- Associated Press - Wednesday, August 22, 2018

FRANKFORT, Ky. (AP) - A top state official’s subpoena powers were on the line as a Kentucky appeals court weighed a former state worker’s refusal to respond to demands for information from Gov. Matt Bevin’s administration.

An attorney for Frank Lassiter, the ex-state employee, said Wednesday there are limits to the subpoena authority of the state’s Finance and Administration Cabinet secretary. Those restrictions put Lassiter beyond reach of the secretary’s subpoena, the attorney said.

“I think the secretary’s subpoena power does not exist outside the executive branch of government,” attorney J. Guthrie True told a three-judge panel of the Kentucky Court of Appeals.

The case stems from Lassiter’s refusal to comply with the Republican governor’s investigation into a no-bid contract awarded by his Democratic predecessor.

The case is an outgrowth of the ongoing feud between Bevin and two of the state’s top Democrats - former Gov. Steve Beshear and his son, Attorney General Andy Beshear.

Lassiter won his case in a lower court, prompting an appeal by the finance and administration secretary. The appeals court panel heard about 45 minutes of arguments, and Judge Kelly Thompson indicated a ruling could come within three months.

Aaron Herzig, an attorney for Finance and Administration Secretary William Landrum III, said state law extends the secretary’s subpoena power to any witness with relevant information in a probe of alleged mismanagement of state funds. He said any person can be a witness.

Herzig said the lower court ruling “takes away” the ability of leaders in the executive, legislative and judicial branches to use subpoenas as an investigative tool.

“If the officials charged with investigating mismanagement … don’t have subpoena power to investigate the entire matter, I don’t know what that power really means,” he said.

Judge Glenn E. Acree asked True how investigators could talk to people no longer in state government if a subpoena did not apply to them.

True acknowledged that state law gives the finance secretary the authority to investigate allegations of procurement-related mismanagement by state agencies and state employees.

“There are limits to the secretary’s authority,” he said. “That’s what we’re really here about. What are those limits?”

The case stems from the Bevin administration’s investigation into whether a $3 million contract that Bevin’s predecessor, Steve Beshear, awarded to SAS Institute complied with state procurement laws. Lassiter is a former state worker who was a consultant for SAS at the time, and his wife Mary was the executive cabinet secretary for Steve Beshear.

Steve Beshear awarded the no-bid contract on his last day in office.

The contract was to provide “fraud detection services” for kynect, which was Kentucky’s state-operated health insurance exchange. In an affidavit filed with the court, Inspector General Ken Bohac said the contract and others previously awarded to SAS Institute appear to have violated state procurement laws and the “well-established policies and procedures of the Finance and Administration Cabinet.”

The inquiry is part of a broader investigation of what Bevin alleges is corruption in Steve Beshear’s administration. Bevin contracted with an Indiana-based law firm to assist with the probe. Democrats have criticized the investigation as politically motivated.

Andy Beshear recently launched his own campaign for governor in 2019. Bevin has not said if he will run for re-election. Bevin and Andy Beshear have feuded over issues including higher education funding and changes to public pension systems that ended up being fought in court.

During the court hearing, Thompson noted that “in a perfect world, the state attorney general’s office would handle investigative work for the state finance secretary.

“That may be really kind of the root of the problem here,” True replied while noting the “tension” between the attorney general’s office and the governor’s office.

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