Virginia Attorney General J. Marshall Coleman has demoted and cut the salary of the outspoken prosecutor in charge of the state's investigation of bribes and irregularities in state purchasing programs.
The move was made last Friday but not publicly revealed until today, one day before the prosecutor, Assistant Attorney General Joseph W. Kaestner, is scheduled to try one of the major cases resulting from the investigation.
Neither Coleman nor Kaestner would discuss reasons for the demotion, a move that could help Coleman's standing in the state's conservative business community, long worried by the antitrust unit's aggressivenss. Coleman is considered to be a front runner for the 1981 Republican nomination for governor although he has not been popular with many of Virginia's business leaders.
One knowledgeable member of Coleman's staff said the action represented an effort by the attorney general to gain more control over the antitrust unit. "There's a feeling that they've been more independent and a little too loose," said the official.
Politicians are likely to interpret the demotion as a signal to the state's conservative business community that Coleman is tightening his grip on controversial members of his staff Kaestner has many times stated his view that the purchasing scandal contradicts the long-held view that Virginia has a corruption-free state government. Coleman, on the other hand, has stressed that the scandal involved only a small number of state employes and that "the vast majority of state employes . . . serve this Commonwealth honestly and well."
Coleman has built a reputation as an activist attorney general based partly on the record established by Kaetner's antitrust section, which has successfully prosecuted the state's first public bid-rigging cases and the first cases of public bribery brought in Virginia in 30 years. The three-lawyer, three-investigator unit, started in 1976, has been transformed under Kaestner's direction into the state's most visible and aggressive anticorruption and white collar crime team.
Coleman spokesman Anson Franklin said Kaestner will try tomorrow's case -- in which a Virginia Beach Furniture salesman is accused of bid-rigging -- and will continue to direct the purchasing scandal investigation. But Franklin said Kaestner will no longer head the antitrust unit and will lose $1,000 of his $29,600 salary.
Franklin conceded the timing of the demotion was poor but implied that Kaestner was to blame. He said Kaestner had offered to resign his post in December and that Coleman had accepted, but that Kaestner recently withdrew his offer. Coleman allowed Kaestner to remain but only with reduced status and pay, Franklin said.
Other sources said Kaestner's resignation offer came after a heated argument with Coleman but neither they nor Franklin would reveal what the argument was about. "It's a disagreement over administrative matters and we don't really have any comment other than that," said Franklin.
Kaestner, who in the past praised Coleman for totally supporting the antitrust unit, said he would have no comment until after tomorrow's court case was completed.
Kaestner called the timing of the demotion "awkward" but would comment no further. Another assistant attorney general said morale in the antitrust section was low and blamed the attitude there on Coleman's actions.
"Joe's sort of been Marshall's fair-haired boy," and in the past he's gotten everything he wanted," said the assistant attorney general, who said many lawyers in Coleman's office were surprised by the action.
Franklin, who is Coleman's chief political adviser as well as his director of administration, denied politics played any role in Kaestner's demotion.
"People with inventive minds will say anything no matter what we say," said Franklin, "but that's just not true."
Kaestner, 33, a native New Yorker, came to the anitrust unit from the New Jersey attorney general's office in 1977. His section has brought more than a dozen lawsuits since then and has collected more than $400,000 in judgments from the suits, most of which involved bribery and bid-rigging in state and local government.