Mayor Sue Hack and Douglas County Commissioner Bob Johnson are facing new allegations that they violated conflict of interest laws that if proven true could force their removal from office.
Grassroots Action, a local political activism group, has asked the Douglas County District Attorney to investigate Hack and Johnson's role in an approximately $1 million package of economic development incentives given to Deciphera Pharmaceuticals, a start-up company that was considering moving outside of Lawrence.
Both Hack and Johnson each own more than $5,000 in stock in the company, which is the amount that triggers conflict of interest laws that prohibit elected leaders from making contracts with companies they own.
"The more you look at this situation, the more questions it creates," Gwen Klingenberg, a member of Grassroots Action, said about the group's decision to ask for another investigation of the matter.
In particular, the group filed the charges after news of another closed-door meeting on the Deciphera deal came to light. City commissioners already had reached a settlement with the Kansas attorney general's office on a violation of the state's open meetings act related to a Sept. 20 closed-door executive session where the deal was discussed.
But documents the city provided to the attorney general as part of that investigation revealed another private meeting involving both Hack and Johnson had taken place earlier that same day. Also included in that meeting were City Manager David Corliss, Chamber of Commerce President Lavern Squier, attorney Matt Hoy and LaVerne Epp, chairman of the Lawrence-Douglas County Bioscience Authority.
Both Johnson and Hack defended their involvement in the meeting, and said they did not believe they had done anything to harm the public's interest by participating in the deal. Both also said they were not participating in the deal to further their own financial interests.
Instead, Johnson said he thought many of the concerns being expressed about the process were being made by individuals who had political differences with the two commissions.
"It is what it is," Johnson said. "I think I have been totally and completely honest. If they want to make a big deal out of it, then have at it."
Johnson had publicly disclosed his approximately $8,000 financial interest in the company and had publicly asked his fellow commissioners whether they objected to him being involved in the process. Neither Commissioner Charles Jones nor Jere McElhaney objected to Johnson being involved.
Hack stood by her previous statements that she was acting in the public interest and was not trying to hide her financial interest in the company. But she declined to make any further comments.
"I've said all I'm going to say about it," said Hack, who did not deny attending the private meeting with the chamber president, Johnson and others.
The key legal question could become whether Hack and Johnson participated in the meeting and provided feedback on how the economic development package should be structured. Both Hack and Johnson ultimately abstained from voting on the Deciphera deal, but Grassroots Action maintains that they were required to be completely detached from the deal.
The state law says elected officials can not "make or participate in the making of a contract" with a company that they have a substantial interest in. The penalty for violating that portion of the law is serious: The elected official shall resign from office.
A 2003 opinion by the Kansas Governmental Ethics Commission states that making or participating in the making of a contract is defined as "discussions and conversations with other council members regarding the options before the council." Hack and Johnson were the only elected officials from their commissions at the private meeting, thus it is not clear whether that meeting could produce a violation as defined by the legal opinion.
Grassroots Action, however, also is alleging Johnson improperly commented on the deal as part of the County Commission's late September meeting where the Deciphera deal was approved. Johnson technically abstained from the vote but made several comments in support of the deal before abstaining.
Douglas County District Attorney Charles Branson confirmed that his office received the complaint Tuesday afternoon. He said his office would quickly review it and decide how to proceed. Branson last month received a complaint from Grassroots Action alleging that the city violated the state's open meetings law. Branson turned that investigation over to the Kansas attorney general, who found the city violated portions of the open meetings act.
But the attorney general also investigated whether Hack violated conflict of interest laws and found there was no evidence showing that she did. It was unclear, however, whether the attorney general focused his investigation on the private meeting that Hack attended or only the one official City Commission executive session.