A league of their own

KLC insurance director fired

'changes needed to be made'

jbrammer@herald-leader.comctruman@herald-leader.comJune 25, 2010 

William Hamilton

  • Time line of events involving the Kentucky League of Cities

    June 7, 2009: The Herald-Leader finds that the top three executives of the Kentucky League of Cities spent more than $300,000 in three years on travel, expenses and other items. All executive salaries top $200,000.

    June 19: At a board meeting, Executive Director Sylvia Lovely suspends three executive perks: League-paid travel for executive spouses; League functions at Azur, a Lexington restaurant partly owned by Lovely's husband; and Lovely's use of a League-provided BMW SUV.

    July 14: The League explains that when four employees went to the Diamond Cabaret in Las Vegas, charging $80 to a League credit card, they didn't initially realize they were in a strip club.

    July 17: League officials suspend all executive credit card use, including Lovely's.

    Aug. 3: Lexington Mayor Jim Newberry, a member of the League's executive board, withholds the city's $26,000 in League dues.

    Aug. 13: League board members end the use of Lovely's husband's law firm and tell insurance director William Hamilton to stop renting space to a League's vendor.

    Aug. 25: Lovely resigns but is authorized to collect her full salary until December.

    Dec. 17: State Auditor Crit Luallen blasts the League in an audit for a culture of excess that included loans and bonuses to top executives, "excessive" salaries and a host of conflicts of interest.

    April 22, 2010: Morehead City Council asks that the League fire its top two executives, acting executive director Neil Hackworth and insurance services chief Hamilton.

    May 11: Hackworth says he will retire at the end of the year.

    June 24: Hamilton's firing confirmed.

FRANKFORT — The Kentucky League of Cities, under fire for more than a year for high salaries, expenses and conflicts of interest, has fired William Hamilton, director of insurance services.

Hamilton is the third executive to leave the League. Executive Director Sylvia Lovely resigned in August, and acting executive director Neil Hackworth announced in May that he will retire at the end of the year.

Bowling Green Mayor Elaine Walker, the League's incoming president, confirmed Thursday that Hamilton was "let go." She is now first vice president.

"There was a sense from the executive board that changes needed to be made," said Walker, who will assume the one-year presidency in September.

She said Hackworth recently recommended to the board that Hamilton be dismissed. Hackworth fired Hamilton on Wednesday.

Hamilton, reached by phone at his League office Thursday, said he would comment after KLC makes a formal announcement. No such announcement was made Thursday, and the group's Web site still lists Hamilton as being employed there.

Repeated calls to Terri Johnson, the League's spokeswoman, were not returned.

An investigation by state Auditor Crit Luallen released in December cited $350,000 in "questionable" expenses that Luallen said allowed the group's leaders to spend money for "their primary benefit rather than providing additional benefits to Kentucky's cities and communities."

Her audit also found that Hamilton had several conflicts of interest with Tennessee-based Collins & Co., including that he and his wife rented office space in Georgetown to the business and that the Hamiltons accepted several Caribbean trips from Collins' chief executive.

Collins & Co. was paid $6.6 million over three years for its work processing insurance claims for KLC.

Cold Spring Mayor Mark Stoeber said Thursday that the lack of any detail from the League about the terms of Hamilton's departure is "another gosh-darn indication of lack of transparency. ... The arrangements regarding his separation should be public."

Earlier this year, Stoeber sent a letter to the League criticizing the management realignment that allowed Hackworth and Hamilton to stay on after Lovely's resignation, saying "shame on you for the blatant, arrogant, self-effacing abuses."

Having Hackworth fire Hamilton, Stoeber said, is "the pot calling the kettle black."

He said that after spending abuses were detailed, Lovely, Hackworth and Hamilton all should have left immediately, without negotiating what Stoeber said in Lovely's case was "a platinum parachute."

Although she announced her resignation last August, she drew her benefits and salary of $331,000 through the end of 2009.

'A new start'

Morehead City Council member Alan Baldwin said he was "very pleased" to hear Hamilton was leaving. "I agree with Ms. Walker that they definitely need to make a new start there, and I'm sorry it's taken them this long to realize that," Baldwin said.

Morehead was among several cities that had called for new leadership of the League's executive staff. Baldwin had been critical of the League's insurance services extending a contract with Collins & Co.

Morehead has chosen to give its business to a different insurance carrier for the next year, he said.

Damon Thayer, R-Georgetown, chairman of the Senate State and Local Government Committee, said he did not want to comment on any specific personnel move but said, "I know that the conflicts-of-interest situations have been of great concern to many taxpayers."

He said he looks forward to League officials reporting to his committee later this year. "Hopefully, the League will regain the confidence of taxpayers, its member cities and the General Assembly," he said.

Hamilton's conflicts

Luallen's audit of League expenses and executive conflicts last year also noted that several members of Hamilton's family had worked for the League; that he had received numerous gifts from League insurance vendors; and that he had almost $70,000 in expenses on his League credit card in three years that had "an unclear business purpose," "inadequate documentation" or were "excessive."

In 2008, Hamilton's total compensation package was $225,520.

Hamilton's daughter Carrie Hamilton works for ACE Insurance, the company that KLC brought in to handle Lexington's business.

The audit also found that Collins & Co. had employed Hamilton's son and his grandchild's mother.

The League is a non-profit organization that sells insurance and other services to its member cities.

KLC is also at the center of an imbroglio in Lexington about how the city procures insurance. In 2007, Patrick Johnston, director of the division of risk management, raised red flags about the ethics of the League related to the way the Lexington-Fayette Urban County Government's law department was buying insurance.

Those questions have led to a city investigation and a state audit into how Johnston's allegations were handled and an analysis of how the city procures insurance. Internal and external auditors for the city have said Johnston's allegations were unfounded.

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