- Associated Press
Wednesday, October 19, 2016

RALEIGH, N.C. (AP) - A federal prosecutor said Wednesday that North Carolina Gov. Pat McCrory, a political donor and the donor’s business won’t face legal action following an examination of state prison contracts once held by the company.

The U.S. Attorney’s office in Charlotte confirmed that U.S. Attorney Jill Westmoreland Rose told McCrory’s attorney several months ago that the Republican governor was in the clear.

This news didn’t surface until the Republican governor responded to comments made by Democratic gubernatorial rival Roy Cooper in their debate Tuesday about the contracts and the contributor, identified previously as Graeme Keith Sr.

McCrory said in the debate he wasn’t being investigated by the FBI, although he later told reporters he had spoken with the FBI.

On Wednesday, an email statement from a spokeswoman for Rose’s office said “all matters related to the governor’s alleged involvement with state prison contracts have been closed by this office with no action against the governor.” Later Wednesday, spokeswoman Lia Bantavani also confirmed that all matters related to Keith and The Keith Corp. in Rose’s prosecutorial district “are closed with no action against either.”

The federal reviews stemmed from maintenance contracts held by TKC Management Services, a subsidiary of The Keith Corp. Newspaper articles last fall raised questions whether Keith sought favorable treatment in getting the contracts at three prisons extended, although McCrory’s Department of Public Safety argued they were neither cost-effective nor promoted secure prisons.

General Assembly members held an oversight committee meeting about the contracts, which McCrory’s administration earlier extended briefly until last December. They are no longer in force.

Legislators were particularly interested in a 2014 meeting in Charlotte between McCrory, Keith, Department of Public Safety Secretary Frank Perry and department officials.

A memo written by a state prison deputy commissioner about the meeting recalled Keith saying he had been working on “private prison maintenance” for more than 10 years and “during that time had given a lot of money to candidates running for public office and it was now time for him to get something in return.” The meeting was soon ended.

McCrory said last year he didn’t hear Keith make a statement linking political donations to state contracts and would have walked out if he had. Keith at the time said the memo was a “misrepresentation” designed to scuttle further privatization of prison services opposed by the department. There was no immediate response Wednesday to an email seeking comment from Keith, a McCrory friend and donor to candidates on both sides of the aisle.

The Charlotte Observer and The News & Observer of Raleigh, citing its own interviews, reported in 2015 that FBI agents had interviewed several state employees and gathered documents. An attorney for The Keith Corp. also said at the time it was cooperating with the FBI.

These reports provided the backdrop for Cooper to attack McCrory in Tuesday’s debate.

Cooper, the sitting attorney general, said McCrory was telling mistruths about Cooper’s campaign contributors. Cooper proceeded to discuss the reported allegations about the prison contract and said McCrory’s “the one who now has an FBI criminal investigation.”

McCrory shot back, saying Cooper should “resign right now for saying that. That is absolutely not true. There is no FBI investigation and you should apologize right now.” Cooper didn’t.

After the debate, McCrory told reporters he knew there wasn’t an investigation because the FBI told him. He said he talked to the FBI and “clarified all the issues, and everything’s fine.” An FBI spokeswoman in Charlotte referred questions Wednesday to the U.S. attorney.

McCrory’s campaign said Wednesday that Cooper lied on camera and his words bordered on legal misconduct as a lawyer. Cooper’s campaign was undeterred, with spokesman Jamal Little saying the federal examination is a “reminder of the consequences of pay-to-play and the troubling optics of campaign donors demanding and receiving state contracts.”

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