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Tenn. Lottery says it need not obey state policies

Jan 9, 2006, 8:30 am

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Tennessee Lottery

Though the state recently cleaned up its policy for investigating harassment claims, the Tennessee Lottery is exempt from those rules, officials said — making it even tougher for the public to keep tabs on harassment cases at the agency.

The Tennessee Education Lottery Corp. on Thursday dismissed its chief administrative officer, Steve Adams, after an investigation of workplace harassment allegations. Lottery officials have refused to provide details of the allegations or investigation, citing attorney-client privilege under state law.

Adams said in a written statement yesterday that he had "never knowingly, or purposely, harassed anyone, much less an employee." He said he was considering his legal options.

The harassment case was at least the third involving a high-profile state official in the past year. Investigators shredded documents in the other two cases, and files on some other harassment probes were empty.

Those problems caused Gov. Phil Bredesen to call for a new policy requiring the state to investigate accusations against executives and rank-and-file employees the same way, maintain all records and tell the parties involved that their confidentiality isn't guaranteed.

But the lottery, as a quasi-governmental agency, doesn't have to abide by any of those rules, its officials said.

The exemption upset at least one legislator.

"They went from shredding to keeping no documentation at all, and now the lottery is hiding behind this excuse of saying, 'We're not a true state agency so we can keep this secret,' " said state Rep. Glen Casada, R-College Grove.

Bredesen was silent on the matter yesterday. Spokeswoman Lydia Lenker said the lottery is "not under our auspices" and that the Democratic governor had not talked with lottery officials about the situation.

"I think he'd want to talk to them before saying anything," Lenker said, adding that the administration was busy preparing for the special legislative ethics session that starts Tuesday.

Lola Potter, a spokeswoman for the state personnel department, which issued the new guidelines for harassment cases, said the lottery is "not a state entity. They're not a taxpayer-funded mechanism. They're customer-funded."

Lottery officials have said over the years that the lottery was set up outside the typical boundaries of state government so it could function more like a business.

"We don't follow any state policies other than open records and open meetings," spokeswoman Kym Gerlock said. "Otherwise, when we started, we started from scratch as a corporation and have our own internal policies for everything we do."

Gerlock also refused to release any records from the case involving Adams, who was state treasurer from 1987 to 2003. She said no records had been destroyed and the investigation "was conducted in a methodical, professional manner."

Rick Hollow, an attorney for the Tennessee Press Association, said the lottery's decision to withhold documents appeared to be in violation of the state Open Records Law, which does not specifically exempt harassment investigations. And the Tennessee Supreme Court has ruled that agencies performing the "functional equivalent" of government work must open their records.

Hollow also said attorney-client privilege only prevents the attorney from discussing a case, while the client - in this case, the lottery - is free to talk.

A judge ruled last year, however, that the state did not have to release some harassment files because they are protected under the attorney-client and/or work-product privileges. The Tennessean, which sued the state for the documents, is appealing Davidson County Chancellor Carol McCoy's ruling.

The lottery's workplace-harassment policy doesn't say much about how investigations of allegations should be conducted.

It does say the lottery's vice president for human resources is responsible for looking into and trying to resolve any harassment complaints.

Gerlock said the lottery's general counsel, Wanda Wilson, led the investigation into the Adams case. The human resources chief, Regena Andrews, is not an attorney.

Asked whether Wilson was tapped for that role so the lottery could invoke attorney-client privilege, Gerlock said she "couldn't comment on that" but noted that Andrews reports to Wilson and was also involved.

She said the harassment investigation was the first in the lottery's two-plus years in existence.

"The fact of the matter is, we've not had anything like this before," she said. "We feel confident we did exactly as we should have in this matter."

Gerlock said she couldn't comment on the possibility that Adams would sue.

If Adams files suit, Casada said his main concern is that the state won't have proper documentation of its investigations. Robert Covington, professor of law at Vanderbilt University and an employment law expert, said that could be a problem in court.

"Generally speaking, things that are well documented in writing provide a more secure basis for going forward," Covington said. "It's not impossible, though, to build a good case without that."

Adams said in his statement that he had a long, stellar record of treating employees appropriately.

"I have served in state government for 30 years, 17 as state treasurer, and have never had any charges of inappropriate actions toward employees leveled against me. I have always been supportive of persons under my employ and continue to do so. I fully understand the importance of a healthy and harassment-free work environment for employees."

Adams, 54, was one of four executive vice presidents reporting to lottery chief Rebecca Paul. He made $187,200 a year, plus bonuses when the lottery exceeded its goals for raising money for college scholarships.

Adams receives a state pension of $5,140 a month, or $61,680 a year, based on his 30 years of service before leaving the treasurer's office, according to the state retirement system.

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