It seemed like manna from heaven. Back in 1999, Virginia was due $4.2 billion from the $206 billion in a huge legal settlement that 46 states had won from four tobacco companies the year before. Delighted state officials around the country scrambled to figure out how to handle their cut. Plans ranged from funding medical research to supporting anti-smoking programs to helping community colleges.
Virginia decided to use $1.7 billion of its share to plug budget holes. Then, pushed by powerful legislators from the tobacco belt that stretches across much of the southern tier of the state, it planned to use another $2.1 billion to create the grandly named Virginia Tobacco Indemnification and Community Revitalization Commission.
The commission, in addition to paying health costs, was supposed to help folks in the tobacco belt recover from the local economic pain as cigarette smoking slowly diminished.
In fact, in its 15 years of existence, the commission has figured in a stunning array of scandals, including the recently concluded corruption trial involving former governor Robert F. McDonnell and his wife, Maureen. Complaints abound about wasteful spending on dubious projects as well as cronyism.
It has been that way from the beginning. In its first year of operation, the commission spent 80 percent of that year’s money, $58 million, on no-strings payouts to 25,150 people who held now- defunct federal quota rights to grow tobacco, hundreds of whom didn’t even live in Virginia.
Thirty-one political appointees, some linked by family and business ties along Tobacco Road, rule the commission. Big names include the commission’s architect, former state senator Charles R. Hawkins (R), and Terry Kilgore, the current chairman and Republican legislator whose brother Jerry was attorney general from 2002 to 2005. Jerry Kilgore also is the attorney for Jonnie R. Williams Sr., the prosecution’s star and protected witness in the McDonnell trial.
The commission has funded a slew of odd nonprofit projects with no relation to the golden leaf, such as aiding the Martinsville Speedway or helping a group of Richmond investors get water and sewer money for their private Farmville prison, which holds undocumented immigrants who are awaiting deportation. Non-tobacco parts of Virginia get no such help, although they should be sharing in the spoils of the cigarette settlement, too.
No one seems to be checking whether commission projects are worth it. A 2011 study by the state’s Joint Legislative Audit and Review Commission found that, of 1,368 projects funded for $756 million, only 11 percent were measured for results. “They are just handing out money,” Del. Ward Armstrong (D-Henry) said in 2011.
John W. Forbes II, a former state secretary of finance and a tobacco commission board member, was convicted in 2010 of defrauding the commission of $4 million. He used the money for “The Literary Foundation of Virginia,” which he created, and set up himself and his wife with six-figure jobs. The rest was siphoned to shell companies.
The commission has awarded $14 million in grants to the Scott County Economic Development Authority, which is headed by John Kilgore Jr., Terry Kilgore’s brother. Meanwhile, their father, John Kilgore Sr., heads the nonprofit Scott County Telephone Cooperative’s board, which has received $7 million in tobacco money to expand broadband access.
The Kilgore family affair isn’t illegal, but it looks bad. The tobacco stench just doesn’t go away. In June, federal agents subpoenaed commission records in their probe of former state senator Phillip P. Puckett. The powerful Democrat from Russell was supposedly discussing a lucrative staff job on the tobacco commission with Terry Kilgore just before a key vote on expanding Medicaid. Puckett resigned in time to throw the vote toward opponents, most of them Republicans.
It’s no surprise, then, that the tobacco commission popped up in the McDonnell affair. Williams gave the McDonnells more than $170,000 in gifts and cash because he wanted their help in pressuring a state research school, such as the University of Virginia, to ask for tobacco money to study anatabine, a substance derived from tobacco. Williams thought anatabine had miraculously curative powers and would boost his company’s profits. Williams testified that using the commission was McDonnell’s idea, but McDonnell denied it.
In the end, the tobacco commission never got an application for anatabine. Too bad. It might have been one of the few times it spent money on something actually related to tobacco.
Virginia should have a way to distribute its rightful share of the tobacco settlement money, but the system needs a makeover. The regional nature of the system ensures that local cronies oversee everything. A new board — with people from other parts of the state — is necessary. Maybe then the non-tobacco parts of the state would get a share of the money. It is their money, too.