The Transportation Cabinet was unduly influenced by road contractors during Gov. Ernie Fletcher's administration, with unnecessary projects awarded while campaign donations were collected from the industry, a cabinet manager testified Wednesday.
Chuck Knowles, a deputy state highway engineer who joined the cabinet in 1976, said he had been concerned about contractors' influence over internal decisions on road projects, job promotions and other matters.
"I have some coziness concerns about a few contractors out of the 600 we deal with," Knowles testified in U.S. District Court in Lexington.
Road contractor Leonard Lawson, 70, and former Transportation Secretary Bill Nighbert, 58, are standing trial on charges related to theft, bribery and obstruction of justice. The trial is expected to last at least three weeks.
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Prosecutors say Nighbert arranged for confidential cabinet bid estimates for $130 million worth of road projects to be leaked to Lawson in 2006 and 2007, during the Fletcher administration. After Fletcher lost re-election, Nighbert was given "a fake job" at a company that Lawson co-owns that came with a yearly salary of $125,000, a $34,500 Toyota Avalon and medical insurance for him and his wife, prosecutors say.
Knowles is the cabinet official who alerted his superiors that bid estimates allegedly were being accessed by people with no legitimate need to see them, triggering the investigation that ultimately led to the indictments against Lawson and Nighbert.
On the witness stand Wednesday, Knowles said Fletcher's Transportation Cabinet in general and then-Highways Commissioner Marc Williams in particular were influenced by road contractors.
He said it's clear — from years of working inside the cabinet — that contractors help decide who gets promoted, and he blamed his strained relations with some contractors as the reason he didn't get a promotion that he wanted.
Knowles told the FBI in 2008 that he heard stories inside the cabinet about road contractors being pressured to pay money to Fletcher's re-election campaign. He did not elaborate Wednesday, other than to confirm what he said to the FBI.
The Herald-Leader has reported that in 2006, Nighbert and Fletcher invited road contractors to a Governor's Mansion luncheon and assured them that Kentucky would spend more than $2 billion on road projects over two years, which it later did. Then they asked the contractors for campaign donations.
Knowles cited two resurfacing projects, one at the Interstate 64-75 split in Fayette County and another on the Cumberland Parkway in Adair County, that he said were not necessary or did not need to be as extensive and costly as what the cabinet ultimately ordered. Both projects went to Lawson's companies.
"I have other people who agree with me," Knowles said.
While questioning Knowles, Assistant U.S. Attorney Ken Taylor said Williams, the highways commissioner at the time, approved a third project for Lawson, on U.S. 60 in Carter County, for which Lawson bid 20 percent more than the cabinet's bid estimate — a big enough difference that Lawson otherwise could have expected his bid to be rejected.
The Executive Branch Ethics Commission investigated Williams for a fourth project. Former cabinet engineer Sam Beverage alleged that Williams ordered him to rig the contract-awarding procedure on a 2005 bridge project in Harrison County for DLZ, a Frankfort-based engineering firm also known as Brighton.
The ethics panel dropped the charge in 2008 after noting that Beverage was the only witness to implicate Williams, and Beverage already had admitted to ethics violations related to the bridge project.
Lawson's defense attorney, J. Guthrie True, attacked Knowles' credibility repeatedly in court Wednesday.
True suggested that Knowles was a disgruntled employee who blamed road contractors when he lost at office politics. True took Knowles' suspicion that contractors quiet ly back friendly cabinet managers for advancement and threw it back at him.
"Who owns you?" True asked.
"The taxpayers," Knowles said.
"Which contractor owns you?" True asked.
"Nobody owns me," Knowles replied.
True noted that Knowles is a "double-dipper," a state employee who retires and then returns to work, drawing a salary and a pension. Knowles said he gets $105,000 a year in salary and $90,000 a year in pension payments from the Kentucky Retirement Systems.
True asked Knowles whether it bothered him ethically to take public money from two sources and cling to a state job that a younger engineer could use.
"No, it does not bother me," Knowles said, adding that the Transportation Cabinet has struggled in recent years to deal with the retirements of experienced engineers who cannot be replaced easily.
On Tuesday, acting Transportation Secretary Mike Hancock said he's aware of at least 37 returned retirees at the cabinet, including himself.
"It's not incredibly uncommon," Hancock said.
While cross-examining Knowles and two other cabinet officials, Steve Waddle and Donnie Miracle Jr., defense lawyers suggested that the cabinet's bid estimates — known as engineer's estimates — are not legally classified as confidential, so their disclosure is not really an offense.
The cabinet produces other estimates on proposed road projects earlier in the process that are known as field estimates. Field estimates are available to the public, including road contractors, as is much of the basic information — such as the price of stone, asphalt and other materials — that go into them, the defense lawyers argued.
Still, the cabinet officials said, engineer's estimates are the cabinet's final decision on what a project should cost, calculated in the days before bids are due, and they are kept locked in desks at cabinet headquarters. Until bids are opened, nobody should see the estimates other than the three cabinet engineers who work on them, the officials said.