When Steve Beshear was governor of Kentucky, he told experts to go fuck themselves and instead allowed the Australian investment bank Macquarie Capital to manage Kentuckywired, a program to build out broadband to rural Kentuckians.
Four years later, the project is massively overbudget, massively behind schedule, and state auditor Mike Harmon just released a report blaming the delays and overages on the decision of Beshear and his cronies to sideline experts and go with the bankers. The total bill is expected to be some $1.5b. During the time in which Beshear was ignoring expert advisors, Frank Lassiter, husband of Beshear's cabinet secretary, took a high-paid consulting gig for Macquarie.
Harmon recommends that Kentucky procedures be amended to require law and policymakers to formally explain any time they ignore expert advice.
Until last week, Kentuckywired was overseen by Bernard “Deck” Decker, but he was fired without explanation by the governor, after he published an open letter to the auditor in which he stated, "By ignoring those that actually knew what they were talking about, those involved in this contract have increased the cost to the Commonwealth by hundreds of millions of dollars that they did not have a right to risk."
Baller and Maryland-based CTC Technology & Energy, consultants hired by the state to assist in the process, warned that such an agreement could end up costing the state more money.
“Macquarie is expert at negotiating agreements that minimize or eliminate its own financial risk,” CTC officials told the state in a December 2014 memo.
Baller said he feared such agreements would force the state to compensate Macquarie and its partners for any delays in obtaining permits.
“This stuff really scares me,” Baller wrote in an email on July 14, 2015, according to the audit. The report does not specify to whom the email was sent, and Baller did not respond to a request for comment.
State officials moved forward despite the warnings.
There Are Kentuckians Who Still Don’t Have Broadband Because the Former Governor Chose an Investment Bank Over Experts [Alfred Miller/Propublica]
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