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Haley takes heat on tax files

State ethics officials said Friday that S.C. law does not require Republican gubernatorial candidate Nikki Haley to report $2,000 in consulting work she did for engineering firm Wilbur Smith Associates.

But lawmakers and supporters of rival U.S. Rep. Gresham Barrett called on Haley to disclose more of her tax records and any other consulting income. The two have a runoff Tuesday.

The State discovered the payment, listed as "services" within her 2009 federal tax returns, while reviewing Haley's tax records Thursday. Haley said she was paid for Lexington County-related consulting work she completed in 2008, but part of her payment did not clear until 2009. She served on the influential House Labor, Commerce and Industry committee at the time.

Haley has made government transparency a central campaign issue, and has introduced a bill to require lawmakers to disclose their income. Haley had claimed she had voluntarily reported all her income, but the consulting did not appear on her 2008 or 2009 state economic interest ethics disclosures. Haley has targeted lawmakers who do consulting, in particular, as a reason the legislature has been slow to adopt reforms.

Haley said she has since realized the need for stricter income disclosure, filing her bill in December 2009.

"I have done nothing wrong," Haley said. "This kind of stuff is a learning process. I saw there was something wrong."

Herbert Hayden, executive director of the S.C. State Ethics Commission, said that consulting fees are not considered income under state ethics rules and do not need to be reported. Only salary can be considered income, Hayden said, because it is paid directly to the employee by the employer.

"It's not income; she's not an employee of Wilbur Smith," Hayden said, noting consulting fees are passed through to Wilbur Smith's clients for payment.

Hayden also said that Haley's bill, H. 4271, requiring "all sources of earned income also must be reported whether or not derived from public or private sources" would likely not include consulting fees for the same reason.

In addition, Hayden said the firm that paid Haley has no contracts with the S.C. House of Representatives, further removing any conflict of interest. But Hayden said there is no reason lawmakers could not go above and beyond state ethics requirements, particularly when they have advocated that others do so.

House LCI chairman Bill Sandifer, R-Oconee, said he could not remember any Wilbur Smith-related bills that came before the committee. Sandifer is also a former House Ethics Committee member who said lawmakers need to disclose income from jobs they received because of their elected office.

Wilbur Smith spokeswoman Danielle Gadow said the firm hired Haley to locate business leads in Lexington County, particularly companies looking to locate there. Gadow said none of Haley's leads resulted in a state work, though the firm does have state contracts. Gadow would not say how much the firm paid Haley.

Haley said she did not use her office to refer state business to Wilbur Smith. She could not say how much she had been paid.

Rep. Mike Pitts, a Laurens County Republican, said Haley should also amend her state economic interest reports to include any consulting fees.

"The reform movement in South Carolina needs honest brokers," Pitts said in a statement released by Barrett's campaign. "If you're going to be a flag bearer for campaign finance disclosure and transparency in the state legislature, then you need to be held accountable and practice what you preach."

Barrett released copies of his 2008 federal tax returns to The State on Thursday. Haley's campaign said it would also release her 2008 return but could not Friday because of her schedule. Haley said earlier this week that a State newspaper request to release 10 years of federal tax returns was "excessive."

John Crangle, attorney with Common Cause, said he disagreed with the Ethics Commission interpretation of what should be disclosed. Lawmakers did not intend to exclude consulting work when they wrote stricter ethics laws in the early 1990s, he said.

"Income is income," Crangle said. "You can create a conflict of interest whether it's an employee or a contractor."