The Louisville Economic Development Alliance is a public-private partnership led by a board of directors made up largely of private businesspeople. The Kentucky Center for Investigative Reporting looked into how Republic Bank will manage the group’s bank account — a choice that has some lawmakers crying foul.
Click the player above to listen to a discussion with LPM’s assistant news director Amina Elahi and KyCIR’s managing editor Jacob Ryan about the ongoing saga. Or read the transcript below.
Amina Elahi: So, Jake, let’s start by talking about this group, which is what’s known as a public-private partnership. What is that, and who’s involved in this case?
Jacob Ryan: The group is called the Louisville Economic Development Alliance. It’s pretty new. Formed in June. It’s a 501(c)(6) nonprofit with a 60-member board of directors and it got $1.5 million in startup funds from the city. The board is a who’s who of Louisville’s elite. Powerful attorneys, corporate execs, bourbon industry leaders, developers…and local elected officials. You name it. And the group has taken a good bit of scorn already from Louisville lawmakers who question its mission.
AE: What is the group’s stated mission? And why are some people concerned about it?
JR: Broadly, it’s set up to reshape how the city does economic development. The group wants to restructure local incentive programs and bonding arrangements. They want to create a new city brand and make Louisville an appealing place to do business. But some Metro Council members are concerned. They fear the board’s role is too ambiguous. And they’re worried the group, which is led largely by private business leaders, will work primarily for private interests.
AE: Until recently, these concerns were somewhat theoretical, but your recent reporting detailed a potential conflict of interest. What did you uncover there?
JR: We reported on the group, known as LEDA, using Republic Bank as its financial services provider. The problem, according to some lawmakers and national ethics experts, is that several LEDA board members also have close ties to the bank. And that’s led to claims of a conflict of interest and more worries that the group will line the pockets of the city’s already wealthy and powerful class of elites.
AE: What are these connections between the bank and LEDA board members?
JR: So LEDA’s interim CEO is Pat Mulloy. He’s currently on the bank’s board of directors and has been for years. Steve Trager is the chair of LEDA’s governance and nominating committee. He’s also the executive chair of the bank and CEO of the bank’s parent company. His father started the bank back in the 80s.
And then there’s Mayor Craig Greenberg. He’s perhaps LEDA’s most vocal proponent. He’s also the group’s chairman. He’s not currently on the bank’s board of directors, but was for more than a decade before he took office. His spokesperson — who is also Steve Trager’s son — directed us to Mulloy for a comment. Mulloy dismissed the notion of any wrongdoing. He said the selection of Republic was fair and open. And, to be clear, three other banks did bid on the contract. But a city spokesperson said staff reviewed all the bids and Republic scored highest.
AE: If the process for choosing the bank was standard practice, why might this still be a problem?
JR: To lawmakers I talked with, this type of perceived conflict could spoil public goodwill. Like we said, the group is already under scrutiny. And they’re concerned that any perception of chicanery could undermine the group’s mission. Ethics experts say groups like LEDA have to be careful to avoid these types of issues — and they can — by being transparent and having a strong policy that prohibits self-dealing and demands disclosure. But here, LEDA members aren’t required to file any financial disclosure with the city. It’s a story we’re going to continue to follow.
