"Any time you're spending taxpayers' money, there should be some checks and balances," said state Sen. Ray Cleary, R-Murrells Inlet.
Although public money makes up 70 percent of the chamber's revenue - a projected $18.7 million for 2011 - state law does not require the chamber to solicit competitive bids or follow any other procurement rules for projects that are paid with taxpayer dollars.
The chamber is required to submit regular reports to governing bodies and the public showing how much tourism grant, accommodations tax and sales tax money it spends and where it spends it, but those reports have no impact on the vendors chosen to do that work.
Chamber President Brad Dean did not return telephone calls last week.
Michael Sponhour, spokesman for the state's Budget and Control Board, said any regulation of how the chamber spends sales tax revenue would have to come from the city of Myrtle Beach.
Myrtle Beach, which passes the sales tax money along to the chamber, does not require the chamber to follow any procurement rules, according to city spokesman Mark Kruea.
"The chamber is interested in getting the biggest bang for its buck, so I'm sure they are being responsible with that money," Kruea said.
FBI investigation
The chamber paid two direct mail marketers, Fort Mill-based Miller Direct Media and Jordan Investment Corp. of Conway, nearly $1 million from public funds including the sales tax during the first nine months of this year, according to quarterly spending reports issued by the chamber.
The payments to Miller Direct and Jordan Investment follow $36,000 in campaign donations those two companies made last year to politicians who approved the tax.
Those campaign donations and others funneled through Dean and other chamber officials in the wake of the tax increase now are the focus of investigations by the FBI and IRS.
Scott Brandon, chief executive of the Brandon Agency advertising firm, said FBI and IRS agents have questioned him about his company's business relationship with the chamber.
"It's clear to me they were looking at whether my contributions to any of the PACs had any influence in me getting more business from the chamber," Brandon said.
The Brandon Agency gave $3,500 to the Grand Strand Statewide PAC in 2008 and Brandon gave a combined $75 last year to three other PACs that supported the sales tax.
The Brandon Agency has received $669,982 in public money during the first nine months of this year for marketing projects such as purchasing advertisements in magazines, according to chamber reports.
Most of that money is passed through to magazines and other media where the ads appear, but Brandon said his company keeps 10 percent to 15 percent in commissions and fees.
Brandon said he has done work for the chamber for at least a decade and that the amount of money his company received this year is less than what he has received in some previous years.
"Some people believe that these guys [the chamber] were conspiring to influence the election by giving campaign money and, in return, promising business favors," Brandon said. "That's not true."
Some area residents and business owners have criticized the donations, calling them payback for a tax increase that directly benefits private companies that get the marketing jobs and tourism-related businesses - such as Myrtle Beach hotels and attractions - that no longer have to spend their own money to advertise.
Campaign cash
In several instances, the chamber is choosing to give its business to those companies that either made campaign donations or contributed money to a chamber-related political action committee called the Grand Strand Statewide PAC.
Miller Direct and its subsidiary, Visit Media, contributed a combined $21,500 to local and state politicians in the months after the tax increase was approved.
Miller Direct and Visit Media also contributed a combined $5,500 last year to the Grand Strand Statewide PAC. Miller Direct contributed another $3,500 to the chamber-related PAC this year.
Miller Direct has received $647,340 in public money from the chamber for work during the first nine months of this year, according to chamber reports.
It is not clear how much work Miller Direct or other companies did for the chamber prior to the sales tax because the chamber previously did not disclose how it spent marketing money.
However, the chamber's marketing budget has grown exponentially since the sales tax - Dean has pegged the year-over-year increase at $15 million - making more money available for companies such as Miller Direct.
Steve Miller, chief executive of Miller Direct, did not respond to a request for comments.
Jordan Investment Corp. gave $9,000 last year to the tax-raising politicians, according to S.C. Ethics Commission reports.
Since then, Jordan Investment has been paid $314,716 in public money by the chamber.
Stephen Jordan, owner of Jordan Investment, did not respond to a request for comments.
Another company - New York-based Corinthian Media, which purchases television ads for the chamber - has been paid more than $3.7 million in public money during the first nine months of this year. Like the Brandon Agency, Corinthian passes much of that along to media after taking a cut for commissions and fees.
Corinthian Media donated $3,500 to the Grand Strand Statewide PAC in 2008 and another $3,500 this year.
Larry Miller, the chief executive of Corinthian Media, did not respond to a request for comments.
In another case, the chamber has given $544,517 in public money to a start-up company called Visibility & Conversions LLC.
Visibility & Conversions was formed on Jan. 6, according to S.C. Secretary of State records. The company donated $3,500 to the chamber-related PAC on Jan. 29, according to the ethics commission.
The chamber's spending reports show the company started getting public money during the first quarter of this year.
Visibility & Conversions, an Internet advertising group, is owned by Bill Rosenthal. Another Rosenthal company - Beach Package Promotions - gave $3,500 to the chamber-related PAC in June.
Rosenthal did not respond to a request for comments.
The $5.9 million in public money given to companies that contributed to politicians or the PAC represents about one-third of the $18.1 million the chamber spent on marketing efforts during the first nine months of this year, according to the chamber's reports.
Calls for oversight
The amount of public money the chamber receives each year is comparable to the budget for a small municipality. For example, the chamber's projected public money stream for next year is more than twice the budget of Surfside Beach.
During the first nine months of this year, the chamber has received $17.2 million in public funds. Nearly three-fourths of that amount - $12.3 million - has come from the sales tax. The rest comes from accommodations tax revenue and state grants.
The lack of public oversight of how the chamber spends all that money has some legislators considering an amendment to the state law that created the tourism-related sales tax.
Cleary said he would like to study how other states handle similar local-option sales tax expenditures.
"We need to look at oversight in other states and do something that's workable," Cleary said, adding that an appointed oversight committee that reviews the chamber's spending could be a solution.
State Sen. Luke Rankin, R-Conway, said he is not aware of any problems with the way public money is being spent but would support measures to amend the law for more accountability.
"If there's some sense of unfairness or if somebody is trying to do business with the chamber but is being shut out, I would not be opposed to any improvements [to the law]," Rankin said. "You always want to get the biggest bang for the buck.
"But I wouldn't want to do anything that would create a bureaucratic, slow procurement process that would make them jump through hoops before making a decision," he said.
Cleary is among the state legislators who received campaign contributions from companies now doing business with the chamber. Rankin did not receive any contributions from those businesses.
Some legislators, however, say there is no need for more oversight because they trust the chamber to spend money properly.
State Rep. Bill Herbkersman, R-Beaufort County, said the Myrtle Beach chamber is doing "a fantastic job" of luring tourists away from competing destinations in Florida and other states.
Herbkersman said he trusts the chamber, but "if I had an issue with the chamber, I would want there to be more oversight," he said.
Herbkersman introduced a bill last year that would have amended the state law to allow Beaufort County to impose a 1 percent sales tax for tourism promotion, with the money likely going to the Hilton Head Island Chamber of Commerce. That bill was approved by the House of Representatives but stalled in the Senate.
Herbkersman said he is not sure whether he will reintroduce the bill during the coming legislative session.
Myrtle Beach Mayor John Rhodes said the chamber's quarterly reports and regular updates to council provide enough accountability.
"It's all there - what they are spending and what they are spending it for," Rhodes said. "There are always going to be questions with anything that has to do with public money, but I think it's fine the way it is."
John Crangle, director of Columbia-based Common Cause of South Carolina, said giving public money to the chamber without oversight "is an open invitation to abuse."
Crangle, whose group advocates for open government, said he questions whether the sales tax legislation is constitutional because it designates a government function - spending tax dollars - to a private entity.
"I don't think that there's any question there needs to be more oversight of how that money is spent," Crangle said. "This is the kind of thing that cries out for reform."
Lobbyists and corporations
The Grand Strand Statewide PAC is operated by a political lobbying group called the Grand Strand Business Association.
The chamber contributes $3,500 per year to the PAC and gives the business association money to pay for state and federal lobbyists. Those lobbyists cost the chamber a combined $253,299 in 2009, according to the association's tax return.
The chamber also provided an office and administrative support for the business association until this year.
One of the lobbyists the chamber provides funding for is Mark Kelley, a Myrtle Beach business owner and former state legislator.
Kelley and Dean delivered some of the campaign donations to politicians in the months after the sales tax was approved.
There are strict rules that forbid lobbyists from facilitating campaign donations for statewide candidates; however, a spokeswoman for the S.C. Ethics Commission has said it does not appear any laws were violated in Kelley's case.
"Just being in the same room is not a violation, it happens all the time," Cathy Hazelwood, the commission's general counsel, told The Sun News. "He [Kelley] is not supposed to touch the envelope or hand over the envelope."
Myrtle Beach lawyer Shep Guyton was president of the business association until late last year when Mike Wooten, president of Myrtle Beach-based DDC Engineers Inc., took that role.
Guyton, a former chairman of the chamber's board of directors, now is vice-chairman of the business association.
Part of the FBI and IRS investigation focuses on $239,500 in post-sales-tax-increase political donations made by 14 corporations for which Guyton was a partner, the registered agent or both.
All of the Guyton-related donations were made with cashier's checks purchased on the same day and in sequential order at South Atlantic Bank, where Guyton was a board member.
Guyton resigned from the bank's board of directors earlier this year.
The Guyton-related donations have drawn scrutiny because some of his partners in the corporations have said the businesses did not have any money to give to politicians. Another corporation was dissolved nearly two years before it purportedly made the donations.
Also, at least four of the corporations have land that is in foreclosure, and chamber critics question why Guyton was giving money to politicians instead of paying corporate debts.
Those critics also question how Guyton got the money to purchase the cashier's checks.
Dean has said none of the money that passed through Guyton's corporations came from the chamber.
All told, the chamber acted as a clearinghouse for $324,500 in campaign donations after the sales tax was approved.
Those donations were given to four City Council incumbents, seven state legislators and gubernatorial candidate Gresham Barrett, who lost to governor-elect Nikki Haley in the Republic primary. Barrett was the only politician who did not play a role in the sales tax increase.
The sales tax was approved on May 26, 2009, and the Guyton-related corporations purchased their cashier's checks on June 8, 2009. The politicians who approved the sales tax increase received those checks and other donations over the next few months and the tax started on Aug. 1, 2009.
Most of the sales tax money - charged on retail sales within the Myrtle Beach city limits - goes to the chamber of commerce for advertising to out-of-state residents. The city gets about 20 percent of the funds for property tax breaks and tourism infrastructure projects.
The tax is expected to generate up to $18 million per year over the 10-year life of the legislation.
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