Lee Zurik Investigation: Hampton not only one 'Playing With Fire'

For years, no one has raised a question about a peculiar arrangement, until we started digging.

Wednesday night, we began our look at the New Orleans Firefighters Pension Board, disclosing a $70,000 pay raise for the board CEO that eventually brought his salary to $165,000.

But we now have questions about his employment, and whether he can serve as a board member and a paid employee.

Richard Hampton's position with the New Orleans Firefighters Pension Board appears to be a Louisiana anomaly.

Hampton joined the board in 1990.  Five years later, the board appointed him secretary-treasurer and also hired him as its CEO.  He's been under contract off and on.  The contract and his board appointment combined could be in violation of Louisiana law.

"Under the Louisiana Code of Governmental Ethics, an appointed board member can't enter into a contract for compensation with the board on which he serves," says Loyola law professor Dane Ciolino.

In 2010, Hampton received a hefty pay raise from the board he serves on.  He abstained from voting, but the board gave him a $70,000 increase, awarding him a four-year contract worth $156,000 a year -- a salary that grows 3 percent each year and also gives him six weeks' paid vacation and six weeks' paid sick leave every year.

Hampton's contract spells out his job duties and title.  He has a dual role as secretary-treasurer of the board and chief executive officer of the pension fund.

The New Orleans Firefighters Pension Board is different than most in the state.  The law does allow the pension board to compensate its secretary-treasurer, stating the duties include depositing money and keeping the financial books.

But Ciolino says he thinks the contract illustrates rather clearly that Hampton is getting paid to do more work than that of a treasurer, and raises legitimate questions as to its legality.   State law doesn't allow a board member to work for the board they serve on.

"It's kind of a fundamental provision in that it avoids conflicts of interest, or even appearances of conflicts of interest," Ciolino says.  "By allowing someone to be both boss and employee, the potential for abuse is fairly obvious."

The Firefighters Pension Board disagrees with Ciolino, and says state law allows Hampton to get paid as a secretary-treasurer of the board.

"The statue was written well before the ethics law, provides that the board shall elect, from its membership, a secretary- treasurer. And it's been that way for decades," says board attorney Louis Robein. "And the secretary-treasurer has been compensated as an employee."

That takes us to the summer of 2009.  Hampton retired as a firefighter and left the board.  While he was off the board, minutes show he remained on as CEO, continuing to get paid as an employee.  At the same time, his brother -- also a board member -- took over as board secretary-treasurer.  But he didn't get paid for that work; again, Hampton did as he stayed on as CEO.

"What happens when he went off the board?" we asked Robein.

"For that six month period?  He continued on as an employee, Robein replies.

"But he can't, legally," we tell him.

"I don't think you have an ethics opinion to that effect," says Robein.

No ethics opinion exists, but Dane Ciolino says the ethics law is clear: When someone leaves a board, he cannot be employed by that board for two years.

Ciolino says, "There are also revolving door provisions that prohibit public servants from leaving the public board and then representing clients before the board, or otherwise doing business with the board because of the possibility of, essentially, collusion before the member leaves."

When we asked Hampton himself how, six months after he left the board, he was able to continue working and receiving payment for that employment, he told us, "Well, I had the contract to work as an at-will employee, as well….  There's no problem with me working in that capacity."

"If he were to resign from the board, under the Code of Governmental Ethics, he could not be employed by the board for a period of at least two years," says Ciolino.

Hampton rejoined the board after a six-month hiatus, getting elected by the retired firefighters.

There seems to be another conflict between Hampton's employment and board membership. According to state law, Hampton's term on the board expires at the end of next year. He'll be up for re-election. But his employment contract does not expire at the end of his board term..

So hypothetically, if Hampton doesn't get re-elected to the board, how can he have time left on his contract as an employee? Remember, state ethics law doesn't allow a board member to resign and be employed by that board – they have to wait two years.

Hampton's not the only board member who's been paid by the pension fund, much of it funded by taxpayers.

Firefighter Tim McConnell joined the voluntary board in 2008.  At the same time he also became an employee of the board, serving as assistant director, getting paid $21,000 in 2008 and $8,000 in 2009.

When we brought this to Hampton's attention, he replied, "We saw the need to add another assistant to do work in this office, and he was ready, willing and able."

Willing and able, but Ciolino thinks that's against the law – again, a board member being paid by the board he serves on.

"We don't believe it's against the law," says Hampton.

Ciolino says, if these are violations of the law, the sanctions could include fines and possibly removal from the board.

Hampton points out that it's not like the board has been trying to hide anything, which is true -- most of the moves have been spelled out in board minutes.

"Certainly the city never had any problem with this," says Hampton.  "They were aware of it the entire time.  They sit on this board, they know what our position is."

But Ciolino says the positions warrant a look by the Ethics Commission, to make sure public officials are not improperly benefiting from the board they serve on.

"So many provisions of the Code of Governmental Ethics are all about making sure that public money is spent for the public's benefit, rather than for the benefit of a board member or a public servant," says Ciolino.

Again, the law says the secretary-treasurer of the fire pension board can be paid.  Other public boards, such as a school board, allow members to receive compensation, too.

But the law says nothing about entering into a contract, being an employee or receiving vacation and sick leave, all of which could earn Hampton an extra $40,000 a year.

All of that raises even more questions for us, as we look into the legality of the management structure of the fire pension board.