Republicans claim AG Beshear has conflict in UofL Foundation probe, should appoint special investigator
The Republican Party of Kentucky is calling on Attorney General Andy Beshear to stay out of any probe into the University of Louisville Foundation and instead appoint a special investigator, claiming he has a conflict of interest given he formerly worked for the same law firm that performed legal work for the foundation.
The head of the criminal division of the Kentucky Office of the Attorney General recently notified UofL leadership that it is beginning a review of the troubled foundation after examining the scathing audit released June 8 on the nonprofit’s actions under the administration of UofL’s former President James Ramsey. Beshear said at a June 12 press conference that he saw no reason to recuse himself from any potential litigation stemming from the audit, as he didn’t think he had been involved in any legal work for the foundation, but would re-evaluate that decision if there were any concerns.
Following reports on the UofL Foundation probe and a request for additional information by the attorney general’s office on Thursday, spokesman Terry Sebastian told IL that Beshear currently is not recusing himself from any potential investigation or prosecution in this matter.
On Friday, the Republican Party of Kentucky issued a press release stating that Beshear showed “an absolute inability to recognize clear cut conflicts of interest” by not recusing himself, arguing he should appoint a special investigator for his announced probe into the foundation. The RPK also stated that Beshear “has been unwilling to rule out whether or not he had performed work for the foundation before becoming AG.”
“Whether or not there is an actual conflict, the Attorney General must recognize there is an obvious appearance of impropriety,” stated RPK spokesman Tres Watson. “There are clearly issues at the University of Louisville Foundation that need to be explored, however, if the AG wants the people of Kentucky to have any confidence in the investigation, he needs to appoint a special investigator. That is the only way to give the public assurance that it will be a fair and thorough inquiry.”
Sebastian of the attorney general’s office countered in a statement Friday afternoon, saying this was just “another day, another attack by the Bevin Administration/RPK for this office doing its job.”
“General Beshear addressed this issue on June 12 at the Galt House to a group of reporters, saying that he didn’t provide legal work for the foundation,” stated Sebastian. “The office has not seen anything yet that would merit recusal but is always willing to re-evaluate if that changes. The general believes in doing his job.”
This matter revolves around the work that attorney David Saffer of the law firm Stites & Harbison performed as the external legal counsel for the foundation throughout the period in question under the former Ramsey administration. Saffer was mentioned prominently in the Alvarez & Marsal audit report on the UofL Foundation, including several email chains between himself and top foundation staff — particularly Kathleen Smith, Ramsey’s former assistant — in which methods of concealing actions from open record requests are discussed.
Beshear worked for a decade at Stites & Harbison before taking the office of attorney general in January 2016, and he represented several companies in high-profile disputes with the previous administration of former Attorney General Jack Conway. After the term-limited former Gov. Steve Beshear — Andy’s father — left office in December 2015, he rejoined Stites & Harbison, where he had previously worked for 20 years before taking office as governor.
The recent request for information the head of the attorney general’s criminal division sent to UofL included documents related to the compensation and email exchanges of the foundation’s former top staffers — Ramsey, Smith and foundation CFO Jason Tomlinson — but did not mention Saffer or any other individual mentioned in the audit report.
In response to Sebastian stating that Beshear did not provide legal work for the foundation, Watson of the RPK sent IL a copy of Beshear’s financial disclosure form from 2014 when he was running for attorney general, claiming it “shows a clear relationship” between the attorney general and the university, as well as the UofL Board of Overseers, an advisory body with no direct oversight authority.
The 2014 disclosure form shows that Beshear was on the board of overseers in 2014 and received tickets to several UofL football games that year, the value of which exceeded $200. Under a section where he was asked to list all sources of retainers received to work or supervise for state agencies, Beshear wrote that “Over the past year, I have provided limited advice to the University of Louisville in a matter where the Attorney General is a party, though I have not appeared before or communicated with the office.”
Watson stated that “regardless of the extent of that relationship, an appearance of conflict is undeniably present.” Asked if there is a distinction between representing the university and representing the foundation that currently is being investigated, Watson said there was possibly a legal distinction, but “the two seemed to be extremely intertwined. But, at least in my mind, the average citizen would look at that disclosure form and believe there appears to be a conflict.”
Following media reports of a probe into wrongdoing at the foundation on Thursday, Watson asked on Twitter whether Beshear would also “investigate his father” for appointing the board that “let it happen.” When asked if he believed that Steve Beshear should be criminally prosecuted for what happened at the UofL Foundation, Watson replied: “No. Just throwing out some hyperbole :)”
Sebastian responded by stating that Beshear “has been transparent about any and all ties to the University of Louisville.”
“More than two years ago, (Beshear) disclosed that in 2014 he had performed legal work for the university,” said Sebastian. “That work was for the hospital and is totally unrelated to the foundation. And even Gov. Bevin should denounce the RPK’s hyperbole given the governor appointed a current partner from the same law firm as part of his new U of L Board of Trustees earlier this year.”
In a Facebook video posted on June 13, Gov. Matt Bevin stated that Beshear’s examination of possible civil or criminal wrongdoing at the foundation “stinks to high heavens” because he was formerly law partners with Saffer and his father now works at the same firm, adding that the attorney general’s office “probably doesn’t even have jurisdiction to check this out.” Bevin spokesman Woody Maglinger did not reply to an email from IL seeking further comment on the current investigation.
In late June, Republican Senate President Robert Stivers accused Beshear of also having a conflict of interest related to a late-2015 settlement between then-AG Conway’s office and Purdue Pharma, the prescription opioid manufacturer that was represented by Stites & Harbison. Stivers not only questioned whether Conway settled the case for $24 million in December of that year so Beshear would not be conflicted when he took office the next month, but whether Beshear used “his public office to advance his former client’s interest” by not moving to unseal the records in the case. The health care website STAT won a case last year to unseal the court records that were to be destroyed under the terms of the settlement and is being represented by local open records attorney Jon Fleischaker in appeals court, where the attorney general’s office is not a party to the case.
Countering Stivers’ suggestion, Beshear’s office says the terms of the settlement forbid anyone in the office of the attorney general from intervening in an appeal to unseal the records, which Fleischaker told IL he agrees with, as “it doesn’t say that point blank, but it strongly implies it.”
However, Fleischaker does believe that Beshear has a “major league conflict” in any matter involving the UofL Foundation due to his association with Stites & Harbison at the time, saying it’s “a legitimate question” as to whether he should recuse himself.”
“If Beshear’s office is going to be looking into issues of the nonprofit and how it behaved and whether there’s a legitimate cause of action for the attorney general, I think Beshear absolutely has to disqualify himself,” said Fleischaker, “and go outside and appoint either independent counsel or at the minimum get a permanent assistant attorney general who does not report to him on this issue.”
Fleischaker added that Steve Beshear’s hiring by Stites & Harbison adds to the common sense of a recusal, saying there remains a “possibility that the Stites firm can be sued for actions taken while (Beshear was) a partner.”