The Grand River Dam Authority board and executive management have created a "volatile environment increasing GRDA's exposure to fraud, waste and abuse," according to an audit released by Oklahoma State Auditor and Inspector Gary Jones.
Jones reprimanded the board of directors for poor attendance, warning this could hinder decisions in the best interest of Oklahomans.
The auditor also cited poor practices in recording business and travel expenses, as well as excessive spending by management especially the former CEO, and has referred that matter to the attorney general for consideration.
The audit confirms information uncovered in a special report in February by the Oklahoma Impact Team's Jennifer Loren.
2/17/2011: Related Story: State Agency Head Gets $90K Raise As Power Rates Rise
Among the audit's key findings:
- Spent $140,000, used GRDA employees and equipment in 2006 to expand the South Grand Lake Regional Airport without GRDA board approval (required by law) and for no explicit benefit to GRDA -- the pilot says its helicopters were never even stored there.
- Discovered a GRDA employee, in charge of two major construction projects totaling $13 million, approved both bid awards to Crossland Construction whose projects manager is a family friend. That GRDA employee did not disclose the friendship even though the employee signed a Conflict of Interest statement acknowledging the employee's obligation, under law, to do so. Recommend attorney general review to see if laws were broken.
- Disproportionate raises for certain employees.
- Giving CEO the power to create new positions creates risk of hiring or promoting people who are not the most qualified for the job like a back-up helicopter pilot, paid $40,000 a year, who didn't have a commercial or private pilot's license, or the superintendent of GRDA's hydro electric operations paid $95,000/year with no experience in power generation.
- GRDA paid $130,000 to remodel an OKC office in Bricktown they leased and paid double the amount of rent the state allows agencies to pay. Asked attorney general to review to see if laws were broken.
- Director of Investments position created to circumvent salary cap for CEO, calls on attorney general to look at possible overpayment of CEO and calls on legislators to possibly eliminate the position altogether since their described duties are already performed by GRDA's CFO.
- States the board wanted to hire one man as CEO but because of the Director of Investments maneuver and its MBA requirement, couldn't name him as CEO so they created a new position for him (and hired another CEO).
The auditor's conclusion? The executives and board operate in a way where they are careful to make sure what they are doing is legal... but they don't care how their actions appear or effect GRDA.
Read The Official Audit
Jones made several recommendations in the audit:
- Update policies and procedures to reflect more oversight, better management of money, more checks and balances, more restrictive conflict of interest rules.
- That the attorney general review to see if laws were broken on three occasions, and asked the attorney general to review two other situations to see if further action is warranted.
The audit contradicts what the board chairman told News On 6 in June. Tulsa businessman David Chernicky said then the audit wouldn't "find anything."
The GRDA released a statement Thursday in response to the findings by the Oklahoma State Auditor and Inspector:
"With responsibilities ranging from electricity generation, transmission and distribution to lake management, this audit will be a resource for the Grand River Dam Authority as it maps out its future in regard to policies, procedures and operations."
Read The Entire Statement