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“ GOD KNOWS IT KILLS ME EVERY DAY,BUT I’M PROUD OF THE WAY HE WENT.”

Karen Hill, mother of National Guard Sgt. Jonathan Adam HughesFrom left: Senior Airman Ashton Goodman, Sgt. David Neil Wimberg, Sgt. Jonathan Adam Hughes

“ THAT’S THE WORST FEAR AS A MOM –

PEOPLE WILL FORGET.” Patricia Montgomery, mother of Spc. Ryan Montgomery

From left: Spc. Ryan Montgomery, Lance Cpl. Thomas P. Echols, Cpl. Joshua Moore

Once a year, on Memorial Day,we pay tribute to those who havedied while serving our country.But for some families in Kentuckyand Indiana, the loss is felt moredeeply, every day.

Tricia Wimberg, for example,has been known to take a lawn chair to Zachary Taylor NationalCemetery, where sometimes she’lltalk to her son, Sgt. David Wim-berg, who died in 2005 in Iraq.

Allyson Echols has a living lega-cy of her husband, Lance Cpl.Thomas Echols. Their daughter, Julia, was born not long after Tom was killed in Iraq in 2006.

And Mark Goodman’s daugh-ter, Senior Airman Ashton Goodman, is still making a dif-ference in the lives of women in Afghanistan through a grant es-tablished in her name followingher death in 2009.

REMEMBERING THE FALLEN

READ THEIR STORIES AND OTHERS TODAY IN FEATURES, E1.

silent about allegations he’d madeabout waste, fraud and misman-agement within the agency, TheCourier-Journal has found.

A copy of theDec.15 settlement,which the newspaper acquiredun-der the Kentucky Open Recordslaw, shows that MSD denied thevalidity of Jerry Ferguson’s allega-tions but agreed “ to provide (him)withcertainconditions,”includingthe money, which was slightly lessthan a year’s salary at the time of his departure.

Five months after firing its hu-man resources director last year,the Metropolitan Sewer Districtpaid him $140,000 as part of a set-tlement that required him to keep

Ferguson, whowas a member of the agency’s executive team, alsoagreedto turn overto MSDalldoc-umentation he had accumulatedfor a threatened lawsuit understate whistleblower protections.

Ferguson’s accusations aboutthe agency had been outlined in a

letter his lawyer, Garry Adams,sent toMSD sixweeks after hiscli-ent was fired, for undisclosed rea-sons, on Aug. 12, 2010. MSD de-

clined to provide a copy of the let-ter to the newspaper. Assistant le-gal counsel Stephanie Harris saidreleasing Ferguson’s claims would“ constitute an unwarranted inva-sion of personal privacy” and re-veal “ preliminary correspondencein which opinions are merely ex-pressed.”

But the newspaper obtained a copy of the letter, which claimedsome employees or contractors

MSD paid fired official $140,00By James Bruggers jbruggers@courier-journal.comThe Courier-Journal

MOREINSIDEDeal boostedpension of former

MSD human re-sources director’spredecessor.Story, A10Ferguson

See MSD, A11, col. 1

Deal kept him quieton waste allegations

Valhalla Golf Clubhas already collected a dazzling stack of cre-dentials to certify it asone of the top 100American courses. Jack Nicklaus designed it.Tiger Woods wona ma-jortitlehere.TheAmer-ican team soaked Val-halla with champagneduring its Ryder Cupvictory three years ago.

Today, Valhalla’s list of un-forgettable moments is primedto grow. Check the leaderboardas we move into the final roundof the Senior PGA Champion-ship presented by KitchenAid.

It’s a stretch to say that youhave toprove you’ve won a PGA Tour major championship toplay in one of the final Sundaygroups. But not much.

Six guys who have won a combined 18 majors are packedintothe topdozenplayersontheSenior PGA leaderboard.

“ We all put on our pants thesame,” Hale Irwin said. “ We allplay golf. Let’s go see what hap-

pens.”Let’sdo. StartwithIr-

win, the co-leader at9-under-par, 207. Hesur-vived a three-putt, dou-ble-bogey 7 on the finalhole to shoot a 2-under70 on a muddy Saturday.

All Irwin has done iswin three U.S. Opensand more events (45)than anybody on the

Champions Tour, including thelast Senior PGA Championshipthat was played here in 2004.He’salso 65years,11months andnearly 4 weeks old.

That meansa Hale Irwinvic-tory today would make him theoldest winner ever on theChampions Tour — by nearlythree years.

“ What’s that old granddaddoing?”askedTomWatson, whoshot a 68 Saturday to park him-selfat 8-under, onebehindIrwin andco-leaderKiyoshiMurotaof Japan.

“ I mean, geez, what’s that

The legend

of Valhalla isabout to grow

By Matt Stone, The Courier-JournalHale Irwin peers over a hill in the rough along the 17th fairwaySaturday at the Senior PGA Championship at Valhalla Golf Club.

Rick Bozich

See BOZICH, A4, col. 1

SENIOR PGA CHAMPIONSHIPComplete coverage of Saturday’s round includes Eric Crawford onTom Watson, five questions for Tom Lehman and more inSPORTS.More photos of the tournament are at www.courier-journal.com.

SUNDAY PRINTEXCLUSIVE

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8/6/2019 Ferguson 2011

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KY2-

were being paid to do littleor no work; that MSD wasoverpaying employees andgiving bonuses to some whoweren’t eligible for them;and questioned the financ-ing of certain MSD landdeals.

It also accused BudSchardein, MSD’s executivedirector, of favoring hisfriends in the agency;assert-ed that MSD wasted itsmoney by hiring a formerstate senator as a team-building consultant at $350anhour;and raisedconcernsabout MSD’s no-bid con-tract with its main outsidelegal counsel, Larry Zielke,saying it wasn’t properlyawarded and was “ wastefuland excessive.”

Adams also asserted in the letter that Ferguson waslet go in “ retaliation of goodfaith reports of waste, fraudand mismanagement and vi-olations of law he discov-ered at MSD,” and in “ directcontravention of the Ken-tucky Whistleblower Act.”

As part of thesettlement,Ferguson’s termination waschanged to a resignation,andboth heand MSDagreedto neither discuss the casenor say anything derogatoryabout the other side.

Fergusondeclined to talk about thesettlement forthisstory, citing the confiden-tiality agreement. His attor-ney said he could only con-firm thathe had senta letteroutlining Ferguson’saccusa-tions to MSD and then en-tered intonegotiationsin fall2010. “ Those negotiationsended in a resolution satis-factory to the parties,”Adams said.

Arnold J. Celentano,MSD’s board chairman, saidina telephoneinterview thatthe board agreed to the set-tlement last year after hear-ingbothfromSchardeinandFerguson.

“ We all came to the con-clusion that Bud was tellingthe truth, and the way tosolve the problem was dowhateverhadto bedone,” hesaid, adding the boardagreed with Zielke then that“ it’s OK to pay” Ferguson toresolve the dispute.

Celentano said Ferguson “ wasn’t doing a good job”and “ employeeswerehavinga real rough time with him.”

Schardein declined todiscuss the case, writing in an email that the newspaperwas seeking to “ harm ratherthan benefit the agency.”

“ Mr. Ferguson’s claimswere settled at the direction of the MSD board,” Schar-dein wrote. “ The board de-cided upon settlement toavoid additional protractedlitigationexpense, and therewas no admission of wrong-

doingor liability.” Schardein said he supported theboard’s decision.

Allegations detailedPhillip Sparkes, director

of the Chase Local Govern-ment Law Center at North-ern Kentucky University,said such settlements over a dispute firing aren’t un-usual. “ And it’s not uncom-monin those kinds of settle-ments to include confiden-tiality agreements of onekind or another,” he said,which can help the em-ployee move on to anotherjob and allow a public agen-cy to focus on its priorities.

But University of Louis-villeprofessor Steven G. Ko-ven, who directs the Masterof Public Administration Program, said that theconfi-dentiality agreement makesit difficult for the public todetermineif Ferguson’s alle-gations are valid.

Through open-recordsrequests,however,The Cou-rier-Journal uncoveredsome details about allega-tions outlined in Adams’ let-ter to MSD.

For example, recordsshow MSDpaidformer stateSen. Lacey Smith $19,750 forteam-building work done in 2009 and$25,000 forsimilar

workin 2010. The2009work wasdone withouta contract,something the agency al-lows “ for small purchases,”according to Harris. Thework in 2010was covered bya no-bid contract datedApril1 of that year.

One of Smith’s invoiceslisted an hourly rate of $350,andin an interview, thegrad-

uate of Harvard Law Schoolsaid that is his standard rate.He said he worked substan-tially more hours than hebilled the agency and thatMSD got its money’s worth from his team-building ses-sions, seminars, personalitytesting and one-on-onecounseling.

“ This is an organization with more than 600 em-ployees,and it’s ledby an ex-ecutive team,” he said. “ Un-less (the executive team)functionsas a team, thepub-lic is not going to get theservices … it’s entitled to.”

Included in the adviceSmith gave to Schardein:The executive team and allemployeesneeded to under-stand his objectives “ with great force and clarity andmust agree with them andsupport them with enthu-siasm that borders on pas-sionunder-girdedby a senseof urgency.” Smith also saidthe executive team mem-bers needed to learn how totrust each other and setaside personal agendas.

Other records detailZielke’s no-bid contract.

Zielke and his law firm have been paid at least$5.9 million by MSD since Jan. 1, 2006, including$950,000 for handling theagency’s bond sales. (As of February, it had billed MSDfor $29,000 in the Ferguson case.)

Thework isin additiontoabout $1.2 million in legalworkfrom severalother out-side attorneys over the pastfive years, and work byMSD’s in-house legal serv-ices department, with itsstaff of four attorneys.

Zielke said state law al-lows public agencies to hirelawyers, much as they can hire engineers and otherprofessionals for their serv-ices — without competitivebidding. Andhe said most of what he does for MSD is le-gal defense work, which re-quires his expertise. “ De-fense work is complicatedand expensive and you haveto know what you aredoing.I know what I am doing.”

He added that no locallawyer knows MSD mattersaswell ashe does. “ I’vebeen there 26 years. I’ve kept myrates as low as possible —$130 an hour. Mynormal rateis $400 an hour. MSD is get-ting a great deal.”

But the $130-an-hour ratedoesn’t apply to legal work on bond issues. Zielke’s firm has charged fees rangingfrom$125,000to $150,000 forwork on MSD bond issuesthat ranged from $180 million to $330 million in the past three years.Zielke declined to say how that would translate into an hourly rate.

Some MSD critics have

questioned the relationshipamong Zielke, the MSDboard and management —and whether MSD couldsave money through morecompetitive bidding of pro-fessional services.

No-bid contracts on pro-fessional services allow “ you to give work to yourfriends,” said LouisvilleMetro Council member Jer-ry Miller, R-District 19, whohas criticized such con-tracts.

Mayor GregFischer, whotook office in January, hassaid he plans to bring morecompetitive bidding for pro-fessional services contracts

throughout metro govern-ment.While the new policy

only applies to metro gov-ernment, Fischer spokes-man Chris Poynter said themayor encourages all localagencies, including MSD, toadopt the same approach.

MSD officials wouldn’tsay whether they wouldadopt such a policy.

Ferguson’s MSD careerBefore coming to work

for MSD in October 2008,Ferguson worked twomonths as an insurance ad-ministrator in the KentuckyPersonnel Cabinet, state of-

ficials said. Before that, heworked from 1997 to 2001 in human resources for FordMotorCo.,MSD recordsandhis resume show.

Officials for the Person-nel Cabinet and Ford de-clined to comment on Fer-guson’s work performance.

While working at Ford,Ferguson won a “ concilia-

tion agreement” in 1999 in a racial-discrimination casebefore the KentuckyHuman Rights Commission. TheCourier-Journal reported atthetime that settlement wasfor$195,000 andincludedre-quirements that Ford, whilenot agreeing to any wrong-doing, would take steps todocument its diversity pro-gram with the commission.

MSD, an agencywith 650employees and an operatingbudget of $110 million, hiredFerguson to lead its human resourcesdepartmentin Oc-tober 2008 at a salary of $130,000. He replaced KathyCooksie, who retired Jan. 1,2009.

If there were any prob-lems with Ferguson’s work at MSD, they weren’t re-flected in his two annualperformance evaluations —includingone given justfourmonths before his Aug. 12,2010, termination. As part of that evaluation, Ferguson wasgivena $4,118annualpayincrease, pushing his salaryto $141,107.20.MSD also gavehim a $4,110 lump-sum per-formance award, recordsprovided to the newspapershow.

Ferguson’s 2010 review described him as “ a naturalleader due to his courageand decisiveness.” He waspraised for stronglypromot-ingMSD policies andproce-dures and for having made“ outstanding progress in ‘reinventing’ MSD’s human resources procedures andpractices.”

“ Hiringis donein a fairerand more consistent man-ner,” the evaluation said.

Growing controversyFerguson’s claims and

settlement occurred justmonths before three boardmembers — chairman Aud-win Helton, vice chairman

Marty Hoehler and pastchairwoman BeverlyWheatley — resigned from the board at Fischer’s re-quest.

The resignations cameafter a March 20 Courier- Journal story detailing how businesses that the threeowned did work for theagency they helped oversee.MSD subsequently adopteda tighter ethics policy, andthe Metro Council haspassed a resolution callingon all city boards and com-missions, including MSD, toadopt the city’s broader pol-icy.

Three new board mem-bers who don’t do work forMSD were sworn in Mon-day.

MSD finances also haveincreasingly become a focusof public attention, as theagency has taken on recorddebt and raised its rates 5 percent to 7percent annual-ly since the mid-1990s, in large partto meetprovisionsof the Clean Water Act andprotect the city from flood-ing.

MSD board membersgave preliminary approvalMay 9 toyetanother6.5 per-

centrateincrease,just underthe 7 percent limit that offi-cials say wouldrequire Met-ro Council approval — a move that would subject theproposal to broad scrutinyfrom 26 locally elected rep-resentatives.“ There’s no accountabili-ty for how they spend theirmoney,” Louisville residentand MSD customer David Johnson said of the MSDboard.

“ We have no vote,” hesaid. “ We have no say overthose people.”

The agency’s eight boardmembers are appointed bythe mayor, and its executivedirector and chief engineerserve at the pleasure of themayor.

Laura Bentley, anotherMSD customer, said shewould liketo see some MSDbelt tightening.

“ I just don’t think theyshould raisetheirrateseverytime they fall short in theirbudget,” she said.

The agency has alsocome under criticism for itsmounting debt — about$2.6 billion, including inter-est, with more borrowing tocome to pay for a 19-year,

$850 million sewer rehabil-itation program as part of a 2005 settlement with theU.S. Environmental Protec-tion Agency and Kentuckywater-quality regulators.

For their part, Schardein and MSD board membersdefended theagency at theirMay 9 board meeting. Asoneexample, they cited how the city has survived recordrains and high waters on theOhio River this year withoutflooding in its protectedzones.

Schardein describedhimself as one of the com-munity’s most fiscally re-sponsible public servantsand challenged anyone toprovide examples of finan-cial waste at MSD.

Fischer declined to be in-terviewed about the Fergu-son case. Poynter said themayor didn’t want to com-ment on “ internal person-nel” matters.

“ He has confidence in Bud,” Poynter said. “ When there have been concerns,they have agreed on a goodsolution.”

Reporter James Bruggers can bereached at (502) 582-4645

MSD | Official agreed to remain silentContinued from A1

A letter fromthe attorneyfor fired MSDofficial JerryFergusondetails wasteaccusationsand claimsExecutiveDirector BudSchardein,

shown at leftat a westLouisvillesewerfacility,favors hisfriends.

Courier-Journal2006 file photo

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