A Hindu ground-blessing ceremony for a new company in Elizabethtown became a campaign controversy last month after Democratic Gov. Steve Beshear participated and his Republican challenger criticized him for it.
What went unnoticed is that one of Beshear's sons, Louisville attorney Andrew Beshear, is paid to represent the company in question, UFLEX Ltd. of India, preparing to collect $20 million in tax breaks from the Kentucky Cabinet for Economic Development. The cabinet has granted UFLEX preliminary approval for tax breaks, but the factory, which will make flexible packaging, first must achieve specific goals for jobs and investment. It's eventually expected to employ 250 people.
Steve Beshear oversees the cabinet as chairman of the Kentucky Economic Development Partnership Board; in 2008, he appointed his friend and aide Larry Hayes as the state's economic development secretary.
Andrew Beshear handles economic development clients, including UFLEX, at the law firm of Stites & Harbison, where his father was a managing partner until he was elected governor in 2007.
The potential for conflicts of interest is obvious, an ethics watchdog said Tuesday.
"It does not look good for the governor's son to be involved in deals like this with state tax money at stake," said Richard Beliles, chairman of Common Cause of Kentucky. "Presumably, Andrew Beshear is getting paid a healthy legal fee for his work in this deal. This just seems a little too close."
The governor's office said Tuesday there is no potential for conflict.
Tax breaks are awarded by the cabinet's Kentucky Economic Development Finance Authority, or KEDFA. While KEDFA is appointed and overseen by the board that the governor chairs, the governor is not a KEDFA member, so it should be considered "an independent agency of state government," said Beshear spokesman Terry Sebastian.
The Beshear administration does not recommend to companies that they hire the governor's son, Sebastian added.
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