Investigation findings ( .PDF )
Neither Douglas County Commissioner Bob Johnson nor Mayor Sue Hack will face charges that they violated the state's conflict of interest laws by owning a piece of a company to which the city and county offered financial incentives.
The Kansas Attorney General's Office has found that there's not enough evidence to pursue a case against Hack and that Johnson's ownership interest in Deciphera Pharmaceuticals is not of the type that puts him in jeopardy of violating the conflict of interest laws.
Both Hack and Johnson said they weren't surprised by the findings but were glad the issue is over. If they had been found to have violated the conflict of interest law, they could have been forced to resign their elected position.
"I think now the question has been asked and answered," Hack said. "I hope that we can move on."
Grassroots Action satisfied
The issue stemmed from the city and county's efforts to keep Deciphera Pharmaceuticals - a Lawrence-based start-up - from leaving the community. The city, county and other groups had put together a package of economic incentives for the company totaling more than $1 million over a 10-year period.
A citizens group - Grassroots Action - began raising questions about the deal because both Hack and Johnson have ownership interests in the company. Grassroots Action leaders said they were concerned that Hack and Johnson had violated a state law prohibiting elected leaders from making or participating in the making of a contract with a company that they own.
But on Tuesday, David Smith - president of Grassroots Action - said he was willing to live with the findings of the attorney general's office.
"The attorney general's office is competent to make these findings," Smith said. "I can't really see what more can be examined. We have to trust that the attorney general's office looked at all the pertinent information."
Findings on Hack
The attorney general's investigation - led by Assistant Attorney General Barry Disney - came up with two sets of findings.
For Hack, the investigation found that there was insufficient evidence that she had advocated for the approval of the package of financial incentives. The investigation notes that Hack did attend a closed-door executive session on the matter, but the law doesn't prohibit her from attending the meeting. It only prohibits her from advocating a position on the issue. The investigation turned up no evidence of Hack taking a position. The executive session meeting was not recorded, nor were any minutes taken.
There also had been allegations of Hack attending other city staff-level meetings on the topic. The investigation held open the possibility that she attended other meetings where the issue was discussed, but again found no evidence that she advocated a position.
As the attorney general's office had noted in a previous investigation on the matter, Hack's attendance at any meeting where the issue was discussed "contributed to the appearance of impropriety."
Hack reiterated Tuesday that in no meeting or other gathering did she urge that the incentive package be approved or provide direction on how it should be structured. Instead, she said she received only briefings on the process.
Findings on Johnson
In Johnson's case, the investigation found that he does not have a legally defined "substantial interest" in Deciphera. Instead, Johnson owns a 50-percent stake in a partnership called J&S Holdings. J&S Holdings has an $8,200 interest in DEC Investors, which has an ownership interest in Biochenomix. Biochenomix, in turn, has an ownership interest in Deciphera.
The state law defines a "substantial interest" in a company as being a direct ownership interest, not ownership through a series of partnerships. Johnson had listed on his state-mandated statement of substantial interest that he owned a portion of Deciphera. But the attorney general's investigation found that he was not legally required to report any relationship he had with Deciphera, and was entitled to vote and offer opinions on the deal. Johnson did advocate for the approval of the incentives package.
"I was under no obligation to disclose it at all, but if I hadn't, I was concerned it would have created the appearance of impropriety," Johnson said. "I didn't want to have the accusation that I was hiding anything. But I'm sorry that it became the thing that it did."
Hack on Tuesday said she believes she is legally in the same situation that Johnson is in. She said her ownership interest in Deciphera is through a partnership very similar to Johnson's. She, however, had not provided that detailed information to the attorney general's office, she said.