It’s looking like another rough week for Governor Chet Culver. News broke yesterday that his chief of staff is taking a new job, and the Department of Criminal Investigation is looking into campaign contributions from people who back a new casino for Fort Dodge.

Follow me after the jump for links and background on those stories.

Speculation about John Frew’s departure as Culver’s chief of staff has been making its way through the Des Moines rumor mill for a while now. Yesterday Frew confirmed that he has resigned in order to manage a large events center project in Cedar Rapids. Acccording to Todd Dorman of the Cedar Rapids Gazette, “It’s been an open secret around these parts that Mayor Ron Corbett has been hoping to hire Frew, who has experience in managing events venues.” IowaPolitics.com posted the press release from the governor’s office on Frew’s resignation. Jim Larew, who has been Culver’s chief legal adviser, will take over as chief of staff. Larew filled in as acting chief of staff last summer after Frew’s hire was announced but before Frew moved to the Des Moines area.

In his resignation letter, Frew said the “difficult decision” to leave was in the “in the best interest of my family and the timing is appropriate.” He noted that the 2010 legislative session has ended, while the governor’s re-election campaign will soon officially begin. While the timing could certainly have been worse, the shakeup in the governor’s staff isn’t encouraging. By all accounts Frew is highly capable and received “rave reviews” after taking charge of the governor’s staff last September.

More bad news for Culver was on the front page of Monday’s Des Moines Register:

The Iowa Division of Criminal Investigation is examining whether an Iowa company aligned with a casino proposed for Fort Dodge made improper contributions to Gov. Chet Culver’s re-election campaign, a state official and a target of the investigation have confirmed.

Three people who support the Fort Dodge casino project collectively donated $25,000 to Culver’s re-election campaign. The same three people have been paid $25,000 by the company applying for a casino license in Fort Dodge. It’s illegal to funnel a campaign contribution through someone else, but the three men involved say they weren’t directed by anyone to donate to Culver’s campaign. They say they were paid for work they are doing to promote the casino effort and gave money to Culver because they support him. (The campaign donated a total of $25,000 to three Iowa charities earlier this month after learning that the contributions were being investigated.) The Register posted background on the key individuals in the story and the timeline of events that occurred.

Compounding the political problem, Culver wrote an open letter to the Iowa Racing and Gaming Commission last month, urging commissioners to approve all four applications for new casino licenses, including one for Fort Dodge. Six former leaders of that commission have criticized Culver’s public lobbying for new licenses, saying it encroached on the independence of commissioners.

While I oppose new casinos, I can’t get too outraged about Culver taking a public stand in favor of them. You can’t convince me that past governors haven’t made their opinions known to appointed board members through private channels. In fact, supporters of new coal-fired power plants in Iowa have criticized Culver for not publicly advocating for coal projects in Waterloo and Marshalltown while those applications were pending with the Iowa Utilities Board.

A separate question is whether the campaign donations from casino backers pushed Culver to advocate more strongly for new casinos. I doubt that. Culver has been on record for years supporting new casino licenses, even though he has also received campaign contributions from people associated with existing casinos, who oppose any expansion of gambling in Iowa.

Culver believes new casinos would create jobs. I’m more convinced by economists who say new casinos would be a “zero-sum game” for local Iowa economies. But at least the governor’s position on the issue has been consistent.  

The Des Moines Register published questions it submitted to the governor’s office and campaign, along with responses received. Excerpt:

4. Did contributions from Steve Daniel, James Kesterson and Merrill Leffler have any influence over Gov. Culver’s March 4 letter urging the Iowa Racing and Gaming Commission to grant licenses to the four casino license applicants?

Answer: Absolutely not. The governor and lieutenant governor have long supported granting licenses to communities that decide in local referendums to pursue such licenses. Further, many folks that have involvement in competing facilities and oppose these new licenses have also contributed to the governor’s and lieutenant governor’s campaign. The fact is that the governor and lieutenant governor have contributors and supporters on both sides of this and many other issues.

5. Should a sitting governor accept campaign contributions from parties associated with pending casino license applications?

Answer: First, the governor has not made or taken any campaign contribution calls from any party associated with a license application once such a license application was submitted. Importantly, the Racing and Gaming Commission makes the licensing decision. There is no appeal to the governor. Some people associated with the current licensees have contributed to other candidates that oppose granting the new licenses just as some of these people have contributed to the governor’s campaign. People supporting new licenses should have the same right to participate in the political process as those who oppose granting these new licenses.

6. Did the governor, lieutenant governor or any members of their staffs meet with representatives of Peninsula Gaming, Webster County Gaming or Webster County Entertainment from Sept. 1, 2009 through March 13, 2010?

Answer (Larew only): The governor and lieutenant governor have consistently supported the issue of licenses from communities after a local referendum. They were already on record supporting these applications. People from some of these groups, like all other Iowans, have the opportunity to meet with their state leaders.

I have no clue whether the DCI’s investigation will lead to any charges. It seems that it would be difficult to prove that casino supporters were directed to pass money along to Culver. It’s only logical that they would support Culver’s re-election, as opposed to the various Republican candidate who all have spoken out against more gambling. Nevertheless, a criminal investigation never looks good for a campaign, even if no wrongdoing is found.

After the DCI investigation is complete, the Iowa Ethics and Campaign Disclosure Board will look into the matter. The ethics board has a lower standard for finding misconduct and could fine the governor’s campaign.

Republicans are going to make hay from these investigations, no question about that. If they really cared about major donors using campaign contributions to advance their business interests, they would advocate for public financing of election campaigns. But they have no fundamental problem with the legalized corruption that pervades our campaign finance system. They’ll just use this investigation as a stick to beat Culver.

Speaking of which, Kathie Obradovich made a great point in her latest column for the Des Moines Register:

His political opponents and others were shocked – shocked! – that the governor could be so crass as to inject politics into this otherwise pure process of casino licensing. Former and wants-to-be future Gov. Terry Branstad said he never would have tried to influence the commission – an independent panel whose members are appointed by the governor.

Of course he wouldn’t have. Branstad signed the law that provided all the insulation any governor could want from the decisions of the commission. It could license all the casinos it saw fit, and the revenue would flow into the state budget. Branstad could happily spend that money and accept donations from gaming backers but refuse to take a public position on any specific casino proposal.

I also agree with Obradovich that Culver should ask the Racing and Gaming Commission to delay its decision on the casino applications until after state candidates’ campaign finance reports are due on May 19.

For what it’s worth, I expect the commission to reject the applications for Tama County, Webster County (Fort Dodge) and Wapello County (Ottumwa), on the grounds that too much of the new business would come at the expense of existing Iowa casinos. I expect the commission to approve the license for Lyon County in northwest Iowa, on the grounds that much of the business attracted would come from the Sioux Falls, South Dakota metro area.

Share any thoughts about recent developments or gambling in Iowa in this thread. Does anyone out there agree with Todd Dorman, who is against restrictions on casino licenses? He doesn’t see why the state should be protecting the gambling industry from competition. The counter-argument is that lifting the restrictions would prompt a wave of new casino openings, and the social costs of gambling are greater than, say, building way more strip malls than Iowa’s population can support.