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Official: Ethics Report At Issue In Campaign Will Be Released

By JOE BIESK
Associated Press Writer

FRANKFORT, Ky. (AP) - A report detailing an ethics investigation of Democratic gubernatorial nominee Steve Beshear's former law firm will be released to the public on Saturday, a state official said.

Franklin County Circuit Judge Thomas Wingate on Thursday decided the report, which was written in 1995, regarding the firm's handling of the dismantling of Kentucky Central Life Insurance Co. was protected by attorney-client privilege. Wingate ruled the decision whether to release the report lies with Julie McPeak, executive director of the state Office of Insurance, and a spokeswoman said it would be released.

"We're planning to release the report at noon on Saturday which is consistent with the court's order and the memorandum we filed last week in court," Office of Insurance spokeswoman Ronda Sloan said.

Beshear is challenging Gov. Ernie Fletcher in the Nov. 6 election. Fletcher has recently used the confidential report as campaign fodder against Beshear, who has said the report should be released. Messages left with Beshear's campaign were not immediately returned Thursday.

During a speech to a Rotary Club in Louisville, Fletcher urged the audience to closely examine the report.

"I didn't know about it, you didn't know about it," the governor said.

Beshear's former law firm, Stites & Harbison of Lexington, was paid $21 million over 15 years for assisting in the liquidation of Kentucky Central. The company owned citrus groves, hotels and billions of dollars worth of life insurance policies but was overtaken with financial woes and collapsed in the mid-1990s.

Kennedy Helm, chairman of Stites & Harbison, said the firm was not contacted by the Cincinnati law firm that conducted the investigation and had never seen a copy of the report until now. Helm said the firm might have more to say after the release on Saturday.

"We think that now that we're free to tell the whole story that the report will be discredited," Helm said. "This is 14 years old, it's about as relevant as who won the 1995 Super Bowl if you ask me. It's a fatally flawed report."

Fletcher has claimed Beshear and his firm prospered from the bankruptcy while hundreds of Kentuckians lost their jobs and thousands lost their savings.

Stites & Harbison was the subject of an ethics investigation 12 years ago, which looked into whether Beshear's firm "violated any duty" or rules of ethical conduct when it signed on to lead the liquidation of the insurance company. The investigation, which had not been publicly disclosed, was reported last month by the Lexington Herald-Leader.

The Herald-Leader and The (Louisville) Courier-Journal asked Wingate to order the release of the confidential report.

Wingate, however, said the report was a communication "created strictly for the purpose of providing legal advice" to former Kentucky Central liquidator Don W. Stephens, and the judge could not order its release.

McPeak, in her capacity as head of the Office of Insurance, is currently the liquidator and intends to release the document after Stites & Harbison has had 48 hours to review it.
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Associated Press writer Bruce Schreiner in Louisville contributed to this report.

(Copyright 2007 by The Associated Press. All Rights Reserved.)


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