By Harriet McLeod
CHARLESTON, South Carolina (Reuters) - South Carolina's Republican governor, Nikki Haley, faced an ethics investigation on Thursday by state lawmakers who accused her of illegally lobbying on behalf of her employers while a member of the legislature.
The Republican-led House of Representatives' Ethics Committee held the hearing in response to allegations stemming from Haley's prior work as a business development consultant for an engineering firm and a fundraiser for a hospital foundation.
Haley held those jobs while serving as a House member from 2005 to 2010, ahead of being elected as the state's first female governor two years ago on a wave of Tea Party support. Both as a legislator and as governor, she has had a rocky relationship with fellow lawmakers, including those in her party.
The ethics investigation of Haley follows an attempt to oust fellow Republican governor Scott Walker of Wisconsin in a recall vote earlier this month over his attacks on public sector unions. Walker survived the recall but remains under investigation for allegedly using his office as Milwaukee County executive for improper political activity prior to becoming governor. Haley traveled to Wisconsin to campaign for Walker during the recall.
South Carolina does not require its part-time legislators to disclose the sources of their income, but they are not permitted to lobby on behalf of their employers.
Both of Haley's employers had business before the state. The hospital, which paid her $110,000 a year, was seeking approval for a new heart surgery center, and the engineering firm, which paid her $48,000, was seeking a contract on a state farmers market.
Haley's attorney, Butch Bowers, has argued that her activities were "the norm" in the legislature. He said she supported the expansion of Lexington Medical Center because the hospital was in her district.
The Ethics Committee first investigated the complaint lodged by South Carolina attorney and Republican fundraiser John Rainey in the spring and cleared Haley of any wrongdoing. But in late May, the panel reopened its inquiry and held a hearing on Thursday.
The hearing featured testimony from executives with the engineering firm, the hospital and the hospital's foundation. The governor was not subpoenaed to testify.
"There's a difference between a lobbyist and business development person," Robert Ferrell, vice president of CDM Smith, formerly known as Wilbur Smith Associates, the engineering firm that hired Haley, said during his testimony before the panel.
If the committee determines Haley has committed an ethics violation, it could reprimand her, fine her a small amount or refer the case to the state attorney general for a criminal investigation.
In her book "Can't Is Not an Option" published earlier this year, Haley, the daughter of Indian immigrants, wrote about the discrimination she faced by what she described as an old-boys network in the legislature and called South Carolina politics a "blood sport."
Haley spokesman Rob Godfrey last month called the ethics charges "made-up nonsense claims" and said that "mudslingers, trash talkers and political opponents will undoubtedly continue to do what they do."
Haley faces a separate investigation by the state Ethics Commission on allegations she misreported gubernatorial campaign contributions by failing to collect required donor information. A formal hearing on that issue will be held on July 18.
She is not the first governor in South Carolina to face questions about ethics.
In 2009, the state Ethics Commission charged then-Governor Mark Sanford with more than three dozen violations, including using state money to fly to see his mistress in Argentina. Sanford agreed to pay $74,000 in fines to settle the ethics charges.
(Editing by Colleen Jenkins and Lisa Shumaker)