Gov. Nathan Deal has cut ties with a business at the heart of an ethical cloud that shrouded his last campaign as he prepares to ask voters for a second term in office.
Deal’s attorney, Randy Evans, said Wednesday that the governor and business partner Ken Cronan sold Gainesville Salvage & Disposal to a Texas-based auction firm for roughly $2 million apiece. The contract also requires the firm, Copart, to pay Deal and Cronan $120,000 each annually over 10 years to lease the land, which the two men still own.
With the sale, Deal is seeking to close the chapter on one of his 2010 campaign’s biggest controversies as he mounts a re-election bid that so far features no opponents. It also injects fresh capital into his bank account, itself a focus during the campaign as Deal tried to repay business loans for his daughter’s failed sporting goods venture.
The salvage firm once held a lucrative no-bid agreement with the state to provide space for state employees to inspect rebuilt salvaged cars. The Atlanta Journal-Constitution reported during the last gubernatorial campaign that Deal, then a congressman, personally intervened with state officials who wanted to open the program to more locations. The story led to an ethics complaint and a congressional investigation.
Evans said the governor had tried to sell the business since he took office in 2011. Although the property was managed in a blind trust, Deal still signed off on the final sale, his attorney said.
“There was no reason, if you’re fully vested in being the governor, to have another business out there,” Evans said. “Once he was elected he recognized that was a full-time job and he didn’t want any suggestion of a crossover between the two.”
The timing, however, was bound to raise questions. Melanie Sloan, the executive director of Citizens for Responsibility and Ethics in Washington, also questioned whether it was a fair deal.
“It’s a good thing if it’s in fact an arm’s-length transaction, but I am skeptical that that’s the case,” said Sloan, whose organization filed a complaint claiming Deal violated congressional ethics rules.
Ethical questions surrounding the salvage yard became a critical issue during Deal’s run for governor.
The AJC reported in 2009 that Deal for years had a no-bid agreement with the state that paid the partners nearly $300,000 a year over a 20-year agreement. The AJC found that Deal and his staff fought to preserve the arrangement, telling state officials that it helped keep unsafe vehicles off Georgia’s streets.
The story prompted an investigation by the Office of Congressional Ethics, which found that Deal, who was then a member of the U.S. House, might have violated federal ethics rules. Deal resigned from Congress in March 2010 before the organization could move forward. At the time, Deal said he wanted to devote himself full time to the governor’s race.
Evans said negotiations to sell the salvage business were in the works for months before it closed June 26. The agreement also gives Copart an option to buy the land from Deal and Cronan for $4.8 million at the end of the 10-year lease.
Copart is a publicly traded online car auction firm claiming an inventory of more than 50,000 vehicles. The company, which operates five facilities in Georgia and dozens more across the nation, is aggressively seeking an expansion. It signed a deal in May to purchase Salvage Parent, which has 39 locations in 14 states.
The agreement with Copart gives Deal an infusion of cash to deal with his family finances. Records show that the governor and his wife, Sandra, owned 90 percent of a failed sporting goods store opened by his daughter and son-in-law by the time it closed. The financial woes of the business, which forced Clint Wilder and Carrie Deal Wilder to file for bankruptcy, became an issue during the 2010 governor’s race.
Evans said the money will likely be used to restructure the governor’s debt, though he would not say how much Deal owes.
“It has steadied because of this sale,” Evans said of Deal’s financial situation. “If you have an infusion of a few million dollars plus a monthly rental, you can only feel it’s a positive. I think his financial footing will be stronger than ever and he’ll have Gainesville Salvage in the history books.”