HIRING OF OFFICIAL'S FIRM RAISES EYEBROWS IN ALA.

HIRING OF OFFICIAL'S FIRM RAISES EYEBROWS IN ALA.

The receivership division of the state Insurance Department paid $78,000 to a Georgia consulting firm at the same time the firm's president was head of the division.

National Stonehenge Corp. of Atlanta has charged the state about $174,000 for work in the state Insurance Department since June. That included $78,000 for work done while its president, R.O. Hutchison, was chief of the receivership division from June until August.The company reimbursed the $78,000 after ethical questions arose, but the company still wants to collect the money, department attorney Mike Espy said.

Attorney General Jimmy Evans said Tuesday his office is investigating the matter after being alerted to it about a week ago.

"It's much too early to tell whether violations of the Alabama Ethics Act have occurred. However, the entire matter should and will be investigated," he said.

State Insurance Commissioner James Dill, an appointee of Ala. Gov. Jim Folsom, hired National Stonehenge to develop policies for companies placed under the department's receiver, Mr. Espy said.

He said the department believed it would benefit from making the company's president head of the receivership division at an annual salary of $60,892.

The department's legal staff approved the arrangement, Mr. Espy said, but later contacted the Alabama Ethics Commission staff for advice.

Howard McKenzie, the commission's deputy director, said the arrangement involved a state official approving work done by his own company's employees. ''We just said that was inappropriate," Mr. McKenzie said.

State records show that $78,386 was paid to Mr. Hutchison's company while he ran the receivership division. Of that amount, $16,086 was paid before the meeting with ethics officials Aug. 9 and the remainder was paid Aug. 20 and Sept. 21.

Mr. Hutchison left his state position Aug. 23 and repaid the money Sept. 30, Mr. Espy said.

"I said, 'Look, take it back, we don't want to create an issue,' " Mr. Hutchison said.

But the next day, the receivership division wrote 64 checks to Stonehenge totaling $96,957, according to state records and a deposition given by Donna McLain, a bookkeeper in the receivership division.

Ms. McLain's deposition also alleges that Mr. Hutchison was in his state office only about one day out of every two weeks.

Montgomery attorney Tommy Gallion, who did work for the department before being removed last week, has asked Montgomery County Circuit Judge Charles Price to look at the arrangement with National Stonehenge. Judge Price has scheduled a hearing today, where he could also consider whether Stonehenge should get the $78,000.

The insurance commissioner who hired Mr. Hutchison said he and his company ''performed a great service to this department and to this state, and it is a shame that they are being subjected to this type of attack."

Mr. Espy said the Insurance Department received 40 hours of work per week

from Mr. Hutchison even if he didn't perform all the work in the receivership office.

Stonehenge continues to perform work for the Insurance Department as a consultant, although the workload has decreased, Mr. Hutchison said.