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Citizen Rainey

A conservative’s crusade for integrity in Governor’s Mansion, state politics

Posted: February 14, 2012 5:34 p.m.
Updated: February 15, 2012 5:00 a.m.
Martha Bruce/C-I

A longtime Republican Party ally, John Rainey entered the political arena in 1987 when he was appointed by Gov. Carroll Campbell to the board of Santee Cooper. Today, from his home in Camden, however, he’s bucking the party on at least one count by questioning the integrity of Gov. Nikki Haley.

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John Rainey is wearing a coat and tie as he strides slowly across the grass of his 17-acre estate -- called Fox Watch Farm -- which is just outside the small town of Camden. It’s after midday, and the sun is turning the nearby dogwood trees gold.

Two big German Shepherds follow him through a small English garden that surrounds a gazebo near a horse barn. Rainey, who turned 70 last month, is a tall man. For years, he has loomed large in South Carolina Republican spheres of influence. He is responsible for recruiting Mark Sanford to run for governor in 2002.

Lately, the longtime Republican fundraiser and powerbroker has caught attention in certain political circles for something else: his one-man mission to discredit the state’s governor, Sanford’s handpicked successor, Nikki Haley.

When Rainey speaks, he does so deliberately. An attorney by trade, he makes sure his words are characterized correctly. He is not fast and loose with facts. If he doesn’t know something, he’ll tell you. If he doesn’t want to discuss something, he’ll make it known quickly.

When it comes to the immediate subject, the reason a reporter and a photographer have come out to Fox Watch Farm to see him, he is clear about the motive of his most recent endeavor: proving that the people of South Carolina have elected a governor who lacks integrity.

“As I’ve said before, I believe Governor Haley is the most corrupt person to occupy the Governor’s Mansion since Reconstruction,” he says. “Put it another way: I think she is corrupt to the core of her being.”

Rainey’s words have weight. He is not some yahoo. Indeed, right now he is on the finance team of ex-ambassador to China and former Utah Gov. Jon Huntsman, who is running for the Republican nomination for president. For eight years, Rainey chaired the state’s Board of Economic Advisors under Sanford. Before that, in the ’90s, he helmed the state’s public utility, Santee Cooper, and navigated it out of one of the largest corporate scandals in the state’s history.

He and Sanford still keep in touch. “He’s an interesting guy,” the former governor said about Rainey recently.

And his support for the GOP is legendary.

“For decades John Rainey carried the financial water for the Republican Party and many of its candidates,” says former South Carolina GOP Chairwoman Karen Floyd.

“He helped to make many of our politicians.”

Given his longstanding influence in the party on the one hand, and his outspoken criticism of the party’s governor on the other, it’s tricky for some people to speak openly about Rainey. Even dangerous, some might say.

Rainey’s charges against Haley are not new: He focuses largely on her dubious compensation for work at Lexington Medical Center and engineering firm Wilbur Smith, arrangements that have both left clouds of lingering questions in the wake of Haley’s rapidly rising political career. Those questions, Rainey believes, still need a thorough investigation, which he has initiated as much as he can as a private citizen. He also believes Haley’s election points to a dysfunctional trend in American politics whereby candidates aren’t vetted seriously by their own parties.

It’s why Rainey is a Huntsman guy, he says. He knows that someone who has undergone as many background checks as the former ambassador makes for a candidate with no surprises.

At the current political moment, you might think Rainey’s work for Huntsman would put a muzzle on the man. But he is long past having consideration for such things.

He is trying to expose Haley, a fellow Republican, for the betterment of the Grand Old Party, he declares, not to weaken it. Besides, he says, before he’s a Republican he is a South Carolinian and an American.

“This is my civic duty,” he said on a warm fall day in October at the farm. “To call out people who I don’t believe represent South Carolina in a manner in which we want to be known and remembered.”

The Integrity Question

From here at Fox Watch Farm, Rainey has been launching a series of private investigations into the sitting Republican governor for more than a year. Last September, before she was elected, Rainey authored a much-publicized letter to President Barack Obama’s U.S. attorney in South Carolina, Bill Nettles, with an opinion that Haley might have violated the federal Hobbs Act. The law prohibits public officials from receiving money “under the color of official right.” The letter was in response to news that Haley had taken $42,500 in consulting income from the engineering firm Wilbur Smith and a $110,000 salary as a fundraiser from Lexington Medical Center, despite her inexperience in either sector. Both entities also had business before the Legislature at the time.

When it comes to Wilbur Smith, Haley’s work for the firm has produced more questions than answers. She didn’t include the income on her financial disclosure reports, and she has yet to say what she did for the money.

The official who hired her, company vice president Robert Ferrell, hasn’t said either.

“She is a well-connected person who knows different things and different people, and that’s why we hired her and I’m going to leave it at that,” he said last year.

Further confusing the matter, Wilbur Smith corporate communications director Danielle Gadow in June said about Haley’s work for the firm, “It was really nothing.”

Asked specifically if Haley had been paid $40,000 to do nothing, Gadow said, “Pretty much.”

Rainey has since further investigated Haley’s tenure at the hospital. His research was responsible for the news that the governor might have lied on her job application by claiming that in 2007 she’d made $125,000 at her family’s Lexington clothing business Exotica. Haley told the IRS she only made $22,000 at Exotica that year. When questioned about the discrepancy, Haley told reporters that she didn’t fill out that particular part of the application and doesn’t know who did. The hospital says no one on its end filled it out. After months of Freedom of Information Act requests, Rainey received one from the hospital stating that the entire application was sent in one seamless transmission — meaning it came from a single computer all at once. Whether that closes the door on that specific case is still up in the air.

“Proof is a legal word, and I don’t think you achieve proof except when you have a judicial determination,” Rainey says about it. “The question is: Do the people of South Carolina believe that she lied? And if they do believe, do they care? I don’t know the answer to those questions. I firmly believe she filled out that entire application.”

At the heart of Rainey’s problem with the governor is that he believes she lacks integrity.

“I’m not addressing the issue of competency or incompetency as governor,” he says.

“I am addressing the issue of integrity of the governor — or lack thereof. Nobody would doubt the competence of former president Richard Nixon. He opened the door to China. He started the EPA. He started the War on Cancer. He was very effective in so many ways, but I don’t think anybody would accuse him of having integrity based on all we know, all the tapes, all that’s come out, and his resignation. So we’re talking about two different issues and I don’t want those issues conflated.”

For his own purposes, Rainey is focused on one thing: “The overarching question is, is Governor Haley a person of integrity?”

In his attempt to find out, Rainey has also probed the state Department of Agriculture to find out what Haley did for Wilbur Smith. He’s sent FOI requests to the state Department of Transportation and the Department of Health and Environmental Control among other entities. Documents related to his various investigations into the governor have ended up in the office of the U.S. attorney and in the media.

Since the governor has been elected, many news stories critical of her or that have highlighted inconsistencies between what she has said and what is fact bore the background fingerprints of John Rainey.

When you ask some close to him what they think of what he’s been doing, one answer is generally constant: He has the means and the time to do it, and he won’t stop until he thinks he’s done.

All of it, however, has come at a personal cost.

“My phone doesn’t ring as often as it used to,” Rainey says. “I don’t get calls from some of the people I used to get calls from. But I understand that.”

Rainey says his campaign has made him a pariah in some circles, but he remains undeterred.

“Look, I am first and foremost a citizen of South Carolina,” he says. “I feel I have, in my position, a civic duty. I have been very privileged in my life to have had the opportunities I have had, both in and outside of government. I have access to the press ... I have credibility, at least in some circles. There are some people who listen to me. They know I’m not a gadfly. They know I do my homework. And I don’t want anything. I don’t get anything from the government.”

Life of Privilege

John Rainey was born in 1941 and grew up well off in the Upstate town of Anderson.

His dad was a doctor of internal medicine and his mother was a civic leader and a philanthropist. He rode horses on a farm that has been in his mother’s family since the late 1700s, back when much of western South Carolina was Indian country.

Like many privileged boys of his generation, Rainey went to an elite prep school.

The one he attended was McCallie, in Chattanooga, Tenn., where his father had previously taught Latin and coached athletics before moving on to Johns Hopkins in Maryland. Rainey graduated from McCallie and went to the University of Virginia in 1959, finishing in three years. At UVA, he majored history and minored in religion.

In 1962, at age 20, he was commissioned at Fort Bragg in North Carolina. After three years he was deferred to go to law school at the University of South Carolina.

In 1965, he graduated and went straight to the service, spending a year in Vietnam and getting out in ’67. Back in the States, Rainey went to Georgetown University in Washington, D.C., where he earned a master’s degree in tax law. After that, he was the president of four Pepsi-Cola franchises in North Carolina and South Carolina and then started practicing law in 1971.

With his privileged upbringing, prep-school adolescence and classical education, Rainey became intrigued by the political class in South Carolina.

He first got into politics when former Republican Gov. Carroll Campbell ran for the post in 1986.

Campbell had attended McCallie, the same prep school as Rainey, and the two connected in Columbia. After Campbell took the governorship he appointed the sharp tax attorney to the board of the state’s public utility, Santee Cooper, in the summer of 1987. Within two years Rainey became chairman. He immediately went to task, heading the giant institution through the cleanup from Hurricane Hugo and through the early-’90s Operation Lost Trust political scandal that rocked the State House. After a new Republican governor, David Beasley, took office and re-appointed Rainey, he chaired Santee Cooper through a massive scandal that ended up with the largest corporate settlement in state history against Big Coal.

During those years on the Santee Cooper board, Rainey made a name for himself as a scrupulous, tenacious, no-nonsense reformer who cleaned up messes. He was more practical than ideological, even though he was a Republican who voted for Barry Goldwater in the first election he could.

It was the year 2000 when things blew up. A Democrat named Jim Hodges had unseated Gov. Beasley with the backing of video poker barons, and once in office Hodges set to work on undoing the previous governor’s gubernatorial appointments.

A powerful Democratic senator had a close friend who had designs on the Republican-appointed Rainey’s position at Santee Cooper.

Privately, some Democrats told Hodges to keep Rainey on the board. Fallout from removing him, they predicted, wouldn’t be pretty.

But Hodges asked Rainey to resign, and he refused. At the time, it hadn’t been tested in court whether a sitting governor had the authority to replace someone in Rainey’s position. Board members had fixed terms, which were staggered, in order to prevent unilateral decimation of institutional knowledge. Rainey said Hodges would have to fire him and take it to court. The result was the now-famous case known as Hodges v. Rainey. Rainey lost before the state Supreme Court in a 3-2 decision. These days, he largely waves it off. A “dustup,” he calls it. But Hodges’ decision to oust John Rainey led to much, much more than that.

First Blood

Sitting in a gazebo that’s situated between the main house of his estate and a horse barn that’s home to such equine royalty as the star of the film “Homestretch” and a descendent of Sea Biscuit, Rainey sips Diet Pepsi and munches on a handful of cashews. Birds chirp in the background. A bee buzzes around his hair. It’s here that he recalls his involvement in the undoing of a previous governor.

Before he’d been ousted from his prized position, Rainey had been on Hodges’ side.

He’d even given $1,000 to his inaugural committee. Rainey assumed he’d be part of the new Democratic governor’s economic team. But not after the public humiliation he’d gone through with the Supreme Court case and his removal from Santee Cooper.

“Had that not happened, I would have stayed loyal to Governor Hodges because I was on his team,” Rainey says.

But if that point in time were like a scene out of the vampire series True Blood, it would be the moment when the fangs come out.

“Life is about inches and seconds,” he says, recalling the days he decided to do what he did next.

Rainey turned on Hodges, taking up the anti-lottery cause with a group called No Lottery 2000. The group raised a million dollars and Rainey traveled around the state as part of a campaign to stop Hodges’ proposed education lottery.

“I was on that yellow bus; I spoke in every church, black and white, every courthouse square you could name in this state, fighting the lottery,” he says about it now. “It was a very ecumenical movement. There were black preachers, white preachers, there was (textile magnate) Roger Milliken, liberal Democrats, the whole deal.”

Their effort failed, however; they couldn’t compete with the money on Hodges’ side. “We lost, and the lottery is a fact of life,” Rainey says.

But a year later, Rainey again had the governor in his sights. In 2001, with Hodges up for re-election, it appeared that the Republican candidate would be then-Lt. Gov. Bob Peeler.

“I didn’t think that that was the best we could do,” Rainey says. “I just hoped we might could do better. I try to be about doing better. I saw this thing about this congressman from the 1st District; he was leaving Congress, he’d term-limited himself. And he seemed like a pretty interesting guy.”

That man was Mark Sanford, then an obscure member of the U.S. House of Representatives with little or no name recognition throughout much of the state.

Rainey had never met him before, but he set up a meeting, hoping to kick the congressman’s tires about possibly running for governor.

It was on a Saturday that he met Mark Sanford and his wife Jenny for lunch in what would go down in political legend as the meeting that launched Sanford’s post-Congressional career.

“After I met with him I knew I had something,” Rainey remembers. “I knew there was something that was different.”

Rainey pressed him. Told Sanford he could do it: He could be governor.

Sanford said he’d think about it. About 10 days later, Sanford called Rainey saying he would run. Rainey put on a fundraiser for him with then-U.S. Rep. Jim DeMint in Greenville and started raising cash. With a campaign managed by his wife from the basement of their house on the coast, Sanford bested the field of Republican primary opponents and went on to defeat Hodges in 2002.

“But for I not staying on at Santee Cooper, Mark Sanford would have never run for governor,” Rainey says about it now. “He’ll tell you that. He ran for governor because of that visit. That’s how history is. If Governor Hodges would have listened to some of his key Democratic friends that were friends of mine, and just left me in office, I was going to work hard for him to make him successful. If I’m on your team I’m not going to work against you. That’s just the way life is.”

Sanford, now a newly minted FOX News contributor, confirms the story.

“He was certainly the one that planted the seed,” he says of Rainey. “He got the ball rolling, there’s no doubt about that.”

The Story of Caesar’s Wife

These days, John Rainey has a different governor in his sights.

This decade’s story of how and why is much different.

Sitting in his gazebo, an open manila folder with notes from a meeting he once had with Haley in front of him, and two donkeys in a pen baying in the background, Rainey sketches out the story of how he first became interested in the woman who would become the state’s first female and ethnic minority governor.

During the 2010 campaign, despite his background in politics, Rainey had never heard of the third-term Lexington representative named Nikki Haley who was running for governor.

“Apparently she gave real texture to the word ‘backbencher,’” he says.

So he hadn’t put too much thought into Haley’s candidacy, until a $400,000 TV ad blanketed the airwaves that had been paid for by a pro-Sanford group. (It was later pulled off the air by a judge for appearing to have improperly coordinated with her campaign.) When Sarah Palin endorsed Haley on the State House steps, Rainey knew the race was over.

Normally accustomed to knowing the nominee of the party he’d helped raise millions for throughout the years, Rainey cast a net out to see if he could find some people who might be able to clue him in on who she was. It came back empty.

It was around that time, near the end of June 2010, that then-state GOP chair Karen Floyd called to say Haley would like to meet him. Rainey invited them out to the farm and they sat in his cottage, which sits near the wood line across from the main house. He had a list of questions for the party’s nominee and he started by asking if she’d been seriously vetted.

Haley told him she’d had a background check that included her and members of her family and had cost something like $30,000. He asked if there was anything in her background that might cause a problem. Haley said no, Rainey says.

“You understand that you’ve got to have an absolutely impeccable record if you’re going to run for governor,” Rainey recalls telling her. “I asked Ms. Haley, I said, ‘Do you know the story of Caesar’s wife?’ She said no. I said, ‘Let me tell it to you.’ Not many people know the story of being purer than Caesar’s wife.”

The story goes like this:

In ancient Rome, around 60 B.C., Julius Caesar was married to a woman named Pompeia who had been accused of corrupting a sacred ceremony. Caesar found out and wanted a divorce. Pompeia, however, denied that she’d done it, and at trial it turned out that a political opponent of Caesar’s had planted the allegation -- Pompeia hadn’t corrupted any ceremony. Caesar, however, divorced her anyway, apparently wanting a wife free from any speculation.

“So she was pure, right?” Rainey says. “But, you have to be purer than Caesar’s wife if you’re going to make it, because she wasn’t pure enough. And that’s the origin of the expression that we apprise so frequently to public officials -- that you must be purer than Caesar’s wife.”

It was after telling that story in the cottage that Rainey questioned Haley about the $42,500 she’d received from Wilbur Smith. She apparently balked.

“My impression of Mrs. Haley was that she was nervous; her eyes telegraphed that to me and her body language. She was ready to leave,” Rainey says. “I was not impressed with her in general, and I felt like that she was nervous and she was evasive.”

It was about then that Haley’s driver came in to say it was time to go.

Not long after, Rainey received a letter from Haley thanking him for the meeting. “I will work hard to earn your support and make you proud,” it read at the end.

So far she’s done neither.

“I had chaired Santee Cooper for 10 years. I was chairman during Operation Lost Trust at the state level and we dealt with the coal scandal at Santee Cooper in that same environment,” he says. “So I had seen the face of corruption. I had looked corruption in the eye. My concern was that maybe I was seeing this movie again when I saw Wilbur Smith. I didn’t know. I still don’t know. It may be perfectly legitimate; everything may be on the total up and up. The only way we’re going to find out is if the governor comes forward and explains what she did or didn’t do for Wilbur Smith [and] how the relationship was established.”

The Only Free Man in South Carolina

About his dealings with Haley, Rainey has been described by his friends as the only free man in South Carolina.

“Obviously that’s hyperbole … but I am a person of some prominence in political and social and economic circles who can speak my mind without fear of any kind of adverse consequences to me or any business that I am associated with,” he says.

“That gives me a special opportunity and an unusual burden, because having that opportunity I am burdened with the responsibility of using it for the good of the state. And I’ve tried to do that.”

“The Republican Party is not first in my life,” he continues. “It’s just not. One thing wrong with partisan politics today is a candidate gets the nomination and people fall in lockstep behind the candidate regardless of the qualifications of the candidate.”

It all comes down to what Rainey describes as a fault line in American politics.

“Here’s what I hear after the primary: ‘Well, she’s the party’s nominee,’” he says of people asking him to back off. “Well, that doesn’t do anything for me. The question is, is that the person we want to be governor? And it comes back to all these unanswered questions. Why wouldn’t the party demand they be answered? You want to fight under our banner? Show you’re worthy.”

“It’s on both sides,” he adds. “Same thing with Alvin Greene. The Democrats got Alvin Greene; we got Governor Haley for the same reason. There’s a fault line through the two-party system and it’s just as deep and just as wide in both parties.

It just is. We don’t vet our candidates.”

If the party won’t do it, the public won’t do it and the media won’t do it, then perhaps increasingly it’ll be up to people like Rainey.

And to him it comes down to one simple thing.

“People as privileged as John Rainey, with the bully pulpits I have had and still have, need to say what needs to be said and do what needs to be done and put country and state above party regardless of the consequences,” he says. “Somebody has to carry that message. Not everybody is as privileged as I am to be able to carry that message because their livelihood’s involved, their relationships are involved. That’s my burden and my privilege. That’s all I can tell you. Civics.” 


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