Several members of the nascent pack of powerful Kentuckians promising to reignite Louisville’s economy have close ties to Republic Bank, which will manage the group’s bank account.
The Louisville Economic Development Alliance’s account will hold millions of dollars, according to city records reviewed by the Kentucky Center for Investigative Reporting. Republic beat out three other banks for the yet-to-be-finalized contract.
Key LEDA leaders — the group’s interim CEO Pat Mulloy, the nominating and governance committee chair Steve Trager, and its chairman and most vocal proponent, Louisville Mayor Craig Greenberg — have spent years on the bank’s board of directors, online business records show.
The connections make some local lawmakers uneasy, who say the relationships have the trappings of a conflict of interest and risk spoiling public trust. This adds to some lawmakers’ fear that the group will push policies benefiting elite business owners instead of working-class people.
LEDA’s interim chief executive and the president of the Metro Council, however, say the selection of Republic Bank was fair and open and any claim of a conflict is misplaced.
Government accountability watchdogs say groups like LEDA, known as public-private partnerships, can get ensnared in accusations of self-dealing because members often stand to reap the rewards of their work. In this case, the ties between LEDA members and the bank underscore a persistent quandary the group could face: How will these prominent business leaders navigate a sea of potential conflicts of interest as they attempt to revamp economic growth in Louisville?
Metro Council Member Paula McCraney, a District 7 Democrat and a nonvoting member of LEDA’s board, said she didn’t know Republic Bank would provide financial services for the group until KyCIR recently told her. She’s hopeful LEDA board members will police themselves when potential conflicts arise — if not for their own reputations, then for the good of the group’s mission.
“If this is designed to catapult our community forward, then we need to be above board,” said McCraney, the chair of the council’s majority caucus and Budget Committee member. “Just the appearance of a conflict will derail this whole thing.”
To her, awarding the contract to Republic could be seen as “a big conflict of interest.”
Ongoing scrutiny
LEDA is at the center of an active ethics complaint filed by a former city employee, Terri Hathaway, this summer. The complaint, now under review by a hearing officer, alleges the group “will transfer the vast majority of control over economic development planning from public interests to private interests.”
At a meeting last week, Hathaway asked the Metro Council to freeze the $1.5 million allocation for LEDA until the city’s Ethics Commission completes its investigation and releases its findings.
The allocation came at the behest of Greenberg, who launched LEDA this summer.
As for freezing the funding, the mayor could hold or rescind the funding, said Kyle Ethridge, a spokesperson for the council’s majority caucus. That’s what Greenberg did last October when he terminated a $40 million contract for a health care nonprofit at the center of an ethics case that followed a KyCIR investigation. Or, Ethridge said, the council could pass an ordinance to rescind funds not already expended. She didn’t know how much of the allocation has already been funneled to LEDA.
According to city records, LEDA will focus on streamlining the city’s various bonding authorities and financing structures. It will also create a new city brand to attract and retain businesses.
The group’s board of directors is a who’s who of Louisville powerbrokers: bourbon bigwigs, developer magnates, bank presidents and corporate executives. Many have ties beyond LEDA, with positions on state and local chambers of commerce, arts organizations and the Louisville Country Club, among others, according to online business records.
Pat Mulloy, LEDA’s interim CEO, dismissed the notion that hiring Republic Bank is a conflict of interest. He said he had no input because he took himself out of the process and left the selection of Republic up to city employees, who followed the state’s model procurement code for awarding contracts.
City staffers issued a request for proposals in late August and reviewed and scored applications from four banks. Republic Bank scored highest and won approval in mid-October, said Caitlin Bowling, spokesperson for the Louisville Metro Economic Development Cabinet. City officials denied a KyCIR request for copies of proposals from the banks because they haven’t finalized a contract yet.
How much Republic Bank stands to earn from the deal is unknown. It will depend on the scope of banking services Republic provides, interest rates and other variables.
Mulloy, who was for more than a year a deputy mayor for economic development under Greenberg, said he never saw the scoring sheet.
“I was very intentional about not being involved,” Mulloy said.
In an emailed statement, Steve Trager said he “cannot speak about client relationships” and any questions about the selection of Republic will be answered by LEDA.
“As a local bank with a record of exemplary customer service and support for the community, we are always honored to be included in the RFP process for important community initiatives,” Trager said.
Asked about how much involvement he had in the bank’s bid for the contract, he said there is “nothing left for me to say.”
“I’ll let the transparent process speak for itself,” he said.
Greenberg’s spokesperson, Kevin Trager — Steve Trager’s son — said Mulloy will speak on behalf of LEDA and Metro Government.
Mulloy has spent more than a decade on Republic Bank and Trust Company’s board of directors, and he’s been on the board of Republic Bancorp Inc. — the bank’s parent company — since 2020. Steve Trager started working at the bank in 1988 and is the current executive chair of the bank’s board and the executive chair and chief executive officer of Republic Bancorp. His father, Bernard Trager, founded Republic Bank in 1982. Greenberg held a seat on the board for more than 14 years until he was elected in 2022, according to his public LinkedIn account.
‘A weak policy’
Despite being a registered 501(c)(6) nonprofit, LEDA is subject to the state’s open records and open meetings laws because it receives public funding. And board members must abide by a conflict of interest policy that prohibits members from using their position on LEDA for their personal gain. The policy outlines examples of conflicts of interest, such as board members doing business or having a relationship with any entity doing business with LEDA, and board members having ownership of or investment interest in entities offering services to LEDA.
Transparency is the “best disinfectant,” said Aaron Scherb, senior director of legislative affairs of Common Cause, a nonprofit and nonpartisan government watchdog group based in Washington, D.C.
“Ultimately, businesses are not accountable to taxpayers,” Scherb said. “There needs to be sufficient checks and accountability measures in place to ensure that big businesses don't have unfettered influence and access in decision-making.”
LEDA board members are required to disclose any potential conflict of interest and may be asked to recuse themselves from discussions on certain matters or resign from the board, according to the policy.
A city spokesperson said LEDA members are not required to file financial disclosure statements.
Putting the onus on board members to self-identify potential conflicts is a weak policy, said Donald K. Sherman, executive director and chief counsel for Citizens for Responsibility and Ethics in Washington, a nonprofit watchdog group based in Washington D.C.
“Lots of people can convince themselves that they don’t have a conflict, when a reasonable person would find it’s obvious,” Sherman said.
Instead, an independent mechanism designed to review and identify potential conflicts of interest — such as an attorney — is a better method to ensure the board’s business is transparent and conducted in the public interest, he said.
In this case, Sherman said it wouldn’t take an expert on government ethics to question how a bank with close ties to several LEDA board members got chosen to manage the group’s account.
“It certainly appears that there is a conflict of interest here,” he said.
Metro Council President Markus Winkler, a District 17 Democrat and another nonvoting member of LEDA, said he doesn’t “have a strong opinion either way.” He said a competitive bidding process is essential to avoid a conflict.
Other prominent banks — PNC, Stock Yards, Old National and Fifth Third — are also represented on LEDA’s board, Winkler noted, and would likely draw similar criticism if they were selected to manage the group’s account. He said the bigger questions are what LEDA will do to jumpstart the city’s economy and whether they’ll be transparent along the way.
“To, sort of, indict something before anything has happened, I think, is not right,” he said.
More questions
Metro Council Member Shameka Parrish-Wright, a District 3 Democrat, shook her head when KyCIR told her Republic Bank won the contract to manage LEDA’s account.
“Why am I not surprised?” she said. “This administration, I know it’s young, I know that it needs to be given a chance to figure things out, but it is full of conflict.”
Since taking office in January 2023, Greenberg has faced two ethics complaints. The first, which the Louisville Metro Ethics Commission ultimately dismissed, alleged he violated ethics laws by giving his wife a job.
The other is the ongoing complaint against LEDA.
Parrish-Wright said she fears Greenberg’s administration “has a convoluted, usual-suspect game that they play with local businesses” that’s designed to enrich people close to the mayor.
And, to her, LEDA is proof.
Two dozen people on LEDA’s current 59-person board helped fund Greenberg’s bid for mayor, according to online state campaign finance records. Collectively, they funneled more than $57,000 into his primary and general election coffers — about 2% of his overall donation haul.
“I don't think that there's a long-term vision for Louisvillians. There's a long-term vision for his pockets and the pockets of his very rich and elite friends,” Parrish-Wright said.
The specter of chicanery is one reason to have “hard conversations” about LEDA’s role in the city, said Metro Council Member Kevin Kramer, a District 11 Republican who leads the minority caucus and is vice chair of the Budget Committee.
Looking back, he said council members didn’t sufficiently scrutinize the proposal to form LEDA during the busy budget season. Kramer wonders how the dues-paying LEDA members could stand to benefit from their participation on the board. And he worries if the group will make good on their promise to revamp the city’s economy.
“We did not ask enough questions,” Kramer said.
LEDA skirts the line between public and private, making it difficult to determine how much scrutiny it deserves, said Metro Council Member Jecorey Arthur, a District 4 Independent who serves on the Budget Committee.
The ties between LEDA leaders and Republic Bank go beyond informal relationships and, to Arthur, are reason for concern.
“To hear that the bank is involved, and so many public officials have a deep relationship with that bank that goes beyond just casual … that's a problem,” he said. “And it makes it hard for people to trust that LEDA is going to work in the interests of working-class people.”
Republic Bank sponsors WFPK Waterfront Wednesday, produced by LPM and the Waterfront Development Corporation.
