- Last Updated on Tuesday, 09 April 2013 17:20
- Published on Wednesday, 10 April 2013 00:20
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Is it a conflict of interest or is it just a matter of appearances? Right now, it’s hard to tell, but Attorney General Ken Cucinelli, the presumed GOP candidate for governor, is in the middle of a brewing controversy about his relationship with a Virginia-based supplements producer.
Cucinelli has a remarkable knack for attracting controversy. Indeed, he often goes looking for them. Usually it’s to increase his standing with the far right of the Republican Party. However, this is one controversy that he probably wishes he had avoided.
The company in question is called Star Scientific Supplements. It’s a publicly traded company that is a major producer of dietary supplements. Its Chief Executive Officer, Jonnie Williams Sr., has been a friend of Attorney General Cuccinelli’s for several years. Their relationship appears to be close. Cucinelli stayed at Williams’ Richmond home for several weeks just after he became Attorney General in 2010.
Later, Williams allowed the Attorney General to use his lake front home and boat. He also paid for a private plane to take Cucinelli on a trip to Kentucky. Cucinelli duly reported this information and it’s a matter of public record. The total dollar value of Williams’ gifts to the Attorney General total $13,000.
None of this is much of a problem, but it does imply a close relationship, and it was in 2011 that the possibility arose for a potential conflict of interest. Star Scientific owned a number of tobacco barns in Mecklenburg County that, according to the state, owed back sales and use taxes of $1.7 million. Williams, arguing that these tax charges weren’t valid sued the state.
That’s where things start to get interesting. First, two months after Star Scientific filed suit against the Commonwealth, the Attorney General bought just a little less than $10,000 worth of the company’s stock. A second purchase, and this value is based on what has been a wildly fluctuating stock price, took the value of the Attorney General’s stock to $19,000. It’s now worth considerably less. However, he bought stock in a company with business before his office, and for a year he didn’t report it. That’s not good. He claimed that it was because it was initially worth less than $10,000, which, under Virginia financial disclosure rules doesn’t require reporting. Fair enough, but in terms of appearances, this omission only serves to raise questions.
But, back to the Star Scientific lawsuit. With the suit pending, Star Scientific’s back taxes are on hold and for over 18 months the Attorney General’s office has failed to take any action on the claim. The Attorney General’s office claims that Star Scientific and Johnnie Williams are not receiving any special treatment. This may be the case, but it’s rare for the Attorney General’s office to just sit on a loss suit for a year-and-a-half.
One action that could have spared the Attorney General a lot of grief over this issue would have been if he had recused himself from any participation or decision-making regarding the Star Scientific lawsuit. He didn’t do this, and for that matter, he didn’t even tell his senior staff that he had an interest in the company.
However, that’s not the only problem with Star Scientific. This doesn’t seem to have anything to do with the Attorney General, but since he has such close ties to the company’s CEO, it doesn’t help.
Here’s the deal: The Federal Government’s Securities and Exchange Commission concerned over a questionable and rather large discounted stock sale last November has launched an investigation of the company. While not involving the Attorney General, none of this makes Star Scientific’s relationship with the Attorney General smell any better.
The Attorney General’s office says that they’re “reviewing the handling of the case.” That’s not much of a response. At the very least the Attorney General should formally recuse himself of the case. Which he has yet to do.
However, on a broader level, maybe this is a signal that it’s a good time for the Attorney General to resign. The last five attorney generals who have run for office have resigned before the start of their campaigns for governor and Cucinelli should too. It wouldn’t make the Star Scientific issue go away but it would help avoid any future conflicts of interest. And right now, the Attorney General doesn’t need any more controversies like this one.