Fri, 03/11/2016 – 4:00pm | by Wyatt Emmerich | www.northsidesun.com
There are much more lucrative ways for politicians to benefit from political office than just using campaign funds for personal expenses. In fact, that is just chicken feed.
Ever wonder how politicians somehow get rich while in office, even though their pay is fairly meager? Business deals.
The Northside Sun reported in detail on how this works 25 years ago, when we did an expose on Bennie Thompson, who was a Hinds County supervisor at the time.
A big real estate developer created a start-up corporation to buy $5 million in apartment buildings. Thompson’s influence was important because the county had control over various zoning matters related to the apartments.
The principals of the new corporation, of which Thompson was one, all put up a few thousand dollars in startup capital. The new corporation then borrowed the millions necessary to buy the apartments.
So how was a startup company able to borrow all the money necessary to buy the apartments? Simple. The developer signed a personal guaranty ensuring the loan would be repaid in event of a default.
In accounting terms, a personal guaranty is a “contingent liability.” That means it’s not worth anything unless a default occurs. As long as the new corporation pays off its loans with rent money, the personal guaranty is valueless, so it is not reported as a campaign contribution or any other form of benefit to the candidate.
An aggressive attorney general or district attorney could have argued that such an arrangement violated our state ethics laws, but this rarely happens and the penalties are a slap on the wrist.
As it turned out, the note on the apartment buildings was paid down and Mr. Thompson went on to become the wealthiest congressman in the Mississippi delegation.
I don’t mean to pick on Rep. Thompson. Financially benefiting from public office is the rule, not the exception. This type of scenario is repeated countless times from politicians of all ilk.
It would make more sense for us to just pay all our political leaders a flat million dollars a year. Then, at least, they would have a better chance of working for the taxpayers rather than their manipulators. –