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Slippery Business V

HCDC Steps In It - Again & Again

By Keith Burton – GulfCoastNews.com    Filed 6/15/04

The Mississippi Attorney Generals office has issued yet another legal opinion that says a retirement incentive plan sought by the Harrison County Development Commission would be illegal if implemented.

The AG opinion, issued June 11, was sought by the HCDC in April after several former and current commissioners received statements from the State Auditors over the possibility that they would have to repay thousands of dollars approved improperly by them for an incentive plan for the HCDC’s director Michael Olivier back in the early 1990’s. The statements from the State Auditors showed various amounts that would have to be repaid individually based upon the votes of the members during their terms.

The AG’s office had already issued an opinion on the retirement plan to the Harrison County Board of Supervisors in 1998 when the plan was shortly thereafter discontinued.

In a Sun Herald article on April 8, the newspaper reported that:

 “Olivier told The Sun Herald the first pre-tax payment was in 1994 for $4,800.65, with subsequent pre-tax amounts of $1,620 (1995); $765.75 (1996); $12,967.55 (1997); $21,102.95 (1998); and $4,128.02 (1999).”

Typically, the AG’s office does not issue legal opinions on actions already taken by a government agency. So the recent request by the HCDC was over whether such an incentive plan could be implemented in the future.

In an earlier story by GCN on the repayment statements, there was a question over when the individuals would have to repay the money for the previous incentive plan. With this latest AG opinion it now appears that some form of formal demand for repayment will likely be issued by the state to the former and current commissioners in the near future.

The HCDC has been under investigation by the State Auditor for over a year. Officials with the State Auditors office continue to decline to comment on their investigation but GCN has learned that the auditors will be issuing a formal report on their findings. Speculation is that such a report may come within three to five weeks.

The HCDC has been the target of criticism by some Harrison County supervisors and some current and former commission members who have sought reforms in the agency. The reformers cite problems with management and lack of accountability, and a resistance to improvements. These concerns have been reported in GCN’s “Slippery Business” series of reports. Though recently, the HCDC has made an effort publicly to improve its communications.

HCDC ACCOUNTANTS FIND PROBLEMS

A recent audit by the HCDC’s own accountants issued in May, found significant internal accounting problems with the agency that could show the HCDC needed to better manage its affairs. The report was prepared by Alexander, Van Loon, Sloan, Levens & Farve PLLC of Gulfport.

"However, during our audit, we became aware of several opportunities for strengthening internal controls and operating efficiency," reads the audit.

“We noted that the fund balance reported at September 30, 2003 did not agree with the ending audit figures,” reads the audit report.

Although the current auditors said such adjustments are made on the direction of accountants, such a condition could result “in inaccurate interim financial statements generated by the commission.”

Also among the HCDC auditor’s findings was that the accountants could not find evidence that the Commission’s staff approved several invoices prior to payment including some contractor payments as required.

The HCDC accountants also found that the management staff received a monthly auto allowance for all business travel whereby no accounting for automobile mileage occurred, as a result, the “Commission reports the monthly allowance as earnings on their form W-2 at year-end.”

The accountants suggested the commission use the state-law required actual mileage method.

The accountants also noticed that the HCDC failed to follow state bid procedures for the purchase of computer equipment.

These are just a couple of the findings from the HCDC’s accountants. But it does show that past management practices could be improved.

GCN called to speak to attorney Harry Allen, who represents the HCDC, but Mr. Allen did not return our call.

NOT FOR THE PUBLIC'S EYES

Inexplicably the full findings of the audit failed to be mentioned in an article in the June 15, 2004 Journal of South Mississippi Business published by The Sun Herald. In an article regarding the HCDC audit, the magazine reported that "in its may 24th finance committee meeting, the HCDC commissioners listened as the CPA firm of Alexander, Van Loon, Sloan, Levens & Farve PLLC, reviewed the findings of the Development Commission FY 2003 audit. The firm issued a "clean opinion" of no instances of reportable conditions nor any significant compliance issues."

The article continued, "In addition, they commended the staff for its management and operating procedures, given its small staff."

Given the fact that the HCDC recently lost a lawsuit for concealing public records, it is interesting to note that the HCDC accountant's report reads that it was not meant for the public's eyes. The report contained the following comment:

"The accompanying comments and recommendations are intended solely for the information and use of the finance committee, management, the Board of Commissioners, and others within the organization, and should not be used by anyone other than those specified parties," reads the cover letter.

So much for the commission's new communications policy lauded in a Sun Herald editorial , Sunday June 14, titled "Harrison County Development Commission is exploring its own redevelopment."  In that editorial, the Sun Herald's editors said:

"This new sense of, and commitment to, openness is one of the most welcome changes that the commission could make," said the Sun Herald's editors.

Clearly a misleading statement by the newspaper and contrary to the facts regarding the HCDC's continuing secrecy.

Perhaps the newspaper's recent favorable HCDC reporting has to do with trying to convince the Harrison County Board of Supervisors to reconsider their disapproval of a new industrial park in the Saucier area. We cite the Sun Herald's editorial in the Tuesday June 15, 2004 edition. The recent editorials clearly indicate a continuing perception of editorial bias at the paper regarding coverage of the HCDC's activities.

In that editorial supporting the proposed new 546 acre industrial site, the newspaper ignores the citizens who live the area who oppose the project and had gotten enough signatures to force a special vote by the Board of Supervisors.  What no one seems to question is that if this project was so needed, why hasn't a private developer taken it on?

NO REPLACEMENT FOR FORMER COMMISSIONER

Meanwhile, the controversies surrounding the HCDC have made it difficult to find a replacement for former Commissioner Paige Gutierrez, who resigned last October citing problems within the HCDC.

Gutierrez was appointed by District 5 Supervisor Connie Rockco. Rockco has told GCN that she is holding off replacing Gutierrez over how Gutierrez, and others, have been treated.

“The manner over how she was treated was very unprofessional and immature,” Rockco told GCN this week. “I fear they would be disrespected as Gutierrez was disrespected. And I don’t want to put anyone in through that type of grief.”

The HCDC is a multi-million dollar agency that manages Harrison County's industrial parks and is chiefly responsible for bringing new jobs to the area. However, the HCDC was not involved with bringing the casino industry to the Coast, and its success at bringing industrial jobs to the area are disputed by both the news media and critics.

The HCDC is not without powerful supporters. There has been speculation among reformers that the agency would be largely spared from any real embarrassment from the auditors due to the political connections the HCDC has developed over the years of its operation. (See Mississippi's Open Wound on GCN)

But there is a growing public sense that such institutions in the state have done relatively little to move the state forward economically as Mississippi continues to trail in manufacturing and industrial job formation and recruiting new industries.

Even the HCDC itself hired a consultant to help the commission find a new direction for its future. The consultant recommended the HCDC seek to become a public/private funded agency as it had largely lost political support by alienating the county supervisors and other local officials. So much so, that the Harrison County Board of Supervisors had ended the county's financial support of the HCDC.


Related:

Guest Opinion - Out of the Darkness - A Call for Accountability at the HCDC - by Reilly Morse

Slippery Business Archive

 

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