Kentucky pension board chair threatened with arrest in spat with governor

(Reuters) - A fight between Kentucky's governor and the state's main public pension system escalated on Thursday when its chairman, who had defied an executive order dismissing him from the post, was threatened with arrest if he tried to chair a board meeting.

Thomas Elliot, an appointee of the former governor, was dismissed by Governor Matt Bevin in April. But the board of the Kentucky Retirement System, the least-funded in the nation, had argued that the governor did not have the right to remove him.

Elliot told Reuters in a telephone interview that he was ushered into a room by two of the governor's close aides and told he would be arrested by waiting state police officers if he tried to chair the meeting.

"They were there to tell me how and what I was going to do and that if I didn't choose to comply with what the desire of the governor's office was, I was going to be arrested," Elliot said.

The incident was the latest in the fractious relationship between the recently elected Bevin, a Republican, and appointees of former Democratic Governor Steve Beshear. It is also a measure of the mutual distrust between elected officials and KRS, which has at least $17 billion in unfunded liabilities.

Amanda Stamper, a spokeswoman for Bevin, said Elliott had "voluntarily elected not to participate in the board meeting."

When asked about the presence of state police, Stamper said Elliot had been "reminded" of the executive order removing him and that he was told that by participating in the meeting, he would be committing a class B misdemeanor offense under a state law preventing the disruption of meetings.

The board's position that Bevin had exceeded his authority in dismissing Elliot was seemingly supported in an opinion from the state attorney general's office earlier this week.

However, Elliott sat with members of the public as uniformed state troopers stood watching, a witness said.

"I have never been to a board meeting where there's an armed encampment," said Jim Carroll, a founder of Kentucky Government Retirees, a lobby group for the system's retirees.

The Kentucky state police did not immediately respond to a request for comment.

(Reporting by Edward Krudy; Editing by Dan Grebler)