Bevin extends contract to investigate Steve Beshear aides. Cost rises to $1 million.

By Jack Brammer | Lexington Herald-Leader

Former Gov. Steve Beshear

The potential cost to Kentucky taxpayers for Gov. Matt Bevin’s investigation of former Gov. Steve Beshear’s administration has doubled, reaching $1 million.

The Bevin administration approved a two-year, $500,000 extension last month of its contract with an Indianapolis law firm to search for corruption in the administration of Steve Beshear, his Democratic predecessor and the father of Attorney General Andy Beshear, who has announced his bid for governor next year.

Bevin, a Republican, has not yet said whether he will seek another four-year term in 2019.

The Bevin administration awarded a $500,000, two-year contract in July 2016 to the law firm of Taft Stettinius & Hollister through the state Finance and Administration Cabinet. In June, the contract was renewed for up to $500,000 more, extending it through June 30, 2020.

Pamela Trautner, a spokeswoman for the Finance Cabinet, said Tuesday that the state had spent $462,000 through May on the initial contract and was expecting another bill from the firm for June.

The renewed contract, she said, is for investigative and legal services.

The law firm, she said, also is handling a lawsuit for the cabinet in the Kentucky Court of Appeals. It involves a $3 million extension of a no-bid contract awarded on the final day of Beshear’s administration in 2015 to SAS Institute of North Carolina to detect fraud in billings made to Medicaid and other state programs. Frank Lassiter, the husband of Steve Beshear’s executive cabinet secretary, had been a consultant for SAS Institute since 2012.

The state attempted to subpoena Lassiter, but his attorney, J. Guthrie True of Frankfort, said Tuesday that Lassiter won in Woodford Circuit Court. The state has appealed that ruling.

Trautner said the renewed contract calls for the law firm to work with the Finance Cabinet’s Office of the Inspector General on issues related to “waste, fraud and abuse in the Finance Cabinet, or other agencies that request investigative assistance.”

The contract, it says, also “will assist with the investigation of potential violations of state laws governing the behavior of elected officials and public servants in conducting the affairs of the state, including but not limited to, investigative assistance related to possible violations of the Kentucky Model Procurement Code and alleged coercion of state employees for campaign contributions in violation of campaign finance laws.”

The state’s model procurement code generally applies to expenditures of public funds by local public entities such as cities, counties and school districts which have adopted it.

The latest contract also says its investigatory scope may be expanded, at the option of the Finance Cabinet, “to include additional alleged violations of the public trust and applicable statutes and regulations reported or discovered as part of this or other ongoing investigations or referred by other agencies to the Finance Cabinet for investigation.”

Trautner would not identify any possible investigations.

The renewed contract was on the agenda last week of the legislature’s Government Contract Review Committee but was not discussed.

State Sen. Julian Carroll, D-Frankfort, said his staff overlooked that contract. The committee reviews hundreds of contracts worth millions of dollars at its meetings.

Courtesy of Gov. Matt Bevin’s Facebook

The renewal was listed as a contract of the Kentucky Infrastructure Authority rather than the Finance Cabinet in Legislative Research Commission documents. The infrastructure authority, which provides grant and loan assistance to communities for water and waste water needs, is administratively attached to the Department for Local Government within the governor’s office.

Neither Donna McNeil, the executive director of the authority, nor Sandy Dunahoo, the authority board’s chairwoman and commissioner of the Department for Local Government, returned phone calls seeking comment.

Trautner stressed that the renewed contract is through the Finance and Administration Cabinet.

Carroll said he was concerned about the first contract and “I sure am not pleased with the renewed contract. It has done nothing for the state.”

In January 2017, the Taft law firm issued a report that said officials in the Beshear administration for years violated state law by soliciting state employees to make contributions to Democratic candidates and campaigns. The firm said it had interviewed 16 politically appointed workers but did not identify them. The report said it was referred to the executive branch Ethics Commission for further investigation.

Steve Beshear called the report “a joke” and “a waste of taxpayers’ money.”

On Tuesday, he said that Bevin “has now decided to waste another half a million dollars and another two years to continue his fruitless search.”

“Mind you, a million dollars wasted at a time when he is ripping vision and dental care away from hundreds of thousands of Kentuckians and underfunding public education,” Beshear said. “Mr. Bevin epitomizes the definition of a self-serving politician putting partisanship above serving the people.”

Andy Beshear

Andy Beshear said in January 2017 that the contract was “grossly political” and that taxpayers deserved a refund.

The ethics commission reached settlement agreements with Walter Gaffield, who admitted to three ethics violations for using his position as head of the Office of Administrative Services to solicit campaign contributions from state workers between 2010 and 2016, and William Ryan, who admitted to two ethics violations as special assistant to the personnel secretary for soliciting contributions from cabinet employees for a gubernatorial campaign between 2010 and 2011.

Much of the Taft report dealt with previous news accounts, including the 2016 federal kickback and political kickback conviction of Tim Longmeyer, who was personnel secretary in the Beshear administration and was top deputy to Andy Beshear until Longmeyer resigned a few days before he was charged.