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Why Did The Charlotte Observer Memory-Hole A Story On Kay Hagan’s Conflict Of Interest?

Lurking beneath the surface of the Hagan-Tillis race is an ethics issue that has gone virtually unreported by North Carolina’s two largest newspapers.


“For some reason they were nicknamed Memory Holes. When one knew that any document was due for destruction … it was an automatic action to lift the flap of the nearest memory hole and drop it in, whereupon it would be whirled away on a current of warm air to the enormous furnaces which were hidden somewhere in the recesses of the building.” – George Orwell, “1984”

National media coverage of North Carolina’s Senate race between incumbent Democrat Kay Hagan and Republican challenger Thom Tillis has focused on Hagan’s allegedly “perfect” campaign, in which the Senator has hammered her opponent on his record of attempting to reform a horrifically inefficient state education system while serving as Speaker of the state’s House of Representatives.

Admittedly, education is a far more appealing wedge issue than claiming one’s opponent plans to ban condoms, but lurking beneath the surface of the Hagan-Tillis race is a troubling ethics issue, one that has gone virtually unreported by North Carolina’s two largest newspapers, the Charlotte Observer and the Raleigh News and Observer: that Kay Hagan’s family, including her attorney husband “Chip” Hagan, her son, and her son-in-law, made out like bandits under the 2009 federal “stimulus” bill championed by Senator Hagan, receiving hundreds of thousands of dollars to renovate buildings owned by their companies through solar power companies which, coincidentally, were also owned by the Hagan family. Instead, coverage of this potential conflict of interest, in which Hagan’s family may have benefitted from her vote and her political connections, has been left to the tiny Carolina Journal, a blog run by North Carolina’s economic libertarian John Locke Foundation, which has run rings around the state’s larger papers in coverage of this race.

Last night it appeared that the major media embargo on the Hagan family’s dealings had finally broken, as the Charlotte Observer, the state’s largest and most influential newspaper, at last put its imprint on a story run by its partner, television station WBTV, concerning a recommendation by the North Carolina Department of Environment and Natural Resources that the Hagan stimulus bundles be subjected to legal review and possible referral the state Attorney General.

By this morning, the story had been memory-holed.

Fortunately, Google caches websites, even those that may have been memory-holed, for some period of time, and this story was no exception. Although the Charlotte Observer may feel that Hagan family peccadilloes distract citizens from the important issues of personality and likeability, it’s possible that North Carolina voters may want to know who’s benefitting from their taxpayer largesse. Accordingly, I reproduce the story (which is copyrighted by the Charlotte Observer and WBTV, even if the Observer thinks it’s not good fit to print) in full, under the “fair use” exception to copyright protection, as this is a matter of political significance to good government for the citizens of the Tarheel state:

State officials say a stimulus grant given to a company run by Kay Hagan’s husband needs “further legal review.”

WBTV obtained a memo written by the Department of Energy and Natural Resources which includes a letter to the state’s auditor from last month. The memo states that NCDENR is looking into potential conflict of interest claims involving Senator Kay Hagan.

NCDENR says they have reviewed grant records and found conflict of issue claims warranted further legal review. Kay Hagan’s husband manages one of the companies in question, who received an energy efficiency grant money in 2010.

According to the NC Department of Energy and Natural Resources, the grant agreement included provisions prohibiting family members from receiving incentive payments, “these rules require, among other things, that no one with direct lineal relations may receive incentive payment. For example, the mother, father, brother, sister, son or daughter or a contractor working in this Program cannot receive Awards, contracts and subcontracts.”

The federal Department of Energy Assistance grant agreement had similar regulations that included members of the immediate family, partners, or people who has a financial interest in the firm selected for the grant.

The $250,644 grant in question went to JDC Manufacturing LLC. JDC Manufacturing is managed by John Hagan, David Hagan, and Charles “Chip” Hagan.

Chip Hagan is Senator Kay Hagan’s husband.

Grant records show that other companies controlled by the Hagan family received money through this grant.

The NCDENR says the grant was for an energy-efficiency project at the company’s building in Reidsville, NC. Plastics Revolution was the tenant of that building and the president of that company is John Hagan.

JDC Manufacturing hired SolarDyne, LLC to do the solar portion of the project, but SolarDyne was allegedly not the lowest bidder and is now registered to the NC Secretary of State as Green Street Power, LLC, managed by Tilden Hagan, Chip Hagan, and William Stewart.

Another subcontractor for solar instillation is owned by William Stewart and lists Tilden Hagan as an employee.

NCDENR sen [sic] the grant to the State Auditor’s Office and the State Budget and Management Office to be reviewed on October 21 because the grant involved state funds.

If the State Budget and Management Office finds a conflict of interest connection between the funds and Senator Hagan, the issue will be sent on to the Attorney General and the SBI

Of course it’s possible that the story has merely been taken down for improvement and other editing. After all, it did have one typographical error. If that’s the case, I apologize to the Charlotte Observer, which will no doubt return the story to full coverage.

On November 5.