City of Bethel Investigation Reveals Improper Contracts and Perks

The Bethel City Council has released a redacted version of its investigation into city contracts, nepotism, and personnel issues.

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The investigation led to the firing of Bethel’s city manager in May and reveals improperly awarded contracts, special agreements, and violations of the city’s previous nepotism rule. It chronicles mismanagement by former city manager, Lee Foley. Bethel Mayor Joe Klejka says the case was clean cut.

Redacted page in the investigation report.
Redacted page in the investigation report.

“We just have to have a city manager who follows the Bethel Municipal Code,” Klejka said.

The Council hired attorney Michael Gatti in February to conduct the investigation for $40,000. The result was a 46-page report and the council fired Foley in May. KYUK and six other news organizations made a public records request for the document that same month. The report was released Monday.

The investigation outlines problems with contracts, including special agreements with the former finance director, Bobby Sutton who was being flown up from Kentucky to do budget work.

Foley apparently made an agreement with Sutton, without seeking competitive bids, kept an account for his personal expenses, and provided him with numerous other perks. KYUK was not able to reach Sutton on Tuesday.

The investigation also describes several improper agreements with a local business, Faulkner Walsh Constructors. The demolition of the old police station was not opened to competitive bidding, but instead done by Faulkner Walsh to pay off debts owed to the city.

“There was code that told him exactly how to do it so there would be documentation, so taxpayers would get their best purchases with the money we’re using for the city,” Klejka said. “That was consistently not followed. Special deals were given to whoever was most convenient for him to pass it out to. In fact it’s not even always clear why he chose what he did choose, because the documentation just isn’t there.”

Attorneys also found informal agreements with Faulkner Walsh to level the teen center for $19,000, which ended up costing double that and another for vehicle removal.

In addition, attorneys say Foley backdated a lease for the company at the airport sandpit where he had been trespassing several months at the rate of $450 a month. Owner Harry Faulkner declined to speak with KYUK.

Besides Foley’s mismanagement of agreements and contracts, investigators faulted the city for some problems, such as a bad billing system and incomplete record keeping for leases.

In an analysis of nepotism, the report highlights former City Manager Lee Foley’s son Bo, who works in the I.T. department. He is apparently the only union employee for whom the city pays full masters degree tuition. He also flew first class on city travel due to his height of about 6 feet 8 inches. The report found several situations that could be in violation of the previous nepotism ordinance, but many details are blacked out. It clears Council Member Heather Pike for her long-term relationship with a city employee.

In a memo listing 29 past and present related employees included in the investigation, Lee Foley made an argument that hiring family members was quite common at the city. None had a waiver from the manager.

KYUK could not reach Foley by phone Tuesday.

It also reveals inconsistency in credit card usage by city employees for personal business.

“We believe the majority of the credit card purchases were probably reimbursed, the big things would be…basically if they don’t pay it back immediately, within the same month, you’re giving them an interest free loan,” Klejka said.

The report includes four pages of bullet pointed recommendations, including several redacted lines. Klejka says a person to deal with all of the many personnel concerns is at the top of the city’s list.

“Probably something we didn’t expect. We found out that we really needed to tighten up our human resources department,” Klejka said. “Several years ago we eliminated that position, that’s clearly been a mistake, that’s left a lot of holes in the city, a lot things that needed to be shored up a lot. So that’s what we really discovered.”

The city is currently recruiting for that position. The council recently made its nepotism rules more explicit and tightened up its policies for credit card usage, tuition reimbursement, leave cash out, and city leases. Several sections of the report are blacked out, including what appears to be the portion about allegation of harassment. The investigation has been sent to the District Attorney’s office for review.

The full report is available here.