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Prison Pay-to-Play Scandal: McCrory Administration Being Investigated by the FBI

Governor McCrory intervened on behalf of a donor and friend to extend a private prison contract over the objections of his own prison officials. Here are the facts:

  • McCrory has received $12,000 in campaign contributions from Graeme Keith of The Keith Corporation, his son, and their business partner.
  • Graeme Keith told McCrory and prison officials that “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.”
  • On December 30th, 2014, at the last minute, the Keith contract was extended leading McCrory Secretary of Public Safety Frank Perry to comment, “Very bad decision… Sorry, but this will soil our Gov.” 
  • Graeme Keith’s pay-to-play comments have led to an FBI investigation into the contract, having interviewed at least 6 state employees. 
  • Frank Perry told a legislative oversight committee that he has heard the Keiths mention campaign contribution four times.

Public Safety Secretary contradicts Gov. McCrory’s account of the meeting:

  • McCrory has told the News and Observer: “Had I heard it, I would have walked out… Secretary (Frank Perry) has informed me that was said probably while I was in a side conversation. I did not hear it… In fact, Frank says it was a pretty long table.” 
  • But when asked about McCrory being in a side conversation, Perry told the News and Observer “I don’t recall that.”
  • Graeme Keith sat “immediately to (McCrory’s) right, with Graeme Keith Sr. one seat away.”

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BACKGROUND

McCrory intervened on contract for friend and campaign donor over the objections of McCrory’s top prison officials. “Last fall, Gov. Pat McCrory personally intervened on behalf of a friend and major political donor who wanted to renew $3 million in private prison contracts over the objections of McCrory’s top prison officials, records and interviews show. Graeme Keith Sr., a Charlotte developer and retired banker once known as “Billy Graham’s banker,” has aggressively pursued private maintenance contracts in state prisons since 1999. Keith’s contracts at two prisons were set to expire Dec. 31, 2014; a third would have ended four months later The governor convened an October 2014 meeting in Charlotte, where, according to a Department of Public Safety memo, Keith told prison officials and McCrory that ‘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.’” (News and Observer, 10/30/15)

  • McCrory has received $12,000 from Keith, his son, and his business partner between 2008 to 2012. “In 2013, McCrory took over as governor. Keith and his son and business partner had given a total of $12,000 to McCrory from 2008 through 2012, but their ties ran deeper than that.” (News and Observer, 10/30/15)

Secretary of Public Safety Frank Perry wanted the contract ended, claiming that it wasn’t saving money and was a security risk. “Perry told Roberts and Stith he wanted to end the contract and allow state employees to resume maintenance. His staffers had been adamant that private maintenance wasn’t saving money and posed a greater security risk. Perry protested the contract extension and said it wouldn’t save much money. But he said he would carry out the ‘marching order.”’ (News and Observer, 10/30/15)

  • QUOTE: “Very bad decision,” Perry texted. “Sorry, but this will soil our Gov.” (News and Observer, 10/30/15) 

The FBI is now investigating the contract, having interview at least 6 state employees; McCrory claims he has not spoken to FBI. “The contract has caught the attention of the Federal Bureau of Investigation. Its agents have gathered documents and interviewed at least a half-dozen state employees from the Department of Public Safety and the Office of State Budget and Management, according to several people interviewed, including Perry’s former chief operating officer, Lorrie Dollar….McCrory said he has not talked with the FBI but said: ‘We have nothing to hide.’” (News and Observer, 10/30/15)

McCrory administration official Frank Perry told legislators that he had heard Charlotte developer Graeme Keith Sr. say on four occasions that he wanted something in return for his political donations. “A top McCrory administration official told legislators Wednesday that he had heard Charlotte developer Graeme Keith Sr. say on four occasions that he wanted something in return for his political donations. But Secretary of Public Safety Frank Perry said that Gov. Pat McCrory never directed him to extend or expand a private prison maintenance contract held by Keith’s company, and that there was no ‘quid pro quo’ from the administration and therefore no reason to report the statements. ‘It was inappropriate. It was uncomfortable,’ said Perry, a former FBI agent. ‘But there has been no quid pro quo and therefore no crime.’ Perry said he never gave a detailed account of Keith’s political overtures to the governor. Perry’s comments came as key legislators explored whether anything improper occurred when Keith, a friend of and political donor to the governor, received an extension on his firm’s contract for prison maintenance late last year over the objections of Perry and other state correction officials.” (Charlotte Observer, 11/18/15)

McCrory denies hearing Graeme Keith’s comment about campaign contributions. “McCrory, a Republican in his first term, said he did not hear Keith make a statement linking state contracts to political donations.” (News and Observer, 10/30/15)

  • QUOTE: “Had I heard it, I would have walked out,” (McCrory) said in an interview. “Secretary (Perry) has informed me that was said probably while I was in a side conversation. I did not hear it.” (News and Observer, 10/30/15)

After McCrory claimed Perry told him a side conversation kept him from hearing Keith’s comments about political contributions, Perry tells the N&O, “I don’t recall that”. “Since news broke that Gov. Pat McCrory convened a meeting to discuss prison contracts with friends and political contributors Graeme Keith Sr. and Graeme “Greg” Keith Jr., the governor has said he did not hear Keith Sr. say that his history of political contributions merited more government contracts. As Exhibit A, McCrory cited Secretary of Public Safety Frank Perry, a former FBI supervisor. McCrory said Perry told him that McCrory was in a “side conversation” when Keith made those remarks during the October 2014 meeting in Charlotte.

But Perry says his recollection doesn’t match McCrory’s. ‘I don’t recall that,’ Perry said in a recent interview.” (News and Observer, 1/21/16) 

  • Perry issued statement denying what he said in Jan 14th interview, after the News and Observer reported on Perry comments that contradicted McCrory’s story. “But after The News & Observer published the story online Thursday, Perry issued a statement contradicting what he said in the Jan. 14 interview. ‘My recollection is exactly the same as the governor’s,’ Perry said in the statement. ‘It’s very understandable that the governor did not hear the statement because there were many side conversations taking place throughout the meeting, including one about a courthouse shooting. Everything the governor and I did during the meeting and throughout this process was proper and ethical.’” (News and Observer, 1/21/16)
  • According to N&O, “The McCrory administration has firmly attributed the existence of the side conversation to Perry.” “The McCrory administration has firmly attributed the existence of the side conversation to Perry. In its first story about the meeting, The N&O quoted McCrory saying that ‘Secretary (Perry) has informed me that was said probably while I was in a side conversation.’ In, The N&O attributed to McCrory the explanation that he missed Keith’s remarks because of a side conversation. That led press secretary Graham Wilson to send two emails to the newspaper in an effort to emphasize that it was Perry who described the governor as being distracted when Keith Sr. talked about wanting to ‘get something in return.’” (News and Observer, 1/21/16) 
  • McCrory told the N&O that it was ‘a pretty long table’ as further proof that he was didn’t hear Keith remarks about contributions, but N&O reporting shows McCrory sat right beside the Keiths. “McCrory offered an explanation, citing Perry: ‘But my secretary informed me that that was said probably while I was in a side conversation, and I don’t know if it was said to the whole table or not, but I did not hear it. … In fact, Frank says it was a pretty long table, if I recall in that conference room. And again, it was a meeting in which we had a lot of people in the room where I was trying to hear both sides because I needed to determine the next steps with a conflict between a contractor and a department.’ McCrory has said if he had heard the remarks, he ‘would have walked out.’ At the meeting, Perry sat immediately to McCrory’s left, attendees say. Graeme “Greg” Keith Jr. was immediately to his right, with Graeme Keith Sr. one seat away. An unidentified aide sat behind the governor.” (News and Observer, 1/21/16)