ATTORNEY GENERAL OFFICE PROBE: KELLY SAYS AUDIT NOT INTENDED TO TARGET JACKSON LAWYER

JEFFERSON CITY - State Auditor Margaret Kelly said Wednesday that a recent audit of the attorney general's office was intended only to outline improprieties in the operations of that office, not to target Jackson attorney John Lichtenegger for any improprieties.

"Some of the newspaper articles I have seen are giving an incorrect perception or slant to this thing," said Kelly, in an interview with the Southeast Missourian. "I think John has taken this personally, and that is unfortunate. It was not intended to be that way.

"I want to clarify that our focus was on the attorney general's office and the recommendations that we made were to that office."

Last week, Kelly issued an audit report of the administration of former Attorney General William Webster, which uncovered numerous findings of mismanagement, mishandling of funds and shortcomings in oversight and control of state resources.

In the report, Kelly suggested "decisions that resulted in the waste of taxpayers' money were so common they were almost routine."

One of the findings outlined in the audit report was that the attorney general's office provided special benefits to a Second Injury Fund contract attorneys, which other contract attorneys for the fund had not been given.

The audit noted that the attorney's law firm was provided office space in St. Louis, and was paid more than $137,000 in fees and expenses during the six months of 1992 he occupied the space.

The audit report does not mention the attorney by name. But when asked at the audit press conference about the attorney's identity, Kelly said it was Lichtenegger.

"We were not commenting on one individual. We were commenting on a situation we saw in the attorney general's office that needed to be pointed out because it was an unusual circumstance," explained Kelly. "This whole thing has been blown out of proportion and taken out of context.

"The context we were looking at were dollars and cents the state was spending under authority of the attorney general's office. That was strictly the focus."

Lichtenegger was upset by the audit report and said it inferred that he had done something wrong. The Jackson attorney said that he and his firm, at the request of the attorney general's office, took over defense of the state's Second Injury Fund in about 4,000 cases. Those cases had previously been handled by St. Louis lawyer William Roussin, who pleaded guilty to federal charges related to problems with the fund.

Lichtenegger pointed out that the attorney general was trying to find someone outside the St. Louis area to clean up the cases, and that his firm was just trying to help. "We completed the cleanup of that mess in St. Louis," the attorney said last week.

References in the audit that his firm was treated special are "absurd," Lichtenegger said.

He noted that the attorney general's office provided an office for his staff to work in St. Louis, but that fees to his firm were paid under terms of the original contract.

Kelly pointed out that Lichtenegger had the same kind of contract for services as all other Second Injury Fund contract attorneys. But no other attorneys under the contracts were provided funds for things like office space and payment for parking fees.

The auditor said a new contract for services, outlining the additional benefits that were provided, should have been drawn up to provide proper accountability for state resources.

"I have pointed out in my audit report that the attorney general's office has contracted with outside lawyers for legal services. But this was a single instance where a Second Injury Fund attorney, working under contract with the office, was also provided additional benefits such as office space, furniture and equipment, in addition to being paid the contract," said Kelly.

"What we were saying to the attorney general was he should limit the benefits provided to contract attorneys to the contract specifications."

Kelly added, "He (Lichtenegger) may have done a monumental job, a fantastic job of taking care of this work, but that was not our focus."

Lichtenegger complained that Kelly had not contacted him to get the facts; however, the auditor said there was no reason to contact him.

"The money was paid out by the state; there are documents and records to show that money was paid. They contract with people and businesses all the time. We are looking strictly from the state view point on how the state needs to conduct business."

In the section of her audit that refers to Lichtengegger's law firm, Kelly's recommendation is that the office should: "Limit the benefits provided to contract attorneys to contract specifications and obtain bids for all leased office space."

Kelly was also criticized by Webster and others for not conducting the normal exit interview with Webster before releasing the audit report.

She noted that before it was released, copies of the audit were made available to Webster and current Attorney General Jay Nixon.

"Because of the unusual circumstances surrounding the audit, I decided it was best to go directly to the public," said Kelly. "The former attorney general and current attorney general have an opportunity to comment in whatever way they like.

"After it was presented, I met two hours with the current attorney general discussing the audit report and recommendations made, and certainly would not do anything to discourage any one of them from responding in any way they like."

Kelly said that among the special circumstances that led her to bypass the exit interview were the fact that Webster had left office and that he was the target of a federal grand jury investigation.

Several members of Kelly's staff have been subpoenaed and have testified before the grand jury in Springfield. This afternoon, Kelly is scheduled to testify.

"I am going to Springfield tomorrow (Thursday) because the grand jury has invited me to meet with them," explained Kelly. "I have consented to meet with them ... I will basically discuss the findings of the audit; that is what I would anticipate discussing."