State Department of Transportation employees in Haywood County wasted thousands of dollars through poor management, questionable purchases and possibly outright fraud, a state report released Friday says.
An investigative report by the Office of State Auditor found $3.7 million in cost overruns on a highway project, $107,000 in questionable overtime payments to two employees and $31,427 in purchases of tools and items like $184 flashlights without following proper procedures.
The report quoted an unnamed DOT official involved in the equipment purchases as saying, “When people need something, I try to help them out.”
“Some people view me like Santa Claus,” the report quoted the official as saying.
Top DOT officials had no such holiday spirit after reading the report for the first time Friday.
Two senior officials said in a telephone interview they were embarrassed and disappointed by the report findings and will investigate further.
“Just rest assured we are going to move very quickly to find out more details and take appropriate action,” said Terry Gibson, state highway administrator. “When we find something’s wrong, we get after it. We get it fixed.”
Transportation Secretary Gene Conti accepted the findings in a response released with the report. He said DOT expects to take disciplinary action against some employees and that procedures will be changed to deal with problems the report details.
The auditor’s report says:
• A project to improve roads in the Wild Acres subdivision in Maggie Valley originally funded at $1.8 million had a $3.7 million cost overrun over eight months in part because DOT workers did not follow proper procedures for use of rental equipment.
Costs were not monitored as they should be, and the overrun meant money had to be moved from other projects, the report says.
• A DOT employee based in its Division 14 office in Jackson County who was responsible for rental equipment contracts did engineering work on the side for the owner of a company that got about half of Division 14’s rental business.
• Three DOT employees in Haywood County violated policies by spending $31,427 to buy tools from a vendor not on a state contract. The department could have gotten the tools for a 35 percent discount if they had been bought under the contract.
Seventeen of the items costing $1,854 cannot be accounted for.
• The $107,000 in overtime two DOT workers received amounted to 46 percent of their compensation from 2008-10 and was much greater than amounts paid other workers.
Further, “The number of reported work hours for these employees was consistently three to four hours more per day than the hours reported by the contractors” the two employees were supposed to be supervising, the report says.
• A DOT worker was supervised by his or her first cousin in violation of DOT policy.
The report does not give the names of any employees involved, although it identifies several by the positions they held during the period in question, roughly 2008-10.
Greer Beaty, the agency’s director of communications, said the department was researching Friday what information it could make available about the identities and disciplinary records of the employees involved.
Conti wrote that two DOT officials have already been disciplined in connection with the Maggie Valley project.
He wrote the transportation department is further investigating the tool purchases “and will take appropriate disciplinary action.” The employee responsible for rental equipment contracts “will be placed on investigatory leave to determine disciplinary action,” he wrote.
Some of the cost overruns on the Maggie Valley project “were due to the unique construction conditions and not totally related to (rental equipment) usage,” Conti’s memo says.
But, it says, “There was clearly a failure to monitor expenditures on the project and detect the project overruns in a timely manner” as a result of not following proper procedures.
Gibson says there is a lot he does not know about problems described in the report. The $184 price for flashlights, for instance, “looks expensive,” he said. “I personally would like to know more about that.”
Asked if he thinks the workers with the large overtime payments actually worked the hours reported, he responded, “That’s a great question.”
But he said he believes the problems in Haywood County and other parts of DOT’s Division 14 are “an isolated issue.”
“Our organization is very large. Like any large organization, you have things happen that you don’t want to happen,” he said
Some changes will extend across the department, which employs more than 10,000 people, Gibson said.
“It’s kind of embarrassing that we have an area of the state where we failed to follow our policies, and we just want to make sure that that’s not occurring elsewhere,” he said.
Beaty said while it is “disappointing” to learn of the conduct detailed in the audit, the department is grateful for the work of State Auditor Beth Wood’s office.
The report says Wood’s office had received reports of misconduct through the State Auditor’s Hotline.
Written by Mark Barrett
(Black Mountain News)
9:54 PM, Jun. 29, 2012
