Second of three parts

Former N.C. House Co-Speaker Richard Morgan's political enemies paint him and Jim Black as the poster boys for abuses of power in state government.

They say he used that power to raise hundreds of thousands of dollars from lobbyists and special interests as part of the "pay-for-play" crowd, and that he punished his political enemies by banishing them to tiny basement offices and taking away some of their secretaries.

But Morgan, who lost his re-election bid to hair salon owner Joe Boylan in a brutal Republican primary last May, insists that he is "beyond anything of a corrupt nature." He says most of the animosity and allegations aimed at him can be chalked up to jealously.

Morgan left office in December after representing Moore County for 16 years. He is settling back into life out of state government, spending some time on his cattle farm in Eagle Springs. He also still has an insurance company and outdoor advertising business.

Former Speaker Black, meanwhile, resigned his seat last month before pleading guilty to state and federal corruption charges. He admitted in U.S. court that he took $29,000 from three chiropractors in exchange for inserting a measure in the 2005 state budget to help their profession. He also admitted in state court that he bribed former state Rep. Michael Decker in early 2003 to switch parties and create a deadlock that would keep Black in power.

That opened the door for Morgan and a few of his closest allies to forge a power-sharing deal with Democrats to make him and Black the first co-speakers in state history.

The investigation that has swirled around Black, a Mecklenburg County Democrat, has snared five public figures connected to him. He is now cooperating with investigators in hopes of avoiding hard time in prison. His sentencing on the federal corruption charge is set for May 14. He faces up to 10 years in prison.

Morgan, on advice from his attorney, has declined to comment on the continuing state and federal investigations. He says he has "done nothing wrong."

Two Close Hits

The probe has hit close to Morgan on two fronts in the past week.

The News & Observer of Raleigh reported Tuesday that a federal grand jury that continues to investigate Black's political and campaign activities is looking into campaign contributions from beer and wine wholesalers to Morgan and Black. A special tax break, worth about $4 million to the wholesalers, was restored in 2004, after having been removed in late 2003.

Beer and wine wholesalers stepped up their donations to Black and Morgan when the two were co-speakers and had the power to partially restore the break or keep it dead.

Beer and wine wholesalers and their political action committee gave roughly $20,000 in contributions to Morgan and Black, according to The N&O. In addition, wholesalers gave $7,200 and beer manufacturer Anheuser-Busch gave $25,000 to the N.C. Republican Main Street Committee, a nonprofit political group formed by Morgan and his allies. A few days after the bill passed, beer and wine wholesalers contributed another $5,000 to the committee.

The N.C. Beer and Wine Wholesalers Association defended the contributions and said they were properly recorded.

Last week, Sabra Faires, who was Morgan's chief of staff during his two years as co-speaker, was subpoenaed to appear before a federal grand jury last week. She has yet to appear before the grand jury. Her attorney did not reveal the nature of the subpoena.

'Pretty Tight'

Morgan was served with a federal subpoena to testify before a grand jury in December. Investigators wanted information and documents from Morgan about his relationship with Black and about a $100,000 contribution in 2004 from a small Virginia tobacco company, S&M Brands, to a nonprofit political committee that backed Morgan and his allies.

In 2003, as co-speaker, Morgan killed legislation that would have hurt small tobacco companies. Morgan insists that he was unaware of the contribution at the time and that it had nothing to do with killing the legislation. The bill had already passed the Senate without dissent, before Morgan had it buried in the House Rules Committee.

His enemies, such as Republican state Rep. John Blust of Guilford County, don't buy Morgan's claim that the two were unrelated.

"His tobacco deal was pretty close to quid quo pro," Blust says.

Blust says that is also a glaring example of the problem of concentrating so much power in one position by a House Committee. Morgan had the bill referred to the Rules Committee, where bills get buried.

"That is what started it for me," Blust says. "That is the kind of reform we are trying to push, to keep something like this from happening, giving a few people the power to stop something or insert a provision in a bill to get something through that otherwise would not pass."

As for the relationship between Morgan and Black, Blust said, "They were pretty tight. I don't know how coordinated they were."

Blust would not speculate on whether he thinks Morgan will be caught in the same net.

What Morgan did "wasn't right ethically," Blust says, though he adds: "I don't think he took personal cash from people."

Big Money

Morgan raised nearly $1 million during his two years as co-speaker -- the lion's share coming from special interest groups and lobbyists -- reaping the rewards of power. That was more money than he raised from 1999 to 2002 and in his final two years when he served as speaker pro tem, combined, according to state campaign finance reports.

His enemies say he lorded his power over lobbyists and special interests to raise money and to extract support from other lawmakers. Loyalty to him, they said, counted above all.

As co-speaker, Morgan controlled millions of dollars in discretionary funds, also known as slush funds. He obtained $1 million from those funds for the Moore County Senior Enrichment Center, something he trumpeted at the grand opening of the center earlier this month, in one of his first public appearances since leaving office.

Blust, one of the representatives whom Morgan banished to basement offices, alleges that Morgan shook lobbyists down for money and was part of the "pay-for-play" crowd. The special interests knew that "you had to pay up," he said.

He says Morgan "cajoled money out of people who wanted legislation passed" and that he could control who got hired as lobbyists.

"He and Black were engaged in pay-to-play," Blust says. "They perfected a way to do this. It is not healthy. We should put a stop to using power to raise money. It is certainly not right ethically. If the speaker did not have that power, there would not be that inducement.

"The leaders pressure lobbyists to raise money for them. Most people think it's the lobbyists up here who are corrupt. I think it's the other way around. We're corrupting them."

Boylan agrees.

"It is not like they were walking around up here with sacks of cash," Boylan says. "It is the other way around."

'On Top of the Table'

Morgan says allegations by enemies that he is corrupt and part of the pay-to-play culture are lies.

"They (Blust and Art Pope, a former state representative from Wake County) feed these things to reporters and throw them out there to see if something will stick," Morgan says. "I believe you are either an ethical person or you are not, and that you are either susceptible to corruption or you are not. Those are things I do not have to worry about.

"I went to great lengths to make sure there was never an appearance of impropriety. I separate fundraising from legislation. Every legislator has to develop his own reputation. People have confidence in my word. There was no money in, policy out."

Morgan called Blust "puppet material who can't raise any resources."

Don Beason, a lobbyist for such companies as BB&T, Bell South, Cingular Wireless and S&M Brands, says Morgan did not engage in pay-to-play. He and Morgan served in the Holshouser administration and knew each other. He contributed more than $7,100 to Morgan, the majority of it in 2004, according to campaign finance reports.

"He never, never made any connection between what went on in state government and contributions," Beason said. "He was always on top of the table, always open. He never solicited money from me in person. That goes on in Raleigh all the time.

"As lobbyists, we had to decide who is truthful, who we could trust. He never lied or misled me. I found him to be straightforward and honest. He is one of the few people I know in politics who has not changed.

"I go to the legislature all the time asking for help. It is hard to get a straight answer. If he said no, or yes, he struck by it. You had his word. I wish he was back up here."

'Richard Was No Different'

But Zebulon Alley, a lobbyist for such companies as Progress Energy and for the video poker and vending interests that contributed $4,000 to Morgan from 2000 to 2004, says that prior to passage of lobbying, campaign finance and ethics reforms last year, "everybody who walked through here was asked for money, and Richard was no different."

Alley was referring to a law passed last August that went into effect Jan. 1, prohibiting lobbyists from contributing to legislative campaigns and from collecting money for legislative campaigns. It also bans gifts from lobbyists.

Morgan says he cannot talk about lobbying and campaign finance reforms too much without being hypocritical.

"I chose to recuse myself from voting on those pieces of legislation," he says.

Another law that took effect last October prohibited lawmakers from converting campaign funds to personal use.

Just before the deadline, Morgan transferred about $583,000 in campaign funds to himself and then loaned it back to his campaign committee.

"I'd much rather have control over the resources I have raised over my political career," he says, "than have the government dictate to me how I can use them."

'Bent Over Backwards'

Faires, who is now tax counsel for the state Senate, says Morgan was "completely ethical."

"I wouldn't have been there [as Morgan's chief of staff] if he was not," she says. "He bent over backwards to avoid even creating the appearance of anything unethical. He was very scrupulous with his campaign finance reporting.

"When he became a legislator, he terminated (insurance) contracts with any groups that did business with the state to avoid the appearance of a conflict of interest. He continued to have interest in a billboard company. He avoided any involvement with legislation having to do with billboards."

Faires says she was aware of several instances when Morgan returned improper campaign contributions, including one that happened in her presence in July 2004. She says Morgan returned $3,500 in contributions from the N.C. Association of Long-Term Care Facilities. Morgan said in a letter to the group, which was also copied to the State Board of Elections, that contributions were "inappropriate and possibly illegal" because they were received when the legislature was in session. Faires says the checks were backdated to before the session started. State law prohibited such contributions when the General Assembly was in session.

According to Morgan's letter, the contributions were received on a day when "one of the few items still unresolved" in the health and human services budget regarded a rate increase. "Delivery under these circumstances can hardly be viewed as a coincidence," the letter said. "... I don't expect this to be repeated."

'Withstand the Heat'

When Morgan saw something that was inappropriate, Faires says, "he didn't have anything to do with it."

In defending himself against allegations that he was in the pocket of lobbyists and special interests, Morgan points out that some of the same lobbyists, such as Beason and Alley, who gave money to his campaigns, represented commercial hog farms during the mid-1990s, when he pushed through a moratorium on industrial hog farms and legislation to prevent one in Moore County from expanding.

Morgan has received numerous accolades from environmental groups for his efforts, but it brought down tremendous pressure from commercial hog farms, including one in Moore County -- N.G. Purvis Farms.

"So much money was being spent on lobbyists to fight this," Morgan says. "It took all of my political smarts to get these bills passed. I ran two bills at the same time, to keep the lobbyists off guard. I used my knowledge of the rules to counteract the lobbyists. They didn't know which bill would be coming when.

"Sometimes, you tick off some powerful people. You have to withstand the heat."

Friday: What's next for Morgan

David Sinclair can be reached at 693-2462 or by e-mail at dsinclair@thepilot.com.