Louisiana Bond Official downplays daughter's job with firm

Bond official downplays daughter's job with firm Ethics concerns arise after she sends e-mails Friday, September 15, 2006 By Robert Travis Scott Capital bureau BATON ROUGE -- The daughter of the State Bond Commission's top manager is employed as an intern with a major underwriter that recently won contracts to help handle more than $1.5 billion in business for the commission.

Whitney Kling, the 22-year-old daughter of Bond Commission Director Whit Kling, signed e-mail correspondence to financial firms related to commission transactions, raising questions of whether her work violated the state Code of Ethics or created the appearance of an unlevel playing field when the commission awarded contracts to her employer.

A graduate student pursuing a Master of Business Administration degree at Southeastern Louisiana University, Whitney Kling has been working as a paid intern since March for the fixed-income banking group at the Baton Rouge office of Morgan Keegan, a financial company based in Memphis, Tenn.

She also recently had an unpaid internship with Crews & Associates, another firm that does business with the bond commission.

Whit Kling took his position with the bond commission in March 2005. Since then, two of the larger bond deals into which he had input have used Morgan Keegan as a co-senior underwriter, the foremost financial role in the transactions. The commission recently awarded contracts to Morgan Keegan as co-senior underwriter for general obligation tax credit bonds and fuel tax bonds for highway projects totaling up to $1.54 billion.

The company was competing against a slate of financial powerhouses, including the Bank of America, Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley and J.P. Morgan. Morgan Keegan has been among the top underwriters for Louisiana as well as other states in the region for several years.

No single person controls the awarding of bond commission contracts. In his current job and in his previous position with the state division of administration, Whit Kling has been part of a team of government officials who score the bids from financial firms to handle underwriting contracts and other deals that are sometimes worth millions of dollars in revenue to the companies. He has influence on aspects of bond sales that can affect a firm's role and compensation in the transactions.

Before Whitney Kling's internships, the state Department of the Treasury, which has oversight of the bond commission's administration, requested an advisory opinion from the Louisiana Board of Ethics on the propriety of Whitney Kling taking the positions. In its March 9 meeting, the ethics board issued an opinion saying that the Code of Governmental Ethics does not prohibit Whitney Kling from accepting an internship "provided she does not assist the underwriters with matters involving the commission."

Kathy Ridley, a spokeswoman for Morgan Keegan, said the company's Baton Rouge branch office "followed normal hiring procedures" when bringing on Whitney Kling, one of 75 to 100 college students the firm employs as interns every year.

"As an intern, Ms. Kling is engaged in clerical and administrative duties, as well as learning about the firm and its business activities," Ridley said. "Interns are prohibited from participating in any activity that requires securities licensing. Ms. Kling has not represented Morgan Keegan in any capacity relative to bond underwriting."

Whitney Kling could not be reached at the Baton Rouge Morgan Keegan office and Ridley said it would be inappropriate for Whitney Kling to comment for this story.

On Aug. 11 and 14, Whitney Kling sent e-mails on behalf of Morgan Keegan to financial firms involved in the recently arranged sale of Louisiana general obligation bonds. The e-mails, obtained by the newspaper, were simple requests for mailing address information.

The ethics board opinion refers to Section 1113A of the Code, which prohibits public servants and their immediate family members from entering into contracts or other transactions with the public servant's agency. The opinion does not address whether Whitney Kling's activities would create the appearance of a conflict of interest.

Ethics Board Executive Director Gray Sexton said the ethics code does not prohibit employment in these circumstances but does address the kind of work that may be done. The e-mails by Whitney Kling "could constitute assistance" in bond commission business, Sexton said. But he could not speculate on whether the ethics board would make such a determination if the issue were brought to the board.

Sexton said public servants can recuse themselves from taking part in agency decisions if a possible conflict of interest is involved.

State Treasurer John Kennedy said that if the ethics board said it was OK for Whitney Kling to work as an intern for Morgan Keegan and that she did no substantive work for the firm related to bond commission business, then he did not think there was a problem. He would not comment on the e-mails unless he could see them.

Robert Travis Scott can be reached at rscott@timespicayune.com or (225) 342-4197.

Where are the national and state regulatory agencies (NASD, SEC, MSRB, Louisiana Ethic Board, the Louisiana Representatives and Senators and the Louisiana Treasurer)on this matter?

The State of Louisiana should redo the whole process of hiring firms to do business with them in the future and redo whatever business that has not been completed related to this article. These firms should have to return all fees and revenues connected to this business to the tax payers of Louisiana.

It appears that this is just business as usual in Louisiana!!!!!

Why will the State of Louisiana not clean up anything?

I truly feel that she is not responsible for her actions. She was traumatized during Hurricane Katrina as she watched, first hand, how George W. Bush let poor black people die on rooftops. She needs treatment, not indictment.

(Sarc.)

I am from La and could laugh at this as just one more example of corruption; but post-Katrina, I cannot. The Feds or some regulators should come down hard on the bond director - not his daughter, she is just a pawn for the pay-off - and then also ban Morgan Keegan from the business, at least in La, if not everywhere.

Whit Kling said his daughter's employment was sanctioned by the Louisiana Board of Ethics and that it would be ridiculous to conclude that her clerical position would have any effect on bond commission business or his decisions.

What did that Board of Ethics opinion say? I understand the opinion states that Whitney Kling was offered an internship for the Spring Term of school 2006. It is now the Fall Term of school 2006 and the Bond Commissioners daughter is still working at an internship. Looks and smells like a real long term position/job. The opinion, we're told, stated that Mr. Kling's daughter Whitney could not have anything to do in relationship with any business dealings that come before the Louisiana Bond Commission or that he had authority over and input in. This is what we understand. Mr. Kling working for the "Fixed Income Banking Group in Baton Rouge" (right under Dad's nose)appears to be a little closer to Dad and the Louisiana Bond Commission than just a clerical position.

How can Whit Kling say that this does not effect or appear to effect Louisiana Bond Commission business or his decisions?

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