The Legislative Joint Auditing Committee is meeting this morning and fireworks are expected over the annual audit on the state Lottery Commission. Doug Smith will report later, but the audit itself is already available.
Lots of good data there, but the juicy stuff begins on Page 51, in a review of various internal controls on expenditures. It has been turned over to Pulaski Prosecutor Larry Jegley for review.
* TRAVEL EXPENSES: This is the biggie. Auditors couldn’t determine if lottery officials — during the era of Ernie Passailaigue’s leadership — had actually attended all seven meetings in Georgia billed to the state as trips for lottery-related conferences. But that’s just the beginning.
“Based on analysis of vendor reimbursed travel costs and the number of business gtrips that resulted in the Executive Director [Passailiague] or vice president of gaming [David Barden] flying home, we question whether some travel was reasonable and necessary. While the agency’s employee manual requires 80 hours to constitute a full pay period, it appears the executive director and vice president of gaming worked alternate work schedules based on analysis of travel. However, a policy authorize alternate work schedules did not exist …”
All that travel — as many have long believed — appears, the audit said, to have been used so Passailaigue and Barden could maximize their time at home in South Carolina. Ernie P. was hired from there, where he was South Carolina lottery director, and brought along Barden as a $225,000-a-year aide. They shared an apartment in Little Rock and apparently never moved families here.
Passailaigue traveled to South Carolina 61 of 216 working days in fiscal 2011, the audit said. For 10 of 16 business trips, Passailaigue flew to South Carolina on the last day of the trip, meaning he spent 71, or 27 percent, of work days at his South Carolina home. Barden pulled the same deal, auditors said, racking up 55 working days in South Carolina.
Documentation for their business travel was lacking, the audit says, and some information, such as flight schedules, were redacted, and there was conflicting information on different forms.
Barden and Passailaigue defended their work in letters submitted to auditors, said they worked lots of overtime and did work while traveling.
The audit, shared with current interim director Julie Baldridge after the abrupt recent resignations of Passailaige and Barden, produced an agreement with management to tighten its travel policies. It will be interesting to hear what Diane Lamberth, chair of the commission has to say, because after some early questions in the lottery era about Barden and Passailaigue reviewing each other’s travels expenses, the commission chair was supposed to step in and sign off on their expenses.
* NO BID: It questioned whether a $91,000 contract with JM Associates to produce broadcast advertising was done properly because it wasn’t bid. The procedure has been changed.
* SECURITY: The audit also questioned adequacy of security on access to agency offices and failure to retain a long enough history of records on electronic access to the offices.
Passailaigue, who was hired for $324,000, brought both Barden and Ernestine Middleton, also at $225,000 a year, to help him get the lottery underway in September 2009. All departed in early October after some changes on the Lottery Commission had produced a stream of questions on lottery practices. Ernie P. has continued to have defenders for his quick startup and the revenue, which has produced millions for college scholarships, all detailed in today’s audit. Internal auditor Michael Hyde had indicated earlier that he had referred some expense questions to legislative auditors, though both Passailaigue and Barden disavowed knowledge of any problems when they suddenly departed last month.
FROM THE MEETING: Not surprised Chairman Lamberth is urging legislators to look forward, not back. But really? Do we let abuse of leave and travel go in return for officials’ departure? Don’t we prosecute every city council bookkeeper who’s caught doing her Walmart shopping with public loot? Is use of public money for trips home — particularly if justified with bogus reimbursement forms — a no harm/no foul thing? Sen. Jonathan Dismang is remonstrating Lamberth for lack of oversight.
UPDATE: Doug Smith contributes coverage from the meeting: