Thompson wants to block lawsuits

The Journal Sentinel staff

Gov. Tommy G. Thompson, whose top aide is embroiled in a now 6-year-old influence- peddling lawsuit involving State Investment Board loans, is proposing a change in state law that may make lawsuits against agencies like the Investment Board impossible.

The proposed change giving the state immunity from lawsuits is drawing objections, though, from Democratic lawmakers who say highly publicized problems at the State Investment Board need the public spotlight a lawsuit can bring.

"This is a healthy check on an important public agency that handles millions of dollars in public funds," said Sen. Joe Wineke (D-Verona). "This is clearly an attempt to stop embarrassing lawsuits like the one filed by Marshall Burkes."

Burkes, the former executive director of the State Investment Board, sued the governor's top aide, James Klauser, in 1989, alleging that a prominent Madison lobbyist used his friendships with Klauser and Thompson to win more than $100 million in Investment Board loans.

Klauser and other Investment Board members, however, deny any wrongdoing and say Burkes only complained of influence- peddling as a ruse to keep his job after the board began action to fire him for mismanagement and abusing subordinates.

After six years of attempts by lawyers for Klauser and the lobbyist, M. William Gerrard, to get the lawsuit dismissed on legal grounds, the case is tentatively scheduled to go to trial in February 1996.

John Matthews, the governor's chief of staff, said Tuesday that the governor included the state immunity provision in his 1995-'97 state budget at the request of the State Investment Board but denied that the provision was designed to stop lawsuits like Burkes' in the future.

"This would not protect the state from a lawsuit like Burkes', either now or in the future," Matthews said. "The Burkes lawsuit was not the catalyst for this."

Matthews said the state Justice Department, as well as the State Investment Board, had requested the lawsuit immunity provision as part of a technical cleanup of state laws. "It's kind of an insignificant technicality," Matthews added.

But Assembly Minority Leader Walter Kunicki (D-Milwaukee) noted that an analysis of the immunity provision by the Legislature's budget office concluded that the effect was to stop any lawsuits being filed against the state unless the state expressly authorized the litigation.

The Legislative Fiscal Bureau analysis also noted the change would end the Investment Board's status as an "independent agency of the state" thereby making lawsuits against it easier and said the change apparently was intended to reassert retroactively the doctrine of sovereign immunity that prevents lawsuits against the state.

"I think this provision is a little bit too clever by half," Kunicki said. "Clearly the Investment Board's image has been tarnished, not just by the Marshall Burkes lawsuit but by the derivative problem and others. It's not been a good month for how the place has been managed."

Last week, Investment Board officials acknowledged as much as $130 million in losses from its risky investment in derivative instruments and questions now are being raised whether investment guidelines aimed at preventing such losses had been followed.

Wineke said that for that reason alone, the governor's attempt to make the Investment Board immune from lawsuits was bad public policy. "What check is there on portfolio managers over there at the Investment Board running amok?" Wineke asked.

The immunity provision was removed from the budget two weeks ago by legislative leaders, who objected to major non-fiscal public policy issues being in the budget, but Matthews said the governor intends to resubmit the provision in a separate bill.

Copyright 1995
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