In 2016, Kentucky's Administrative Office of the Courts was looking for office space for newly-elected Supreme Court Justice Sam Wright. They got two offers: One would cost more than $59,000 a year and require extensive renovations. The other space was larger, had 15 parking spaces and would cost $21,000 a year.
State officials chose the first option, even though it cost three times as much. They did not document why they chose it, and they did not visit the site before signing the lease, as state policy requires. The selection memo, which is the sole document relied on to make the decision, also left out one key detail: The company that owned the more expensive property was owned by the justice's two sons.
That's just one finding of many in a scathing audit released Thursday of the administrative arm of Kentucky's judicial system. The audit, believed to be the first ever independent examination of judicial system's finances and policies, found a "pervasive lack of accountability" and resistance to transparency. The Supreme Court sets administrative policy for the judicial branch, but they meet in secret and won't allow the public to monitor their actions. When Auditor Mike Harmon recommended they conduct administrative business in public, they refused.
"Their dismissive attitude towards key recommendations regarding ethics and accountability quite frankly saddens me," Harmon said in a news release announcing the audit's findings. "No matter what branch of government, we owe it to the taxpayers of Kentucky to strive toward openness and transparency."
Administrative Office of the Courts Director Laurie Dudgeon noted Supreme Court rules say the justices "will sit in open session for scheduled oral arguments and on such other occasions as it may determine."
"There is no decision-making body in the Commonwealth similar to the Supreme Court, which must have discretion to conference confidentially about pending matters, administrative or otherwise," Dudgeon wrote in response to the audit.
The court did adopt an open records policy last year, a first ever for the court system. The judicial branch of government is not covered under the state's Open Records Act.
Dudgeon requested the audit last year after the Lexington Herald Leader reported irregularities with the AOC's "employee-only" auctions for surplus vehicles. Such auctions are illegal in the executive branch, but different rules apply to the court system. Dudgeon called the audit "one of the most valuable exercises the AOC has undertaken during my tenure as director and I am pleased with the results."
Auditors found the court system has rules in place to protect the public interest. Those rules are applied to most employees. But elected judges and appointed officials often ignore those rules when it benefits them. A former executive officer purchased multiple items at a surplus property auction that he conducted. Two Supreme Court justices bought furniture and a car in private sales that were not advertised and were not part of the employee-only auctions. Most credit card purchases by Dudgeon and Chief Justice John Minton did not have supporting documentation. And the chief justice's wife instructed staff to purchase 13 personalized 11-ounce mint julep cups as gifts for board members of the State Justice Institute. The institute had recently been appointed to the board.
"Accountability begins with upper management and elected officials setting a proper tone," auditors wrote in the report. "In such an environment, even conscientious employees may become lax, and some employees are tempted to manipulate the weak control environment for personal benefit."
The AOC agreed with many of the recommendations. Dudgeon noted the AOC has struggled since 2008, when budget cuts forced them to lay off nearly 300 employees, eliminate court programs and trim operating costs.
While Dudgeon did not respond specifically about why the court system would lease office space from a Supreme Court justice's sons, she said the AOC was working to update its policies to address conflicts of interests to avoid the "appearance of favoritism."
"(We) will make appropriate recommendations to the Supreme Court consistent with these findings and recommendations," Dudgeon wrote. "Additionally, it is the longstanding practice of the AOC to abstain from leasing property directly from elected or appointed officials or members of their household."