A meeting and a strange memo were brought up again and again by state lawmakers Wednesday. The members of a joint legislative commission were looking into how and why a Charlotte businessman and McCrory campaign donor was awarded $3 million in state prison contracts.
The businessman is Graeme Keith, chairman of The Keith Corporation or TKC. It’s a real estate firm that has a side business, providing maintenance at prisons, including three state run facilities in North Carolina. Those contacts were due to expire at the end of 2014. So on October 28 of last year, Governor Pat McCrory arranged a meeting between him, Keith and four state prison officials to talk about renewal.
Frank Perry, the Secretary of the Department of Public Safety was at the meeting which he said quickly became "heated and useless."
Useless, according to Perry, because Keith didn’t just want to extend those three contracts, he wanted the contracts for all 56 state prisons for the next decade. The Department of Public Safety didn’t want to work with TKC anymore, arguing that privatization didn’t save money and was security risk.
It became heated when Perry told Keith if privatizing prison maintenance was such a good idea "after 25 years, he would have had more clients." McCrory quickly ended the meeting after that.
Graeme Keith and his family have been big campaign donors in North Carolina for years. They have given to both Democrats and Republicans. Records show Keith and his son contributed $12,000 to McCrory campaigns from 2008 to 2012. And, according to Perry, Keith made the following statement, "that he had made his contributions and it was time for him to get something in return."
Governor McCrory acknowledges he was in the room at the time, but says he was talking to someone else and never heard Keith utter that phrase. Perry told lawmakers that wasn’t the only time Graeme Keith said he expected some quid pro quo, in fact he'd heard it four times, "three times in person and once on the phone."
At the time the governor asked State Budget Director Lee Roberts to look into the contracts and decide if they should be renewed. On December 31, Roberts decided they should, citing lower costs to the state.
That’s something he stressed to the committee Monday, saying under seven different formulas the privatization contract saved the state money. Which is why it was a surprise when Roberts told lawmakers "these contracts expire at the end of this year and they will not be renewed."
He gave no reason for this decision.
Roberts and Perry said they never felt any pressure from McCrory to renew the contracts. No one from TKC was at yesterday’s committee meeting but Graeme Keith released a statement calling Perry’s comments “a gross misrepresentation and an attempt to discredit me.” Keith’s release also questioned “the statement being attributed to me in an unsigned, undated, highly questionable DPS memo.”
That memo corroborates what Perry says he heard.
It does lack a signature, but its author is known. It was written by Joe Prater, a deputy commissioner of prisons who was also at the meeting.
The News and Observer, which broke this story, reports the FBI is looking into the incident.
