment. She was out of state on Friday, Oct. 14, according to her assistant, Laverne Chase. When asked where, Chase said, “I’d rather not say.”

The Kitzman event raised money for Haley, but it may have benefited Perry as well.

Haley, the nation’s youngest governor, has yet to make an endorsement in the South Carolina’s critical first-in-the-South presidential primary. She has said that she will. A Haley endorsement would be a major boost for Perry’s sagging presidential campaign. As she ponders it, the insurance commissioner—who Perry appointed just three weeks before launching his presidential bid —is helping make Haley comfortable in the Lone Star state.

The South Carolina governor flew to Texas on a private plane late last month without putting the event on her public schedule. She left with her campaign coffers flush with insurance industry cash.

The suggested contributions for the Ethos Group fundraiser featuring Kitzman were $500 per person, according to the invitation. “Make checks payable to: Haley for Governor,” it read.

Most people gave more.

Haley raised about $35,000 from Texas contributors in her latest fundraising quarter, according to her disclosure reports released last week. Much of it came from insurance industry folks in a two-day period around the time of the Ethos Group fundraiser with Kitzman. The Ethos Group and the Ethos HR Online Corp. each gave $3,500—the maximum allowed under South Carolina law. Other contributors included Ethos Group executives David Terek,  Jeffrey Lukash and Kerry Muller, who donated at or near the maximum amount, according to the fundraising reports.

The Washington, D.C., consulting firm that facilitated the hour-and-a-half-long fund-raising event, The Goldwater-Taplin Group, “provides unrivaled representation for the insurance industry in all 50 states,” according to its website.

Lee Newell, executive assistant to the firm’s CEO, sent out the invitation for the Ethos Group event, according to an email version of it. The email said those not able to attend could send contributions to the firm, which would hand-deliver it to Haley.

Newell wouldn’t provide any details about the fundraiser to the Observer. “I know nothing about the function,” she said before hanging up the phone.

For her part, Kitzman, a 54-year-old Houston native, is a close friend of Haley. Kitzman formerly directed the South Carolina Department of Insurance, but former Gov. Mark Sanford forced her out of that post. She ran for lieutenant governor in 2010, raising the majority of her campaign cash from the insurance industry, but lost the race. When Haley entered the governor’s office this year, she appointed Kitzman to a coveted position leading South Carolina’s budget board. Kitzman held the $173,000 post for six months before bolting for Texas this summer to regulate the insurance industry under Perry.

Both Perry and Haley have been criticized for dispensing political payoffs to friends and contributors. In Texas, companies that received state economic development grants through Perry’s office have donated millions in campaign contributions to the governor. He’s also received millions in campaign contributions from his political appointees. This isn’t the first time one of Perry’s appointees has been involved in soliciting campaign contributions from a regulated industry. In 2009, the head of the Texas Alcoholic Beverage Commission signed a fundraising letter for Perry’s reelection campaign that was sent to restaurant owners regulated by his agency. 

So why did the Ethos Group put on a Texas fundraiser for Haley in the first place?

“They, like many others across the country, like what we are doing in South Carolina with a pro-business climate,” said a Haley campaign aide in a statement to the Charleston Post & Courier. “We appreciate their willingness to support the governor.”

But something else could be going on.

South Carolina voters have accurately predicted the eventual GOP presidential nominee since 1980; and a recent Winthrop University poll found that 70 percent of Republicans in the state approve of the job Haley is doing.

Meanwhile, the fresh-faced Tea Party governor has been sharpening her national profile and spending much time on FOX News, ramping up talk that she’s angling for a  placement on 2012 vice presidential shortlists.

Kitzman’s Texas fundraising for Haley could be aimed at currying favor for Perry with the governor of a state with a January primary that could make or break Perry’s presidential run.

“That’s kind of what I suspect went on,” says John Crangle, a Limestone College political science professor who has run the South Carolina chapter of Common Cause for 25 years. “Why else would she go to Texas and raise insurance money?”

Crangle adds that insurance companies are common targets for governors looking for campaign cash because of the hyper-regulated nature of their industry. “A common pattern of practice around the country is to shake down insurance companies because they’re regulated industries and they’re easy to shake down,” Crangle says.

In Texas, the pay-to-play game is played for sure, says Winslow of Texas Watch. But usually, he says, the participants are careful in how they present fundraising events so as to avoid any perception of a conflict of interest.

What’s unusual about the Texas Ethos Group fundraiser for Haley, he says, is that the state’s insurance commissioner was there.

“It’s unusual to have an agency head who’s an administrative officer — not an elected official — to be actively involved in politically fundraising for a candidate like this,” he says.

So, why might Kitzman have landed her job and then become involved in fundraising?

Says Winslow, “There’s all kinds of speculation that Perry made this decision as a way to court Haley.”

 

Corey Hutchins is a reporter for the Columbia Free Times.