Collateral Damage in HCDC Investigation
Auditors Issue Demand Letters

By Keith Burton - - Filed 4/6/04 UPDATED 4/8/04

A state auditors investigation into the Harrison County Development Commission that has been underway for nearly a year is yielding a surprising result.

This past week, investigators with the Mississippi Department of Audit began issuing what are being called informal demand letters to former members of the development commission. These demand letters contain varied amounts depending on how long and when the former commissioners served. Most during the 1990's.

What the auditors are questioning at this point in their investigation of the HCDC is a retirement incentive program established in 1991 by commissioners on the board at that time, to encourage HCDC’s director, Michael Olivier to remain with the agency.

Over time, as the payments were authorized by the commission in approving the docket of payment claims, some HCDC commissioners that replaced earlier appointees, also assumed a responsibility over the disbursement of money for Olivier’s retirement incentive plan.

In 1998, the Harrison County Board of Supervisors had some questions over the plan and asked for an Attorney General’s opinion. That opinion said that such a plan was not authorized.

Over the past year, investigators with the state auditors have been in and out of the HCDC offices in the Hancock Bank tower in Gulfport. They have repeatedly declined to comment on their investigation. But last week’s actions suggest that their efforts are far beyond a routine matter.

The HCDC and its director over the past two years have been the focus of repeated efforts by both public, and some private individuals to bring some changes to the HCDC, which they feel is not operating correctly.

In the process, it was learned by reformers (see GCN’s Slippery Business Archive) that the HCDC routinely destroyed records, including its own financial records, such as receipts for expenditures. The HCDC also recently lost a lawsuit filed against the agency by a private citizen for concealing public records.

Then, starting last week, representatives of the state auditors office began phoning former members of the commission for interviews.

One individual that spoke at length with GCN on what the auditors wanted is a much respected Gulfport citizen who served on the HCDC in the late 1990’s.

Seal of the Mississippi Office of the State AuditorHe said he was quite surprised to be called. In his interview with the auditors, which he said did not last long, the state auditor investigator only asked about the incentive plan and then handed him the informal demand letter.

“How would you like to get something like this,” our source said.

Our source said his demand letter totaled near $2,000, which was broken down showing half of the amount was for investigative fees and interest.

Based on what our source tells GCN, other commissioners have demand letters indicating larger charges.

He said there was no deadline on the document for when repayment would have to be made, or if a repayment was actually required.

“It doesn’t say pay this amount by this time,” he told GCN.

Since it appeared that the informal demand letters didn’t indicate any repayment time, GCN called the audit office to get a clarification.

What we found out is that the state auditors DO expect the money to repaid.

“Anyone that has received one of such letters and have questions regarding what they should do, should contact our office,” said Mick Bullock, public relations director for the Mississippi Department of Audit.

While the state auditors repeatedly refused to comment on the HCDC investigation, a GCN review of past investigations in other cities where such letters were issued, shows that people who receive the letters are personally responsible for payment, and not the agency such public officials worked for.

This latest development regarding the HCDC shows a form of collateral damage that can occur to people who serve on commissions that that are poorly advised and run. The commissioners on the HCDC, as on similar boards, are usually respected citizens who serve by appointment made by public officials and are volunteers.

With the HCDC, its 12-member board includes individuals appointed by the mayors of Harrison County’s five cities, the five Board of Supervisors, and two appointments by the governor.

There are indications that the HCDC plans to fight the demand letters issued to the former commissioners. A meeting is to be held Wednesday (April 7, 2004) where the issue is to be discussed.

If the HCDC does decide to fight the demand letters, sources say there is a legal question as to whether the HCDC can expend funds to defend the individuals that received the letters.

More to come.

UPDATE:  4/8/04

In a special meeting Wednesday morning, HCDC commissioners did not vote to defend former and some current commissioners from the demand letters issued by the state auditors. However, it is expected that the HCDC will do so formally at some point.

The commission did  vote to ask for an Attorney Generals opinion if a future compensation plan for the commission's director could be established in some form.

The Commission went into executive session shortly after their meeting began at 9 a.m., which the press and visitors could not attend. This time the commission went into the executive session properly. They had not done so in the past on every occasion.

That procedural problem had triggered one of the reasons for going into executive session, to deal with a possible lawsuit  from Pass Christian lawyer Tut Kinney, who was again threatening the commission for improperly going into executive session in a meeting in the recent past. It was Kinney that had successfully sued the HCDC over public records mentioned higher in this article.

The commissioners also said they were going into the private session Wednesday to discuss the auditor's investigation.

Reportedly, the commissioners did vote in open session to change a previous meeting's minutes, the one addressed in Kinney's most recent complaint.

The tone of the commissioners prior to their meeting was subdued. There were no previous commissioners in attendance.

The Sun Herald reports Olivier's pre-tax incentive plan that was provided in the 1990's totaled $45,384.92 before it was ended in 1999 following questions by the Board of Supervisors.


Related: GCN's Slippery Business Archive of stories on the HCDC

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