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98 PAGES
INDEX
A company owned by the
chairman of the Metropolitan
Sewer District board has been
paid nearly $600,000 for work
done for the agency over the
past five years none of it ob-
tained through competitive bid-
ding.
In addition, MSD has hired
businesses owned by the MSD
board vice chairman and one
other board member, paying
them a combined $49,000 since
July 1, 2006, according to docu-
ments obtained by The Courier-
Journal through a Kentucky
Open Records request. Only
part of that work was competi-
tively bid.
Those business deals would
be violations if MSD were for-
mally part of Louisville metro
government, which it isnt, even
though its board is appointed by
the mayor and its two top staff
members arehiredbythemayor.
But since its creation by the
Kentucky General Assembly in
the 1940s, the districts business
dealings with board members
have been legal yet troubling,
ethics experts say.
While it may be legal, it is
most disturbing ethically, said
Edward L. Queen, director of
leadership education programs
at EmoryUniversitys Center for
Ethics inAtlanta. At abaremini-
mum, it generates a level of sus-
picion that cannot be helpful to
doing the publics business.
Details of the payments are
documented in records The
Courier-Journal obtained after a
state audit of MSD was finished
inFebruary. It citedthe relation-
Expert questions ethics of using board members companies
Wheatley Hoehler Helton
By James Bruggers
jbruggers@courier-journal.com
The Courier-Journal
Chairman Audwin
Helton is founder of
Spatial Data In-
tegrations Inc.,
which was paid
$584,899 by MSD.
Board Vice Chair-
man Marty Hoehler
co-owns Market-
graphics of Louis-
ville, which MSD
paid $23,700.
MSD board mem-
ber Beverly
Wheatley owns
Wheatley Roofing
Co. Inc., which
was paid $25,035.
Dealings by MSD disturbing
See MSD, A8, col. 1
Only about 10 percent of 145 Neighbor-
hood Development Fund grants handed out
by the Louisville Metro Council in the past
two years have spending reports filed with
the citys budget office, according to records
inspected by The Courier-Journal.
Those grants, each of which exceeded
$5,000, collectively total more than
$1.9 million, and the lack of financial report-
ing underscores a prob-
lemidentified in an au-
dit of the city last year
that the budget of-
fice had no system to
ensure that grant recip-
ients filed expenses or
for checking that the
spending was proper.
Mayor Greg Fisch-
ers administration re-
cently announced that it will assign a staff
person in the Office of Management and
Budget to monitor all neighborhood grants,
regardless of the amount.
The Courier-Journal contacted nearly a
dozen agencies that were grant recipients,
and several said there were legitimate rea-
sons whythecitybudget officehas norecord
of their expenses.
Some said they filed expenses with their
Metro Council representative or the council
clerk; others said they havent received their
funding yet, sothey have noexpenses tofile.
The Louisville Metro Parks Foundation,
whichis approvedfor a$10,000grant this fis-
Giant gap
found in
city grant
reporting
Neighborhood fund data
fell through metro cracks
By Dan Klepal
dklepal@courier-journal.com
The Courier-Journal
SUNDAY
PRINT
EXCLUSIVE
Available only
in your print edition
today.
See GRANTS, A5, col. 1
MORE THAN
$150
in coupons
in todays paper
BENGHAZI, Libya The
U.S. and European nations
pounded Moammar Gadhafis
forces and air defenses with
cruise missiles and air strikes
Saturday, launching the broad-
est international militaryeffort
since the Iraq War in support
of an uprising that had seemed
on the verge of defeat.
The Libyanleader vowedto
defend his country from what
he called crusader aggres-
sion and warned the involve-
ment of international forces
will subject the Mediterranean
and North African region to
danger andput civilians at risk.
Libyan state TV claimed 48
people had been killed in the
attacks, but the report could
not be independently verified.
The U.S. military said 112
Tomahawk cruise missiles
were fired fromAmerican and
British ships and submarines
at more than 20 coastal targets
to clear the way for air patrols
to ground Libyas air force.
French fighter jets fired the
first salvos, carrying out sever-
al strikes in the rebel-held east.
President Barack Obama
saidmilitary actionwas not his
first choice and reiterated that
he would not send American
ground troops to Libya.
ALLIES ATTACK
LIBYA DEFENSES
Patrick Baz, AFP/Getty Images
A parachute, left, is ejected from a Libyan jet as it crashes after being hit over Benghazi on Saturday as
Libyas rebel stronghold came under attack from Moammar Gadhafis forces.
U.S., Europeans strike to enforce no-fly zone, blunt Gadhafi
By Ryan Lucas
and Hadeel Al-Shalchi
Associated Press
See LIBYA, A2, col. 1
NCAA ACTION IN SPORTS | C1
KENTUCKY WINS,
MOREHEAD STATE
COMES UP SHORT
Full-page graphic. A6
Radiation found in milk,
spinach, officials say. A7
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ships but couldnt conclude
whether conflicts existed.
The records provided by
MSD show:
Spatial Data Integra-
tions Inc. was paid $584,899
between July 1, 2006, and
Feb. 22, 2011, for helping
MSD with computerized
mapping. The companys
founder, president and chief
executive officer, Audwin
Helton, has been on the
MSD board since 2003 and
serves as chairman. His term
ends in July 2012.
Marketgraphics of
Louisville was paid $23,700
between Aug. 3, 2007, and
Dec. 13 for providing MSD
with information about real
estate trends. The business
is co-owned by MSD Vice
Chairman Marty Hoehler,
who has been on the board
since 2002. His termends in
July.
Wheatley Roofing Co.
Inc. was paid$25,035 byMSD
between April 21, 2008, and
Dec. 14, 2009, for roofing
work. The company is
owned by board member
and former MSD Chairwo-
man Beverly Wheatley, who
started with the board in
1998 and whose term ex-
pired last year. State law al-
lows her to continue serving
until reappointed or re-
placed.
Only Wheatley Roofing
went through competitive
bidding, the records show.
State lawallows government
agencies to avoid competi-
tive bidding for professional
services, according to Larry
Zielke, a Louisville attorney
who advises the MSD board
andhandles litigationfor the
agency.
Helton, Hoehler and
Wheatley have said their
work for MSD was above-
board. MSD officials say no
laws were broken and there
are safeguards to protect
against abuse, including a
conflict-of-interest policy
that requires disclosure.
It is all done in the pub-
lic, Zielke said. No one is
hiding (the contracts).
He also said the agencys
eight board members, who
approve all MSD contracts
larger than$50,000, must ab-
stain from voting on any
contracts involving their
own companies. The posi-
tions are essentially volun-
tary but come with a
$75-per-meeting allowance
tocover expenses, MSDoffi-
cials said.
Possible conflicts
While no one has sug-
gested that the three board
members or MSD broke any
laws, ethics experts say the
payments to board mem-
bers businesses could be
perceived as a conflict
that could shake public con-
fidence.
It seems like a conflict of
interest in a broad sense,
evenif it may not technically
or legally be one, said Ste-
ven G. Koven, a professor of
urban and public affairs at
the University of Louisville,
director of U of Ls masters
inpublicadministrationpro-
gram, andauthor of the 2008
book, Responsible Gover-
nance: A Case Study Ap-
proach.
I think public expecta-
tions of government-run or-
ganizations are that individ-
uals working in the public
sector should not be lining
their own pockets at the
same time.
Queensaidhe was partic-
ularly troubledby the no-bid
nature of some of the work.
This seems tostrike me as a
disturbing gapinthe law, he
said. To the extent you can
minimize those (ethics) ap-
pearances, it will help im-
prove the publics confi-
dence in government.
Mayor Greg Fischer de-
clinedtobe interviewed. His
spokesman, Chris Poynter,
said he looks forward to
learning more about work
being done for MSD by the
businesses of board mem-
bers.
The state auditor cited
the relationships during a
special audit of the agency.
In September, the state of-
fice asked MSDs private
auditor, Crowe Horwath, to
look into allegations of fi-
nancial and other irregular-
ities within the sewer agen-
cy, after allegations of mis-
management were raised by
Future Fund, a land trust
thats fighting a sewer line
extension in eastern Louis-
ville.
While the auditors found
no evidence of fraud or
abuse in MSD financial
practices, they wrote that
they werent able to deter-
mine whether conflicts ex-
isted with board members,
because there is no account-
ing standard defining what
constitutes a conflict.
Helton, who was named
to the board by former May-
or Jerry Abramson, said that
is very sensitive to that is-
sue (of conflict), adding
that he has repeatedly asked
MSD officials, including
Zielke, whether he or his
business was doing anything
wrong.
He said he has been as-
sured his business could do
work for MSD, adding, I
didnt want to put MSD in
any sort of predicament.
He referred all other
questions to Zielke.
Hoehler said there was
no competitive bidding on
his companys contact be-
cause its service is a sub-
scriptionandisnt offeredby
any other business.
I didnt go soliciting
them, he said of MSD. I do
help other sewer agencies
outside of MSD. We have a
product that nobodyelsehas
in this market by helping
government agencies plan
their infrastructure needs.
Wheatley said that shes
done very little business
with MSD and that each she
was the low bidder. She said
boardmembers shouldnt be
precluded from competing
with others in the commun-
ity for MSD business.
MSD staff members de-
fended the hiring of the
board members companies,
saying they followed the
provisions of state law that
allow them to contract for
professional services with-
out seeking competitive
bids.
Eachyear MSDputs out a
request for qualifications for
areas of anticipated con-
tracting work, said Brian
Bingham, a senior MSD en-
gineer. The companies pro-
vide information about their
capabilities, and as the need
arises, staff review the ap-
propriate businesses on the
list, he said.
Bingham said that if a
board members company is
involved, MSDstaff fullydis-
cusses any potential con-
flicts and asks if other op-
tions exist.
He saidhe made the deci-
sions that Heltons and
Hoehlers firms were the
best companies to do the
work required.
Heltons firm qualifies as
a minority-owned business,
andWheatleys qualifies as a
woman-owned business.
MSD has annual targets for
contracting with minority-
and women-owned busi-
nesses and encourages such
businesses to seek contracts
with them, said Marion Gee,
MSDs finance director.
MSD, which had operat-
ing expenses of about
$125 millionlast year, has be-
come the target of growing
controversy and criticism.
It is carrying a debt of
about $2.6 billion, including
interest, with more borrow-
ing to come to pay for a
19-year, $850 million sewer
rehabilitation program as
part of a 2005 settlement
with the U.S. Environmental
Protection Agency and Ken-
tucky water-quality regula-
tors.
Customers have seen
rates rise 5 percent to 7 per-
cent a year since the
mid-1990s and 33 percent
in 2007 and MSDofficials
have said they can expect
moreof thesamefor years to
come.
Sen. Dan Seum, R-Louis-
ville, whotriedtobringMSD
under the Kentucky Public
Service Commission two
years ago, called for a shake-
up because the MSD
board serves as the watch-
dog for an agency that
spends a lot of money, sets
rates and has built up a large
debt. If they are enriching
themselves and feeding at
the trough, they need to go,
Seum said.
Different standards
Potential conflicts would
be less likely to come up in
other parts of local govern-
ment.
Poynter said the differ-
ence is that MSD isnt for-
mally a part of metro gov-
ernment. MSD doesnt have
to follow the citys ethics
policies or its ethics ordi-
nance, which he said basi-
cally means you cant be do-
ing business with the agen-
cies of the board you sit on
or with metro government,
he said.
The citys stricter ethics
policies would apply to
boards or commissions such
as the Louisville Metro Air
Pollution Control Board, the
Louisville Metro Planning
Commission, Louisville
Board of Health, the Parking
Authority of River City
Board of Commissioners
and the Transit Authority of
River City Board of Direc-
tors, Poynter said.
Zielke saidthat howMSD
operates is based on what
the agency is allowed to do
by the law that created it.
Poynter said Fischer
hasnt hadtime toreviewthe
MSD boards composition.
By July 31, five of the eight
positions will be eligible for
reappointment or replace-
ment.
His management style is
all about transparency and
not having a perception of
wrongdoing, said Rebecca
Fleischaker, another Fischer
spokesman.
Reporter James Bruggers can be
reached at (502) 582-4645.
MSD | Board defends its use of firms
Continued from A1
MSD BOARD
Members are appointed by the
mayor:
Beverly Wheatley, owner
of Wheatley Roofing Co.;
started with the board in 1998;
term ended June 30; can serve
until replaced or reappointed.
Arnold J. Celentano,
retired wastewater engineer;
started with the board in 2007;
term ended July 31; can serve
until replaced or reappointed.
Martin Hoehler, co-owner
of Marketgraphics of Louisville;
started with board in 2002;
term ends July 31.
Ben Richmond, president
of the Louisville Urban League;
started with the board in 1990;
term ends Aug. 31.
Marvin D. Stacy, Ford
Motor Co. retiree; started with
the board in 2005; terms ends
Aug. 31.
Jerome L. Clark, retired
electrician; started with the
board in 2007; term ends July
31, 2012.
Audwin Helton, president
and chief executive officer of
Spatial Data Integrations;
started with board in 2003;
term ends July 31, 2012.
Charles E. Weiter, consult-
ing engineer; started with the
board in 2006; term ends June
30, 2012.
Time: 03-19-2011 21:12 User: mstollhaus PubDate: 03-20-2011 Zone: KY Edition: 1 Page Name: A 8 Color: Cyan Magenta Yellow Black