Influential Frankfort lobbyist Bob Babbage last year failed to disclose his private business deals with Gov. Steve Beshear's chief of staff, in violation of the state ethics law, documents show.
"It was just a mistake," said Babbage, who filed a corrected disclosure report with the Executive Branch Ethics Commission last week, after the Herald-Leader asked him about the business deals. "It was an omission in the paperwork."
On Monday morning, Babbage and Adam Edelen, the governor's top aide, dissolved a land-development company in which they were partners with another Beshear appointee, Ralph Coldiron. They cited a desire to avoid the appearance of impropriety.
Hours later, Beshear strongly defended the relationship between Babbage and Edelen, arguing that it was properly handled and that everyone has the right to make a living.
The Herald-Leader first reported on the deals Thurs day.
"I don't think it looks bad," Beshear said. "If the only people who can work for state government are folks who don't know anybody, don't do any business with anybody, (and) don't make any money in any other way before they turn to state government, then we wouldn't have many people working for state government."
In his annually required disclosure report to the ethics commission last July 29, Babbage said he did not have financial relationships with anyone in the Beshear administration.
In fact, Babbage and Edelen — at that time, the governor's newly appointed chief of staff — were partners in Chartwell Land Co., which built a large house on a Bourbon County golf course, a speculative investment that was sold last month. Chartwell, founded in 2006, is the company they dissolved Monday.
The men and their wives also co-own a downtown Lexington condo unit in the Main & Rose building. They said Monday that they do not plan to sell the $257,100 unit, which provides office space for Babbage as well as for Edelen's wife, an Apple Inc. account executive who sells computers to the Kentucky Department of Education.
Under the state ethics law, lobbyists who knowingly file a false disclosure report to the ethics commission can be found guilty of a Class D felony, which can bring up to five years in prison and substantial fines.
However, the ethics commission agreed to accept Babbage's corrected report last week, in which he belatedly disclosed his ties to Edelen, said interim general counsel Rebecca Goodman. Unless someone files a complaint to the ethics commission, the matter is closed, she said.
Babbage said he told attorneys at the ethics commission in a conversation last summer that he and Edelen did business together. But Babbage said he failed to submit, or get, anything in writing.
"It was inadvertent. I wasn't trying to conceal anything," said Babbage, a former secretary of state, state auditor and Kentucky Democratic Party chairman.
Babbage is one of Frankfort's top lobbyists, with roughly two dozen clients who want something from the state government. He reports more than $500,000 a year in fees for lobbying the legislature alone; he is not required to disclose what he has paid to lobby the executive branch.
Babbage's clients include major contractors, including Palmer Engineering, which has received more than $1.2 million in state payments since Beshear took office in 2007. (A state contracts data base does not provide comparable figures for the previous administration.) Another client, International Game Technology, sells gambling equipment in states that have legalized gambling, as Beshear wants for Kentucky.
But the governor said Monday that his administration does no undue favors for Babbage's clients.
"There has been no allegation that Bob Babbage or any other lobbyist has gotten any kind of special treatment from the Beshear administration, because they haven't," Beshear said.
Steve Robertson, chairman of the Kentucky Republican Party, said that, unfortunately for Beshear, his chief of staff keeps embarrassing him.
First, the public learned that Coldiron — Edelen's friend and business partner — was given a political appointment at the Kentucky Office of Homeland Security, and a pay raise from $80,000 to $100,000 a year simply because Coldiron requested it, Robertson said.
Now the public knows Edelen and Coldiron did business on the side with a lobbyist who failed to disclose that fact, Robertson said.
"I hope Adam Edelen will take the steps necessary to assure the people of Kentucky that the good ol' boy patronage system is not continuing in the governor's office," Robertson said. "It wasn't that long ago — December 2007 — that the governor gave an inaugural speech in which he said his administration would be held to a higher ethical standard. This doesn't look like a higher ethical standard."