By Morgan Watkins, Louisville Courier Journal
Kentucky taxpayers must pay nearly $33,000 in court costs and penalties because Gov. Matt Bevin’s administration improperly withheld information about the investment of public money in a private company.
Franklin Circuit Court Judge Phillip Shepherd ordered Bevin’s Cabinet for Economic Development to pay the Courier Journal’s court costs, plus penalties, because it refused to release public records that identify shareholders of Braidy Industries, which plans to build a state-subsidized $1.5 billion aluminum rolling mill near Ashland.
The Courier Journal requested the records last summer but was denied access to them. When Attorney General Andy Beshear determined that the documents in question are subject to public disclosure, the cabinet sued the Courier Journal in an effort to overturn Beshear’s legal opinion.
Michael Abate, an attorney who represents the Courier Journal, said this week’s court order sends a strong message to officials who willfully violate Kentucky’s Open Records Act.
“They dragged us to court over this,” Abate said. “This is a really strong and a really good decision that shows that agencies have to abide by the open records law.”
On the final night of its 2017 session, the Kentucky Legislature unanimously voted to grant Bevin’s request for $15 million that would be used for economic development purposes. Legislators later said they were told it would be an incentive to help land a major employer in economically distressed Eastern Kentucky, but not that the state would become a part-owner of a private business.
The Bevin administration subsequently denied access to records identifying other shareholders in the startup company.
Shepherd in March ruled the state must disclose the shareholders’ names. His order on Thursday requires the Bevin administration to cover almost $30,700 in Courier Journal legal costs, plus $2,225 in statutory penalties.
“Absent an award of attorney’s fees and penalties in these circumstances, state agencies would be rewarded for obstructing timely compliance with the Act and would have an incentive to initiate legal proceedings to delay compliance,” Shepherd wrote.
“The effect of such tactics would be to punish the parties who seek to vindicate the purposes of the Open Records Act, by forcing them to assume the cost, burdens, and delays inherent in defending a lawsuit,” he explained.
While the records have not yet been publicly released, Shepherd indicated the shareholders identified in the documents match the names voluntarily provided by Braidy Industries in December:
► Charles Price, CEO of Louisville-based Charah LLC. Price, whose company provides coal ash management services, sponsored a fundraiser for Bevin last year that raked in $68,000 in campaign donations.
► Braidy Industries CEO Craig T. Bouchard, a Florida entrepreneur who retains a controlling interest in the company.
► Commonwealth Seed Capital, the government-owned limited liability company that served as a conduit for the state’s $15 million direct investment of taxpayer money in Braidy.
► The Robert Stucker Trust. Robert Stucker is chairman emeritus of the Chicago-based law firm Vedder Price.
► Carl Westin, whom Braidy described as a Swedish national. Carl Christian Westin Jansson confirmed in December that he is the sole owner of the investment firm Carl Westin Ltd.
► Michael Porter, a Braidy board member and economist who teaches at Harvard Business School.
► Norton Schwartz, a retired U.S. Air Force general and Braidy board member.
► Christopher Schuh, a Braidy board member and head of the Massachusetts Institute of Technology’s Department of Materials Science and Engineering.
► John Preston, a former MIT director of technology development (and licensing) and current Braidy board member.
In Thursday’s order, Shepherd denied the state’s request to keep records concerning Braidy’s investors secret while it appeals his March ruling on the merits of the case.
Instead, Shepherd said the records will remain under seal for 30 days to give the state an opportunity to ask a higher court to intervene and temporarily prevent his order requiring the release of the documents from going into effect.
“This is an important ruling for the taxpayers of Kentucky,” said Joel Christopher, the Courier Journal’s executive editor. “We have a right to know how our money is being invested.”
The economic development cabinet plans to appeal Thursday’s order as well as Shepherd’s earlier ruling in the case, agency spokesman Jack Mazurak said. He also disputed the notion that the cabinet willfully violated the open records law.
“As the Cabinet laid out to the Court, releasing the requested information — regardless of Braidy Industries’ independent decision to release it — would establish a case law precedent harming Kentucky’s ability to attract businesses and grow a stronger economy,” he said in an emailed statement.
Besides the $15 million state buy-in, Braidy Industries is eligible for as much as $15 million in tax incentives, among other support. Boyd and Greenup counties also granted the company a 20-year property tax exemption, though the company has pledged to contribute to public schools.
Morgan Watkins: 502-582-4502; firstname.lastname@example.org; Twitter: @morganwatkins26. Support strong local journalism by subscribing today: www.courier-journal.com/morganw.