Sununu Inaugural Team Releases Conflict of Interest Policy, Months After Declining to Do So

Apr 25, 2019

When faced with questions earlier this year about the thousands of dollars paid out from his inaugural committee to his sister and top political advisor, Gov. Chris Sununu’s team said those payments followed state and federal regulations, and “the organization’s bylaws and conflict of interest policy.”

But when NHPR asked to see those bylaws and conflict of interest policy, Sununu’s team declined.

“As a private non-profit, the organization’s internal governing documents are confidential,” Ben Vihstadt, a spokesman for the governor, wrote in an email at the time.

That statement, however, contradicted what the Sununu Inaugural Celebration told the IRS about its disclosure policies just two months earlier. Only after NHPR pointed out this discrepancy two weeks ago did the governor’s team agree to share copies of the inaugural committee’s governing documents after all.

(Read the Sununu Inaugural Celebration’s bylaws here and its conflict of interest policy here.)

These documents outline a policy for regulating potential conflicts, including ensuring that committee members and their family members can't unfairly profit from its activities. According to that policy, the committee's members must vote on any transaction that presents a potential conflict and then document the rationale for approving such transactions in its meeting minutes.

While the Sununu team says they followed these processes before issuing payments to its own board members, they declined to provide additional documentation — such as meeting minutes — to back up those claims, citing confidentiality.

“The organization does not release minutes of internal Board meetings due to its status as a private non-profit,” Vihstadt told NHPR this week.

New Hampshire lacks comprehensive disclosure and compliance rules around gubernatorial inaugural committees, and Sununu is the first sitting governor required to detail how his committee raises and spends its money in reports to the Secretary of State’s office. State lawmakers are taking steps toward adding more disclosure requirements, in part due to the questions raised in recent months about the Sununu inaugural fund’s decision to pay two of its trustees roughly $99,000 in consulting fees and other expenses. Those payments were disclosed in political fundraising reports filed with the state.

While state regulations may be thin, the committee's IRS filings shed some additional light on its operations. Sununu’s inaugural committee is registered with the IRS as a 501(c)4 organization, a type of nonprofit that’s supposed to exist “exclusively to promote social welfare.” In order to maintain its tax-exempt status, the inaugural committee has to file annual reports to the IRS.

In its most recent report to the IRS — dated Nov. 15, 2018, and covering the 2017 calendar year — the Sununu inaugural organization was asked to indicate “whether (and if so, how) the organization made its governing documents, conflict of interest policy, and financial statements available to the public during the tax year.” (There’s often a lag between the time period covered by an organization’s IRS filings and when those documents are made public by the IRS.)

In the filing from November, the Sununu inaugural organization said those documents are provided “upon request.”

After noticing this statement, NHPR followed up with the governor’s team to again request copies of its conflict of interest policy and bylaws, citing its statement to the IRS, on April 12. After waiting nearly a week to respond, the governor’s team agreed to mail copies of the documents to NHPR.

Sununu's team agreed to mail copies of its bylaws and conflict of interest policy to NHPR. Here, a cover letter signed by Sununu advisor and inaugural committee treasurer Paul Collins.

“Considering these documents are not readily available online, the Sununu Inaugural Celebration Inc., Board of Directors would be more than happy to mail you the documents you have requested,” Vihstadt wrote in an email six days after NHPR first asked to see the records. In addition to serving as spokesman for the governor’s office, Vihstadt is also a board member of Sununu’s inaugural committee.

Vihstadt provided no response when asked to explain the discrepancy between the organization’s previously stated position that its governing documents were “confidential” and the statement that appeared on its most recent IRS filing.

The Sununu Inaugural Celebration’s conflict of interest policy states that a conflict “will be deemed to exist whenever an individual is in the position to approve or influence Corporation policies or actions which involve or could ultimately harm or benefit financially: (a) the individual; (b) any family member (spouse, domestic partner, grandparents, parents, children, grandchildren, great grandchildren, brothers or sisters (whether whole or half blood), and spouses of these individuals); or (c) any organization in which he or a family member is a director, trustee, officer, member, partner or more than 10% of the total (combined) voting power.”

Under the terms of that same policy, the organization should only approve a “contract or transaction” that presents a conflict of interest if “the terms are fair and reasonable to the Corporation and the arrangements are consistent with the best interests of the Corporation.”

“Fairness includes, but is not limited to, the concepts that the Corporation should pay no more than fair market value for any goods or services which the Corporation receives and that the Corporation should receive fair market value consideration for any goods or services that it furnishes others,” the policy states. “The Board shall set forth the basis for its decision with respect to approval of contracts or transactions involving conflicts of interest in the minutes of the meeting at which the decision is made, including the basis for determining that the consideration to be paid is fair to the Corporation.”

The bylaws also address the potential for compensation and reimbursement to directors of the organization.

“Directors shall receive no compensation for their services but may be reimbursed for the expenses reasonably incurred by them in the performance of their duties,” the bylaws state. “With approval of the full Board of Directors and subject to the Corporation's Conflict of Interest Policy, a Director may receive reasonable compensation for personal services rendered to the Corporation that are either outside or beyond the scope of the duties associated with the role of Director.”

As first reported by the Union Leader in December, the governor’s inaugural fund paid a total of roughly $165,000 in 2017 and 2018 to Sununu himself, his family members and other close political allies.

Two of the people who received the most money from the inaugural committee — Cathy Sununu, the governor’s sister, and Paul Collins, a longtime political advisor — are also members of the inaugural committee’s board of directors. That role gives them the authority to make decisions about how the organization spends its money.

According to the inaugural committee’s fundraising reports, Blue Orchid Interiors — a company operated by Cathy Sununu — received $37,900 for “inaugural fundraising/consulting” in March 2017. The company received an additional $4,870 for “expenses/supplies and decor” in January and February 2017, and $7,418 for “Governor’s Office expenses” in August 2017.

Collins was also paid $37,900 for “inaugural fundraising/consulting” in March 2017, and has earned an additional $11,000 in “expenses” or “travel expenses” from the committee over the last three years. Collins also earns an annual state salary of $106,000 as senior advisor to the governor.

In January, Collins said he and other members of the Sununu Inaugural Celebration’s board of directors “were chosen based on their past experience with fundraising, event planning, and community outreach.”

“All Directors have a shared responsibility to oversee the planning of inaugural events and the responsible spending of surplus funds,” Collins said at the time. “Certain Directors provide additional services for which they receive compensation Such arrangements are made in full compliance with State law, IRS regulations, and the organization’s bylaws and conflict of interest policy.”