Special Reports

KLC staffers accepted trips, gifts, steered work to relatives

Azur Restaurant, co-owned by Bernie Lovely. Photo taken June 3rd, 2009. Photo Taken by Jes Ledbetter | Staff
Azur Restaurant, co-owned by Bernie Lovely. Photo taken June 3rd, 2009. Photo Taken by Jes Ledbetter | Staff

The audit of the Kentucky League of Cities listed numerous conflicts of interest that officials had with insurance vendors and other firms. In addition, gifts, including meals, trips, hams and even jobs for family members, were cited as problems.

■ Bernard Lovely, an attorney and the husband of KLC executive director Sylvia Lovely, received benefits for his law firms and his restaurant, Azur.

Over 10 years, KLC spent $2.1 million with law firms where Bernard Lovely was a partner — $1.4 million of that in the three years reviewed. Auditors said William Hamilton, the chief insurances officer, told KLC's general counsel Temple Juett that Lovely's law firm "was not getting enough work." Other staffers said the firm would not have received as much KLC business if Bernard Lovely had not been a partner there.

KLC employees were encouraged to dine at Azur, which Lovely co-owned. And even though KLC staff members spent $28,600 there over three years, the business Azur received from vendors of KLC "was reported to be much more significant," the audit said.

■ James Johnston, president of Collins & Co., a claims adjustment company for KLC, provided his house on Bonaire, an island in the Dutch Caribbean, for an annual scuba diving trip taken by Hamilton, Juett and Michael Goff, administrator of product development, and some spouses over a period of five years. (Juett said he paid for his expenses for some years.) Hamilton, as chief insurances officer, was involved in choosing Collins & Co. to process insurance claims and was responsible for monitoring its work. He did not view accepting the use of the house as a conflict, according to the audit.

■ Meals, drinks and entertainment for top executives who attended conferences in New Orleans, San Diego and Orlando, Fla., were paid for by vendors. "Executive staff expected the vendors to pick up the tab," the audit said.

■ ACE Reinsurance, which did business with KLC, paid for two trips to Naples, Fla., for Hamilton and his wife.

■ MunichRE, a multinational insurance company, paid for the stays of Hackworth, Hamilton and their wives in Munich, Germany.

■ Hamilton's family members often had jobs or contracts with KLC or its vendors, including $14,413 for decorating services to his wife, $13,576 to his brother for renovation work and $1,290 for lawn mowing services to his son. In addition, Hamilton's son, daughter and grandchild's mother were employed by vendors.

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