The Maryland House of Delegates unanimously passed legislation on Thursday to reform the state’s ethics laws, following a Washington Monthly exposé of Governor Larry Hogan’s advancing road and highway projects near properties his company owns—a development that can boost the value of those properties.
In Hogan’s first term, he overhauled the state’s transportation policy by cancelling a planned $2.9 billion rail line through Baltimore and directed the freed-up funds to road projects. Several of those projects were adjacent to properties owned by his business, which he did not divest from. They included a new $58 million interchange and $23.5 million in road and sidewalk improvements in Prince George’s County. Hogan didn’t disclose his ownership stake in those properties before the legislature approved the infrastructure projects in 2015 and 2017, respectively, even though Maryland law requires officials to recuse themselves from decisions that could financially benefit them or their family.
The bill, called the Integrity in High Office Act, would tighten the state’s disclosure laws by requiring the governor, lieutenant governor, attorney general, treasurer, and any agency head to notify state ethics officials and members of the General Assembly whenever they face a decision in which they or a relative have a monetary interest.
Notably, the bill would also require all elected officials to reveal more information about businesses in which they have a stake, such as what, if any, properties they own.
This is especially important because Hogan has kept the public and legislators in the dark about his company’s dealings. In his annual financial disclosure reports, Hogan has only listed the limited liability companies (LLCs) in which he has ownership, but not the properties those companies own. In turn, he was able to steer state dollars to infrastructure projects in Maryland’s transportation budget without anyone knowing they would increase the value of his holdings.
“I certainly had none of this information when working on the budget committees or in discussions,” Bill Ferguson, a Democratic Maryland state senator, told me in September 2020. (A month later, he became Senate President.) “Had I known this information, I think there would have been much more targeted and purposeful questions about the necessity of projects that appear to have a financial benefit to the governor.”
Hogan’s real estate business has grown since his inauguration: He went from having a stake in 30 real-estate LLCs in 2015 to 43 in 2020. The business has been lucrative: According to tax returns from his first three years as governor, which he released during his 2018 reelection campaign, Hogan made $2.4 million in total. His annual government salary is roughly $180,000. According to John Willis, a historian of Maryland politics, Hogan has made more money as governor than any other in state history.
Hogan has argued that he’s kept separation from his company, HOGAN, a multipurpose real estate brokerage with assets throughout the state, by putting his holdings into a trust agreement, which was approved by the State Ethics Commission. Hogan left his brother in charge of the company and put three business associates—two of which are executives at his firm—in charge of the trust.
Ethics experts have argued that the arrangement does not prevent conflicts of interest because it allows him to be fully apprised of the company’s activities. “He owns it, he will benefit from it, he is not shielded from knowledge of what his holdings are,” Kathleen Clark, a government ethics professor at Washington University in St. Louis’s School of Law, told me last year.
The House bill also would mandate that all government employees disclose whether they have any contractual relationship with a government entity, a provision responsive to a self-dealing scandal at the University of Maryland Medical System; the organization had contracts with the companies of nine of its own board members. Former Democratic Baltimore Mayor Catherine Pugh also struck a deal with UMMS to purchase hundreds of thousands of dollars’ worth of a children’s book she wrote. Pugh is now serving a three-year prison sentence on federal fraud, tax, and conspiracy charges. Annapolis insiders said the provision helped to shore up GOP support for the measure, which passed by a vote of 138-0.
Still, the main design of the bill, according to its chief sponsor, is to prevent future executives in Maryland from repeating behavior like Hogan’s. “In recent years, the public’s trust in state government has been tested by several ethics scandals, including allegations against Governor Hogan,” said Maryland House member Vaughn Stewart. “Sunlight is the best disinfectant. The Integrity in High Office Act will strengthen our disclosure laws and help ensure Maryland’s elected officials serve the public interest, rather than their own.”
Having passed the House, the bill now heads to the Senate. If it advances through that chamber, it will go to Hogan’s desk. He has not yet indicated whether he will support it or not.
Last year, after the Monthly story came out, the governor was asked at a news conference whether he needed share more information about his business dealings. “Nobody has been as transparent,” he said. “No elected official has disclosed as much as I have.”