Something Rotten in Landfill Deal?
Tuesday, June 22, 2010
In an effort to clean up one of the biggest financial messes in the state of Rhode Island the governor’s chief legal counsel, Kernan “Kerry” King, steered the effort to recover a portion of the lost money from the landfill to a friend and campaign donor, Thomas F. Holt, Jr.
Holt is a Boston-based lawyer who summers in Narragansett and plays golf with King at the Point Judith Country Club. Not only did Holt get a state contract worth $1.5 million but he did so without bid.
King, a Republican, is now running for General Treasurer.
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But several local watchdog groups said the deal raised ethical concerns.
“In Rhode Island, this sort of thing does not violate any statutes we have in this state but it would be a violation in other states and that tells us that maybe public officials should not be involved in this kind of behavior,” said John Marion, executive director of Common Cause Rhode Island. “Mr. King should have recused himself because he received a contribution.”
King told GoLocalProv that he recommended that Governor Don Carcieri approve the hiring of the Boston-based law firm K&L Gates by a state agency—the Rhode Island Resource Recovery Corporation. Holt is a lead attorney for the firm.
A Friend and a Donor
Holt is both a friend and a donor to King. In 2005, Holt donated $1,000 to King’s campaign for lieutenant governor, according to state campaign finance records. Holt, a Democrat, then gave $250 to Carcieri in 2006. He said he made the donation because he was friends with King.
Holt’s firm, K&L Gates ended up making $1.5 million representing Resource Recovery. The former directors and some employees had mismanaged the state’s landfill, costing the state as much as $75 million, according to a state audit.
K&L Gates was hired in February 2010 to pursue an insurance claim to recover some of the losses. Just four months later, the firm won a $5 million settlement for the state from the RSUI Indemnity Corporation, one of the insurers of Resource Recovery. K&L Gates received a 30 percent commission on the settlement, totaling $1.5 million and leaving the state with $3.5 million.
King claimed that he had negotiated a lower fee. “They were looking for a more lucrative arrangement than we could provide,” he said.
A Conflict of Interest
King insisted there was no conflict of interest between his friendship with Holt and his role in getting his firm state work.
Holt likewise denied any connection between his campaign contribution, his friendship with King, and his work for the state.
But the head of Operation Clean Government, another government watchdog group, begged to differ.
“It sounds like a potential conflict of interest and Mr. King should have considered recusing himself from that decision-making process,” said Larry Valencia, president of the organization.
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