Maryland Acting Gov. Blair Lee III, who has lent his campaign $110,000 in the past month to pay for a last-minute media blitz and election day "walk-around" money, yesterday refused to name the source of more than a third of the funds, saying such a disclosure would "embarrass" his creditors.
Shortly after he repeatedly declined, to discuss a $40,000 portion of the loan at the stormiest news conference of his 15-month administration, Lee came down to the State House press room to announce that he received most of the $40,000 from "a personal friend" and the remainder from "an uncle."
But he refused to identify the friend, other than to say he was a retired Air Force officer from Prince George's County who has no business dealings with the state. He also declined to name his "uncle", saying only that he was an elderly man who lives outside Maryland.
Lee said the friend lent him $30,000 over a 90-day period at an interest rate of 8 per cent, while his uncle gave him a short-term loan of $10,000 at no interest. (Commercial bank loans in Maryland carry a prime interest rate of more than 9 percent today.)
"If I call the guy (who lent him $30,000)," Lee said at the impromptu press briefing, "he'd probably say it's all right to release his name. But I'm not going to do it. It's a matter of principle with me (not to expose his creditors to questions from reporters)."
Maryland's election law requires candidates for public office to reveal the names of campaign contributors and lenders. But the disclosure requirement does not extend to the original source of the loan if the candidate borrows money personally and then lists himself as the campaign lender.
In finance reports filed with the state elections board this week, Lee listed himself as the source of three loans, totaling $110,000, which were made to his campaign in August. He was not required by state law to reveal where he received the money or when he plans to repay it.
Deputy State Attorney General George A. Nilson said the absence of a complete disclosure provision on campaign loans "is an obvious shortcoming in the law. Loans are a source of campaign contributions and that is something the law is trying to get disclosed."
With five days remaining until the primary, Lee leads his three Democratic rivals in contributions with about $600,000. His three loans were designed to cover the costs of television commercials and "walk-around" money for election day workers in the Baltimore area.
The controversy over of Lee's campaign loans came up unexpectedly at his weekly news conference, an event he has generally presided over with facility and good humor since becoming acting governor in June, 1977 while suspended Gov. Marvin Mandel was preparing for his second trial on political corruption charges.
As he was peppered with questions about the loan, he grew uncharacteristically testy, snapping at reporters and refusing to answer what he called "pretty silly" inquiries. When one interviewer pressed for the identity of the unnamed friend, Lee shot back, "Look, buster, the answer is no."
The issue arose when he was asked whether his personal wealth gave him an unfair advantage over other candidates who cannot lend large sums of money to their campaigns. He replied that much of the funds came from personal loans from his "friends and relatives," not himself.
That was new information for political reporters who had been told earlier in the week that Lee had liquidated personal assets to come up with the money. "What [the acting governor] feels is that the most honorable and straightforward way is to put the money from your own pocket into the campaign," his son, Blair Lee IV, said Tuesday when asked about the loans.
Under questioning, he said he sold $60,000 worth of stock in family companies to his father, Col. E. Brooke Lee, with an option to repurchase it later. Another $20,000, he said, was taken out of a personal "kitty" and lent to the campaign.
But he spent the next several minutes refusing to disclose the source of the remaining $30,000, saying that campaign finance laws "don't require it or suggest it or hint at it." He then scolded reporters for "going too far" in demanding the name of his creditors.
"You're really trying to set up a situation where a candidate can't finance a campaign," he said in lecturing tones. "And then you'll all be happy. This has nothing to do with the spirit of campaign finacing laws. This is curiosity (on the part of reporters)"
Within an hour after the news conference, a more subdued Lee came down to the basement press room to present new figures. Only $50,000 worth of stock was sold to his father, he said, and $40,000 came from his "uncle" and "friend."
Lee's $110,000 loan is the largest in the gubernatorial campaign. One of his rivals, Harry R. Hughes, has an outstanding bank loan of $35,000 secured by himself and four campaign supporters. The other two candidates, Walter S. Orlinsky and Theodore G. Venetoulis, have not given their campaigns any personal loans.