Bill Lee prepares to 'step away from Lee Company,' though specifics of transition unclear
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As Gov.-elect Bill Lee travels the country attending governors conferences and nails down his Cabinet appointments and legislative agenda, there's still one looming task.
The longtime businessman has to figure out what he'll do with Lee Company, the Franklin-based HVAC, electrical and plumbing business his grandfather founded in 1944 — and where Lee went to work in 1981 after graduating from Auburn University.
Lee became president of the business in 1992, and now serves as chairman of the company, which brings in roughly $250 million in revenue annually.
While Lee has yet to announce any specifics on how he will separate himself from the 1,200-employee company, his transition team said the process is underway.
"The governor-elect is working closely with counsel as he prepares to step away from Lee Company to ensure there will be no conflicts of interest as he enters the governor's office," said press secretary Laine Arnold.
Arnold described the process as "ongoing," but that it would "be completed in the coming weeks."
Mark Cate, who served as chief of staff under Gov. Bill Haslam, said Lee's task of separating himself from the business will be one that's time-consuming.
"Probably what their biggest issue is is unwinding himself from the company," said Cate, now president of the Stones River Group public affairs firm. "That’s the hardest thing, quite frankly. When it's been your family company for all these years and you're trying to get yourself unwound out of it, that takes a little time."
Haslam "had the advantage of already stepping away from the day-to-day management of Pilot," Cate said. "It's a little bit harder for Bill Lee than it was for us."
Lee's transition team has not said whether he will place his holdings into a blind trust, which would give a financial agent control of the investments and shield Lee from any knowledge of how the holdings are being handled.
Since 2012, Lee Company has received roughly $14 million in contracts with a number of state agencies, according to public procurement records.
Before the Nov. 6 election, Lee's campaign announced he would cancel the contracts if elected.
According to the Tennessee Department of General Services, as of Friday, Lee Company had no current contracts with the state.
The business's last remaining state contract was canceled effective Aug. 31 at the company's request, said David Roberson, director of communications for General Services.
Law doesn't spell out how officials should act with business ownership
Tennessee law isn't explicit on what a governor is to do to avoid conflicts of interest with his or her companies.
While state code says it's unlawful for any official who oversees a state, municipal, county or other public contract to have an interest in it, governors aren't typically the officers directly overseeing state contracts.
There's even less guidance on what to do with assets, though the state ethics commission requires minimum disclosures of income sources and investments for certain officials seeking or holding office, including the governor.
Lee as a gubernatorial candidate disclosed the required information.
Craig Holman, a campaign finance and governmental ethics lobbyist for Washington, D.C.-based Public Citizen, a left-leaning consumer advocacy nonprofit, said Lee should not only disclose his interests, but pledge to not make governing decisions that could benefit his company.
"He should recuse himself from anything that directly affects his personal finances or the finances of his family," Holman said. "That is the standard practice among the states and at the federal level."
Upon taking office, Haslam placed all of his assets — with the exception of his Pilot Oil holdings and an out-of-state real estate investment — into a blind trust.
Haslam defended his decision to not remove the Pilot holdings from his control because his stake in the family company was widely known.
"What's the use in putting it in a blind trust?" Haslam told The Associated Press in 2010. "I would still know. The reason you put something in a blind trust — like any securities you own — is so you can honestly say you don't know."
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Before him, Democratic Gov. Phil Bredesen, who at the time of his inauguration in 2003 estimated his net worth around $200 million, placed all of his investment holdings into a blind trust.
Shortly after taking office, Haslam issued an executive order revoking a requirement created by Bredesen that the governor and Cabinet-level staff disclose additional information about their income.
"I think the new governor ought to reinstate those steps that Bredesen took, for the public to have some confidence that his administration is not taking advantage of their position to unduly enhance their own financial situation," said Dick Williams, state chairperson of Common Cause Tennessee.
Lee has declined to release his tax returns, saying his decision was based on the need to protect his business.
Despite a precedent of Tennessee governors releasing their tax returns, including Republicans Don Sundquist and Lamar Alexander and Democrats Ned McWherter and Bredesen, Haslam did not.
While Haslam declined to make his returns public, he did provide a summary of his income and taxes paid. Lee has not provided that information.
Conflicts of interest at federal level could trickle down, expert says
Holman pointed to conflicts of interest involving President Donald Trump, who he says is violating the federal conflict of interest code with his global business holdings.
By Trump not being held accountable for violating the federal government's conflict of interest policies, Holman said a dangerous precedent is being set for ethics in finances and could trickle down to how such policies are enforced among governors.
"The bottom line is it carries over to the state level, as well as throughout the administration," Holman said.
While Holman said it's a good sign Lee said his company would not renew state contracts if elected, Holman suggested there should be a uniform conflict of interest code applying to state and federal government agencies. It would spell out how all politicians should act.
"The governor or president should never ever be exempt from the conflict of interest code," Holman said. "And if we don't have that type of ethics arrangement, there is all kind of room for mischief."
Reach Natalie Allison at [email protected]. Follow her on Twitter at @natalie_allison.
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