Kentucky attorney general releases statements from 1983 highway bid-rigging case

jcheves@herald-leader.comJanuary 9, 2014 

Leonard Lawson in 2010.

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— Highway contractor Leonard Lawson "almost came to blows" with another contractor three decades ago as the two conspired to divide state road projects between their companies, according to a lengthy statement Lawson gave prosecutors in August 1983.

On Thursday, the Kentucky attorney general's office released Lawson's statement, which was part of a 1980s bid-rigging investigation that led to felony convictions against his company, Mountain Enterprises, and Nally & Gibson Surfacing.

Mountain Enterprises paid a federal fine of $150,000. Nally & Gibson paid $300,000, and its president, Edwin Paul Gibson, who also pleaded guilty, was fined $50,000 and was ordered to perform 120 hours of community service.

The Lexington Herald-Leader, The Courier-Journal of Louisville and The Associated Press requested the statement through the Open Records Act after Lawson was indicted in 2008 on federal bribery charges, along with former state Transportation Secretary Bill Nighbert. Both men were acquitted in that case.

Lawson opposed the news organizations' records requests in court, citing his right to privacy. But the Kentucky Supreme Court ruled against him last month.

"Lawson's admitted involvement in a successful attempt to circumvent the (Kentucky Transportation) Cabinet's competitive bidding regulations gives the public, we believe, a legitimate interest in finding out how that could be accomplished, as explained by someone who admits to doing just that," the court wrote.

J. Guthrie True, Lawson's attorney, said Thursday he had no comment on information disclosed in the statement. True said it's his understanding that Lawson no longer holds an active position in any of the road-building companies he once owned.

For many years, Lawson, now 74, dominated Kentucky politics and highways, giving hundreds of thousands of dollars in political donations and winning contracts worth hundreds of millions of dollars. His operations were based in Central and Eastern Kentucky.

In the 39-page transcript of Lawson's interview with prosecutors, and in an attached agreement he signed, Lawson provided information about his company's bid-rigging and identified other participants to prosecutors who were building criminal cases. In exchange for that cooperation, and for paying $112,000 in restitution and damages to the state of Kentucky, Mountain Enterprises avoided a one-year suspension from bidding on road contracts.

Lawson said he met at bars, hotels and his home with other highway contractors shortly before the Transportation Cabinet began new rounds of bidding for road projects. The contractors discussed what projects were likely to be coming, who was entitled to bid on each project as they took turns, and how they should structure their bids to maximize their profits without facing a truly competitive bid.

Lawson said that when he felt entitled to a contract, he would figure the fixed costs, such as labor, equipment, supplies and transportation, then add "a profit of 15 to 20 percent." To conceal his collusion with other builders, Lawson said he would instruct at least one to submit a "complementary bid" that was "2 to 3 percent higher."

At one point in the interview, a prosecutor asked Lawson about a particular road project for which he bid $167,265 and the next-highest bid was $168,754.

"Doesn't that seem a little close?" the prosecutor asked. "Wouldn't that make that a little suspicious?"

Lawson told the prosecutor it was better for the next-highest bid to be too close rather than much higher.

"Well, if I was lookin' at it from Frankfort's, uh, standpoint, uh, and kind'a analyze those bids, it would look like it ... it would make it look a lot more competitively with three people biddin' than it would, uh, if they'd been a lot of spread there," Lawson said.

The contractors usually agreed on who would get contracts in which counties, carving the state into their own non-competitive territories based on the locations of their quarries, asphalt plants and other operations, Lawson said. But tensions flared if someone believed that another contractor was taking too much, he said.

At a 1979 meeting at the Continental Inn in Lexington, Lawson and Kentucky-Virginia Stone Co. president Burt Paynter argued over forthcoming projects around Bell and Knox counties.

"Burt Paynter was ... was mad and ... and possibly also drunk and saying, you know, 'You're taking my business away from me, you're taking away my livelihood, I'm gonna fight ya,' and uh, they were disagreeing over whose turn it was to take a job," Lawson's attorney, John Reed, told prosecutors. Paynter's sons and James York, a Lawson manager, had to separate the two men, Reed said.

Burt Paynter died last year at age 93. Kentucky-Virginia Stone Co. no longer builds roads and is largely inactive.

Paynter's son, John, who lives in Tennessee, denied Thursday that his family participated in bid-rigging.

"We fought that in a trial. We went to court and fought that and we won. That was the end of it as far as I'm concerned," John Paynter said.

Paynter said he wasn't present for the 1979 argument between his father and Lawson, but he remembers Lawson.

"I've read everything in the newspapers over the years about his politicking and how fast he grew and all the techniques he used to do it," Paynter said. "I knew some of that stuff already, and some of it I didn't."

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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