LSU downplays potential conflict with board member and Bernhard Capital

    LSU officials are downplaying the relationship between board member Jay Blossman and Baton Rouge-based private equity firm Bernhard Capital Partners, which co-owns a joint venture that is seeking to enter into a long-term contract with the school to overhaul and run the aging energy system that cools all the buildings on the main campus.

    Blossman, an attorney and former public service commissioner, is a paid director of Charah Solutions, a utilities services company that Bernhard Capital acquired in 2017 and took public in 2018 but continues to own a majority of shares in, according to Charah’s proxy statement, filed in April with the U.S. Securities and Exchange Commission.  

    Blossman has been a member of Charah’s board of directors since June 2018 and received $175,000 in cash and Charah stock for his board service in 2019, according to the SEC filing, which also states that by virtue of his position on the Charah board, Blossman is designated as a director of Bernhard Capital.

    But Blossman, who was appointed to the LSU board in mid-2018, did not disclose his relationship with the Bernhard entities to the state or to LSU until recently. On the personal financial disclosure form all appointed members to state boards and commissions are required to file with the Louisiana Ethics Administration, Blossman lists only his personal business and an unpaid relationship with a small nonprofit organization, the Tchefuncte River Foundation, which works to keep the Northshore river clean.

    The disclosure form was filed in May 2019, nearly one year after Blossman was named to the Charah board and became a Bernhard Capital director.

    LSU officials confirm they were only recently made aware of Blossman’s relationship to Charah and Bernhard Capital, months after discussions about the energy contract had come before the board. They decline to say whether they have sought an ethics opinion from the state ethics commission.

    But university spokesman Ernie Ballard says in a statement, “Charah Solutions does not have any contractual relationship with LSU nor is it seeking any relationship with LSU.”

    State ethics laws preclude state-appointed board members from doing business with the boards on which they serve.

    Blossman did not return a call seeking comment.

    Bernhard Capital principal Jeff Jenkins also downplays the relationship, saying, “There is no ethics issue since he has no financial interest in Bernhard LLC and Charah is a separate publicly traded company and it is publicly disclosed he is on the board.”

    Bernhard LLC, also owned by Bernhard Capital, is the entity that co-owns Louisiana Energy Partners, which is seeking the LSU district energy contract.

    Bernhard Capital was created in 2013 by Jim Bernhard, one of the most powerful Democratic businessmen in the state. Earlier this summer, he was appointed to the LSU board by Gov. John Bel Edwards but later declined to serve because of potential conflicts of interest with entities he owns that do business with LSU.

    LAEP is one of those entities. In 2019, it inked a lucrative contract with the state to upgrade the energy system at the Shaw Center for the Arts and provide cooling to more than 30 downtown office buildings.

    The contract was drafted in such a way that it can legally be amended to include other state entities like LSU.

    LSU has been studying for more than a year how best to upgrade the campus energy system, as well as its other aging facilities. In 2019, it retained KPMG to study the issue. The firm has recommended putting the energy system contract out to bid in order to attract a wide variety of competitive proposals from national firms.

    In March, a KPMG consultant briefed the LSU board on the recommendation and noted that nearly a dozen national firms had expressed interest in submitting proposals for the deal.

    Subsequent to that meeting, LAEP submitted its own proposal to the board, which was followed by a second proposal from the firm that supplies cooling to the LSU Health Sciences Center in New Orleans, Enwave Energy.

    In August, the LSU board was expected to get an update from university administrators on the issue along with a recommendation to issue a Request for Qualifications to a select group of firms. But the issue was not placed on the August board meeting agenda because of controversy related to Blossman, sources familiar with the situation say.

    Ballard says the board will not vote on the issue at its September meeting either, though the agenda for the Friday meeting appears to suggest the board will get another update recommending a formal, structured procurement process that would open the deal to multiple firms.