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RALEIGH (AP) - Democratic Gov.-elect Beverly Perdue wrapped up her Cabinet picks Tuesday by choosing a Republican and former deputy at the troubled Department of Health and Human Services to lead the agency.

Perdue chose Lanier Cansler as HHS secretary even though he was the No. 2 person at the agency from 2001 to 2005 as its efforts to fix the state's mental health system were widely criticized.

Cansler's consulting business, which he started after leaving the post, has been involved with the department. He represented a company whose $265 million Medicaid billing contract was recently accepted by the state.

Perdue defended the choice, saying that "99 percent" of the health professionals, service providers and advocates she contacted as part of Cansler's vetting "agreed that I couldn't find a better leader to set the ship back to the right course."

Perdue will succeed outgoing Democratic Gov. Mike Easley on Saturday.

The governor-elect also said current Administration Secretary Britt Cobb will stay on the job, the only holdover from outgoing Gov. Mike Easley's Cabinet.

Former Bank of America marketing and information technology executive Kenneth R. Lay will head the Department of Revenue. Retired Triangle-area Council of Governments chairman Dee Freeman will lead the Department of Environment and Natural Resources.

Cansler, 55, is a former GOP state House member from Asheville who left the Legislature to become deputy secretary at HHS in the Easley administration, under then-Secretary Carmen Hooker Odom. The department manages Medicaid, mental health and substance abuse programs, and oversees social services offices and public health initiatives.

During Cansler's tenure, the department struggled to carry out a 2001 law designed to shift the state's mental health programs away from institutional care to community-based treatment offered by private providers.

Efforts got sidetracked as psychiatric services dried up in rural areas. State institutions actually saw patient levels rise, as did concerns about staffing levels and safety at aging state hospitals and a new one in Granville County.

"Community capacity is good and the direction to go, but the implementation has been a real problem, and we're going to really focus on addressing that," Cansler said.

The most recent problems have centered on Cherry Hospital in Goldsboro, where a patient died last April after he was left in a chair without food, water or proper medical attention for nearly a day.

John Tote, executive director of the Mental Health Association in North Carolina, praised Cansler, saying that he wasn't one of the architects of the mental health reforms and often spoke candidly to advocates about the problems. With potentially large budget cuts expected this year, Tote said, Cansler's knowledge of the department will help limit the impact of reductions in services.

"Lanier clearly brings a sense of leadership that is desperately needed because of the experience that he does have," Tote said.

Cansler registered as a lobbyist for Computer Sciences Corp. in 2007. The company has landed a contract, one of the largest in state government, to complete an overhaul of North Carolina's Medicaid billing system. Cansler also was once a registered lobbyist for ValueOptions Inc., a key contractor that oversaw payments for the state's mental health services.

Cansler said he registered for the firms to err on the side of caution. He said he only helped company leaders meet legislators, not push for certain legislation or actions by state government.

"I wanted to be absolutely certain that no one could accuse me of doing anything improper, and that's the way that I will continue operating in health and human services," Cansler said.

Perdue said Cansler has withdrawn completely from outside work. She said he won't make any decisions or participate in discussions involving former clients.

"He has become 100 percent owned by the people of North Carolina for the next four years as secretary," Perdue told reporters.

But Cansler's quick jump from being a registered lobbyist to a Cabinet secretary raises questions about potential conflicts of interests, said Bob Phillips with Common Cause North Carolina.

"I think there is an awkwardness and a perception issue," Phillips said.

Later Tuesday, Perdue said she had hired Eddie Speas as her general counsel. Speas worked with the state Justice Department for 32 years, leaving as the chief deputy attorney general in 2003. He has worked in a Raleigh law firm since then.

Perdue's announced Cabinet includes six members who once served in the Easley administration or were appointed by him to commissions. There are two women and two black members.

"I didn't care what political party was, if somebody was a woman or a man, what race or religion they were," Perdue said. "I actually looked across North Carolina for really good leaders."