Members of State Board Go on Luxury Trip Paid For By Company They Oversee
Three members of Colorado's Pinnacol Assurance board gold at Pebble Beach.
June 2, 2010 — -- Three members of a Colorado state board that oversees a multimillion-dollar semi-private state agency went on a golfing trip to the luxurious Pebble Beach resort that was paid for by the agency – raising questions about the board's independence and ethics.
Pinnacol Assurance, a tax-exempt, quasi-public agency that handles workmen's compensation for more than half of Colorado workers, has an estimated worth of $331 million to $374 million. It receives money from the state of Colorado and from local governments. A nine-member board appointed by the governor oversees Pinnacol and rules on salaries, bonuses and expenditures for Pinnacol CEO Ken Ross and other executives on behalf of the state of Colorado.
But investigative reporters from ABC affiliate KMGH in Denver traveled to Pebble Beach in mid-May, and found members of the Pinnacol board on a five-day golfing trip with Ross that was paid for by Pinnacol.
CLICK HERE TO WATCH KMGH'S REPORT ON PINNACOL
Video shot by KMGH shows three Pinnacol board members -- Chairman Gary Johnson, ethics member Debra Lovejoy and board member Ryan Hettich -- golfing on a course that costs $495 per person per round, staying in rooms that start at $695 a night, and enjoying dinner and cocktail parties. Johnson and Lovejoy brought their spouses.
The Pinnacol outing also included a chartered bus for a wine tour in nearby Carmel wine country. State Sen. Morgan Carroll, D-Aurora, who chaired a committee last year that reviewed Pinnacol's business practices, called the trip "ridiculous" and "obscene."
"They are stewards of the public money," Carroll said. "The board is supposed to [provide] oversight. ... It is uncomfortable to me that there's a large amount of wining and dining."
In 2003, the Colorado state auditor said executive compensation at Pinnacol was high compared to the state's other quasi-private agencies. Pinnacol has reduced some salaries and bonuses since then. In 2009, Ross defended five and six-figure bonuses as "earned" and "fair" in an interview with KMGH and said Pinnacol execs were underpaid compared to staff at other insurance companies. He also defended Pinnacol's $143,000 suite at Invesco Field and a $133,000 trip with clients to Scottsdale, Arizona.Records show, and Pinnacol has confirmed, that Pinnacol paid for past trips by Pinnacol board members and their spouses.
Pinnacol confirmed to KMGH that it paid for the recent Pebble Beach trip of the board members and their spouses. KMGH has not been able review receipts of the trip, however. When KMGH asked for records of the Pebble Beach trip under the Colorado Open Records Act, Pinnacol declined the request, and then asked a Denver judge to block release of the records, claiming an invasion of privacy. The judge's ruling is still pending.
Independently, KMGH was able to learn some of the costs of the trip. The clerk at the hotel where the board members were staying told KMGH that 28 rooms were on the Pinnacol account. A brochure for the hotel said rooms range from $695 to as much as $2,200 for suites.
A clerk at the pro shop, meanwhile, said the greens fees were on the Pinnacol "master account." Rounds of golf at Pebble Beach are $495 a person, plus costs for caddies and gratuity, the clerk said. "So no one is paying separately?" asked KMGH reporter Tony Kovaleski."Correct," said the clerk.
Following a round of golf at Pebble Beach on May 13, KMGH's Kovaleski approached Pinnacol board chairman Johnson on the 18th hole of the golf course hole and asked him whether he felt it was appropriate that he and his wife were on the trip.
Before Johnson could answer, Pinnacol CEO Ken Ross interrupted.
"You point your finger at me again," said Ross to Kovaleski, "and I'm going to break it." He demanded that the camera be turned off.
CLICK HERE TO SEE THE CONFRONTATION BETWEEN KOVALESKI AND ROSS
Ross later apologized for what he called "overreacting." He said Kovaleski had intruded on a "private, personal ceremony being experienced between two of our guests," because Debra Lovejoy's husband was re-proposing to her at the 18th hole. He also said Pinnacol would reevaluate its travel policy.
CLICK HERE TO READ ABOUT ROSS'S APOLOGY
In a previous interview, board chairman Johnson had told Kovaleski that the Pinnacol board was "very independent." But after the golf trip, when Kovaleski asked to speak with Johnson, Lovejoy and Hettich, a Pinnacol spokeswoman said by email that "we will not be making these individuals available for an interview."
KMGH also attempted to contact the three board members individually by phone and email, but they did not respond to requests for comment.
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State Sen. Carroll said the golf trip is evidence Pinnacol needs new leadership, and said that board members who were on the trip should resign.
Gov. Bill Ritter issued a statement calling the trip "ill advised." Pinnacol's board, meanwhile, is expected to meet Tuesday at 9 a.m. Mountain Time.
Arthur Kane and Tony Kovaleski are investigative reporters at KMGH, the ABC affiliate in Denver.