Chris Koster

By Johnny Kampis | Missouri Watchdog

ST LOUIS — Attorney General Chris Koster accepted campaign contributions from law firms that submitted proposals for contingency fee contracts, an audit report says.

Thirteen firms that bid to work with the AG’S office on major lawsuits gave contributions to Koster totaling more than $170,000 in 2011, the report said. These firms represented nearly half of the 28 that responded to the AG’s office request for proposals.

“He can retain control over the procurement process, but he ought not to be soliciting campaign contributions at the same time,” Spence Jackson, spokesman for Missouri Auditor Thomas Schweich, told Missouri Watchdog. “It’s certainly an appearance of impropriety.”

Koster, a Democrat who took office in 2009, is running for re-election this fall. He is unopposed in the Aug. 7 primary, and will face Libertarian Dave Browning and one of two Republican candidates, Ed Martin or Adam Lee Warren, in the Nov. 6 general election.

Schweich, a Republican, said in Wednesday’s audit that Koster retained the right to accept or reject proposals for the contracts and solicit new responses after asking the Office of Administration to handle the process. The report noted that state law does has no provision that allows the AG to retain such control.

In April, the AG was evaluating proposals in lawsuits regarding the drug Avandia, the Petroleum Storage Tank Insurance Fund, and pricing violations involving the pharmaceutical industry. The audit said the state might recover significant money in the three lawsuits, and law firms picked to assist on the cases stand to receive hefty fees.

Jackson said Koster agreed to hand over complete control regarding decisions about the contracts to the Office of Administration during Schweich’s investigation.

The AG’s office remained largely silent over the issue Wednesday. Spokeswoman Nanci Gonder did not return a call for comment, but responded to an email, saying “We appreciate the auditor’s efforts on this project, and will certainly take his thoughts into consideration.”

Martin used the opportunity to take a swipe at his political adversary.

“Tens of thousands of dollars in campaign contributions are tied directly to those contingency fee contracts in what appears to be a pay-to-play scheme,” he said in a statement provided to Watchdog. “This sort of mismanagement and pay-to-play scheming is unacceptable from the attorney general’s office.”

The audit also found other issues with the AG’s office, giving Koster an overall grade of “fair” – the second worst score. This means the organization audited needs to improve operations in several areas.

Schweich’s report said the office spent $4.6 million for legal and expert witnesses for the three years ending June 30, 2011, but didn’t explain how and why they were selected.

Thomas Schweich

“There’s missing records in a lot of those cases,” Jackson said.

Only 20 of 56 payments during the period provided documentation on the selection process.

Koster’s office uses periodic observations by timekeepers to determine when employees are present, which doesn’t provide assurance that hours are accounted for accurately, according to the audit.

Attorneys provide manual timesheets, but Schweich’s staff found discrepancies between the written and the computer records. The audit recommends the use of a standardized electronic timesheet.

The study also found that the AG’s financial services division fails to prepare an initial record of money received in the mail, which makes it difficult to ensure the money is accurately accounted.

“We feel like they took our recommendations to heart and are going to make the necessary changes,” Jackson said.

He said Schweich will likely audit the office again next year. State law requires the auditor to study the AG’s office once per term.

The office was last audited in June 2009, when now Gov. Jay Nixon was completing his final term after 16 years as AG. Some of the information used in the latest audit includes Nixon’s last year as AG.