In 2010, the Alabama Republican Party negotiated a deal with a Florida company to design hundreds of glossy and colorful campaign flyers for GOP candidates seeking seats in the Legislature.
The contract with Majority Strategies of Ponte Vedra Beach, Florida was for $848,687.
Once the deal was signed, Majority Strategies then subcontracted out the printing, shipping and postage costs of the flyers to another company: Craftmasters Printing of Auburn.
Craftmasters is owned by four men, each sharing about 25 percent of the company. One of the shareholders is former Auburn football coach Pat Dye.
Another owner is Rep. Mike Hubbard, who is now the speaker of the Alabama House of Representatives, making him one of Alabama's most powerful elected officials. But, at the time the contract with the Florida company was signed, Hubbard was chairman of the state GOP.
The deal is at the center of what is an emerging fight between Hubbard and state Senate leader Del Marsh on one side and Alabama Republican Party Chairman Bill Armistead on the other side.
Armistead, a former state senator from Shelby County and the GOP's nominee in 2002 for lieutenant governor, was elected Republican Party chairman in early 2011. Shortly after taking over from Hubbard, Armistead sought a financial review of GOP records from 2010.
It was that review - Armistead calls it an audit but the company that did the work does not - that first brought the contract with Majority Strategies and the subcontract with Craftmasters to Armistead's attention.
Armistead took the report to the GOP state Executive Committee for its review. According to some committee members who spoke on condition of anonymity, Armistead pushed to make the findings public in an effort to embarrass Hubbard in the view of some committee members.
Those same members said the group was sharply divided over the importance of the contract with Craftmasters, with some saying it showed Hubbard had personally profited using party dollars. Others argued that the review showed no such thing and that before any action was taken, Hubbard should be given a chance to defend himself.
With the committee unable to reach agreement on what to do, Armistead took up all copies of the report and locked them away.
Armistead has since refused to disclose the report, although when asked about it, Armistead confirms its existence. Asked repeatedly in a recent interview if he believed the report indicated improper actions by Hubbard, Armistead would not answer. Asked if the financial review eased any concerns he might have had regarding how party dollars were used in 2010, Armistead again would not answer. Asked if he was concerned that his refusal to clear the air regarding the report could be seen by some as casting a shadow over Hubbard's tenure as party chair, Armistead had no response.
In a recent interview with the Birmingham News/al.com, Hubbard saw the financial review and after reviewing it a few moments, tossed it back across the table.
Hubbard has heard about the so-called audit for over a year. In fact, he sent a letter to Armistead and the state GOP Executive Committee this summer asking that they release the report.
"I have nothing to hide and that, whatever it is - and it's not an audit - shows we did nothing improper. Nothing," said Hubbard.
Hubbard said the contract with Majority Strategies was negotiated by then GOP executive director John Ross, not Hubbard or Sen. Marsh, who served as GOP finance chairman in 2010. Hubbard said at no time did Ross or Marsh or himself ask Majority Strategies to subcontract out work to Craftmasters.
"Majority Strategies made that decision and neither Del nor I played any role in it, period," said Hubbard.
Hubbard said Craftmasters has a well-earned reputation for doing quality printing and meeting deadlines. He said Majority Strategies also has a reputation for doing quality design work and in fact worked for the Mitt Romney campaign this year and subcontracted out to Craftmasters some of the work on printing flyers in that campaign.
"I'm proud of the quality work the company does and it has a national reputation for doing good work and delivering a product on time and on budget," said Hubbard. "Craftmasters and Majority Strategies had a history of working together on projects long before we bought the company."
When taken apart, the subcontract of just over $725,000 with Craftmasters shows that the company after printing, shipping and postage cost made a profit on its work of almost $37,000. Hubbard's personal profit from the deal came to just over $9,000.
"If the implication Bill is making in this so-called audit is that I somehow got rich from this deal, well that's laughable," said Hubbard, who pointed out that as chairman he personally donated $40,000 of his own money to the party's fundraising efforts in 2010. Marsh also donated $40,000 of his own money.
"If I wanted to make money, I would have never become party chair," said Hubbard.
Marsh said he does not understand why Armistead won't release the report.
"By not releasing it, Bill has allowed a cloud to hang over Mike's head and mine and that's wrong," said Marsh.
Marsh said he and Hubbard spent from 2006-2010 working endless hours to raise money for the GOP with one goal in mind: To elect a majority Republican Legislature.
"We drove thousands and thousands of miles to meet, talk with, cajole, plead and beg for money to help elect Republicans," said Marsh. "Mike and I met with and talked with dozens of good people to get involved, to run for seats with the promise we would raise the money to help get them elected and that's what we did. Anybody out there who thinks Mike somehow made money as chairman just does not know what they're talking about."
Marsh called on Armistead to release the report.
"Bill should put the report out there. Just make it public," said Marsh. "Locking it away and then inferring something is wrong is just wrong and it's hurtful to the party."
Hubbard said he's tried of the game that's being played.
"If Bill thinks I've done something wrong, then show everyone this report," said Hubbard. "I know what I've done. I have nothing to hide. My question is, why won't Bill Armistead release it?"
Armistead said he can't release the report until there is agreement by the Executive Committee to do it.
"My hands are tied," said Armistead. "I made a commitment to the committee to lock this thing up and I have. Apparently some people who made the same promise to the committee have now leaked it but that doesn't mean I can release it."
For months there have been rumors of an on-going effort by some to dump Armistead as party chair. Lt. Gov. Kay Ivey's name has been mentioned as one possible replacement, although GOP insiders now say Ivey has decided not to seek the post.
Armistead won the party's top job in 2011 by defeating Rep. Jay Love, R-Montgomery, the man Hubbard wanted to succeed him.
Hubbard said he's heard the speculation about replacing Armistead but said he is playing no role in that effort.
Marsh also said he knows there are some in the party unhappy with Armistead's leadership and that some may want him out as chair.
"Look, being party chairman is a hard job and frankly I hope Bill stays as chair," said Marsh. "I think the situation can be fixed but that report needs to be released and this cloud removed."
Armistead said he has heard the rumor that some may want him gone.
"When you are in a leadership position, you can't make everybody happy," said Armistead.
One of the areas thought to have created a divide between Armistead and Hubbard is their separate efforts to raise money. As GOP chair, one of Armistead's main jobs is to raise money for the party.
But, that job has been made harder than usual by the creation of a political action committee, or PAC, named the Alabama 2014 PAC. Former Gov. Bob Riley, a close political ally of Hubbard's, is chairman of the PAC but Hubbard and Marsh are deeply involved with the effort.
To date, Armistead has been able to raise only about $300,000 this year for the GOP. On the other hand, the 2014 PAC is approaching $900,000 in donations raised.
"We are preparing to defend our majorities in the Legislature," said Hubbard. "We know that in 2013 and 2014 we are going to see candidates run as Republicans who are not really philosophically Republicans. We know the effort to undermine us is coming and we are going to put money into races on the side of real Republicans. That is the sole reason we have been raising money. It has nothing to do with trying to hurt Bill Armistead or the party."
Armistead knows Hubbard's PAC is far out distancing his fund raising efforts but he said he's fine with it.
"Mike wants to be able to take sides in 2014. The party can't do that in a primary," said Armistead. "I understand what they are doing. But, it does make the effort to raise the money we need to run the party, to do all the party building things we do, just that much harder given the fact that we are probably seeking dollars from some of the same sources."
State House reporter Kim Chandler contributed this this report.
Source: http://blog.al.com/spotnews/2012/11/alabamas_republican_party_not.html
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