Jan. 18 (Bloomberg) -- National Basketball Association players should consider replacing Billy Hunter as their union chief after he focused on personal interests ahead of the organization, New York law firm Paul, Weiss, Rifkind, Wharton & Garrison said after a nine-month investigation.
Hunter, 70, didn’t do anything illegal, the law firm said. It said he failed to manage conflicts of interest and hid the fact that his contract as executive director of the National Basketball Players Association wasn’t properly approved.
“Mr. Hunter’s actions have also called into question his stewardship of union resources, reflected poor judgment or raised serious doubts about his interest in policies and procedures to protect the union’s interests,” Paul, Weiss said in the report.
The firm said in a statement that it reviewed thousands of documents, including financial and governance records and e-mail. It said it also interviewed more than three dozen people, including union employees, vendors and executive committee members.
Hunter, who took over the union in 1996, said in an e-mailed statement that he was pleased the 229-page report “recognized that I have not engaged in criminal acts nor was I involved in misappropriation of union funds.”
“Through the benefit of hindsight, as with any executive, there are always things that could have been done better,” Hunter said. “But on the major issue, I am pleased that this report has confirmed what I have always known and said -- I did nothing illegal.”
A special union committee retained the law firm in April to investigate claims of nepotism, conflicts of interest and potential misuse of association funds.
Theodore V. Wells Jr., co-chair of the litigation department at Paul, Weiss who led the investigation, said in a statement that Hunter wasn’t given an advance copy of the firm’s findings.
“This has been a truly independent review,” he said.
The report said player representatives and the union’s executive committee should decide at next month’s All-Star weekend to reject Hunter’s contract and search for a new executive director or properly approve a new agreement.
The report said Hunter knowingly failed to inform the executive committee and player representatives that his five-year, $15 million contract extension in 2010 wasn’t properly approved.
“Although we cannot guarantee that a court would agree, in our judgment the union has no obligation to accept Mr. Hunter’s current contract as valid or enforceable,” the report said. “We believe that the circumstances of the contract’s formation and the lack of proper approval cast serious doubt on Mr. Hunter’s ability to enforce it.”
Hunter said the accord is legitimate.
“It was ratified by the NBPA executive committee and signed by President Derek Fisher,” Hunter said. “I believe the contract and extensions are valid. I am pleased to discuss with the player representative board any concerns about my contract.”
The U.S. Attorney’s Office in Manhattan began an investigation into the union after Fisher asked for independent reviews of the association’s finances and business practices.
Fisher said in an e-mailed statement yesterday that he was “looking forward to reviewing today’s report, findings and recommendations.”
“As there is an ongoing investigation by the government as well, I hope that this is a chance for us to become an upstanding, strong organization with the sole purpose of serving the best interests of current and future players,” Fisher said.
Hunter has a daughter and daughter-in-law on staff at the New York-based association. Another daughter is special counsel at a law firm used by the union, and Hunter’s son is a principal at Prim Capital, a financial planning and investment company that advises the union on investments and runs its financial awareness program for players.
The union paid at least $4.8 million to Hunter’s family members and their professional firms since 2001, according to public records.
The report says the union should consider including an anti-nepotism policy that prohibits the employment of immediate family members of NBPA employees, directors or officers. Such a rule would stop the union from continuing to employ Hunter’s daughter and daughter-in-law. The union also should bar vendors who employ immediate family members, according to the report.
In addition, the union should consider dropping Prim Capital, which didn’t cooperate fully with the investigation, Paul, Weis said in the report.
“Prior to the report’s issuance, the NBPA began implementation of some of the recommendations suggested, including a revised hiring policy and a new anti-nepotism policy,” Hunter said.
Jerome Williams, a former union executive committee member who is now retired, said via telephone that he doesn’t know whether Hunter can survive the findings of the report.
“It’ll depend on the relationships with the guys,” he said.
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