The Arkansas Lottery Commission voted without objection Friday to hire a new internal auditor, filling the position left by an auditor who questioned the validity of one of the lottery’s largest contracts.
Donald Matthew Brown of North Little Rock, director of finance for Windstream Corp., was chosen after 2 1/2 hours of interviews and discussion. Two of the nine commissioners, George Hammons of Pine Bluff and Bruce Engstrom of North Little Rock, were not present.
Brown became the finance director at Windstream in May. He had been employed as a finance staff manager with the company since 2008.
According to his application, Brown made $110,000 at Windstream.
Brown worked for PricewaterhouseCoopers LLP of Little Rock from 2002 to 2008.
He earned a Bachelor of Business Administration degree in accounting from Harding University in 2001.
Brown did not return phone calls to his home.
Commission Chairman Ben Pickard of Searcy said Brown will start as soon as possible. He was offered a $110,000 salary, Pickard said.
Pickard wouldn’t discuss the commission’s choice of Brown, saying it is a personnel decision.
Commissioner Dianne Lamberth of Batesville said the commission liked Brown’s background.
“He had been on both sides. He had been audited and the auditor,” Lamberth said. “We felt that was a very good fit for us.”
The commission interviewed one other candidate,Carol Snay of Little Rock, former finance director for the Little Rock airport.
The commission planned to interview three candidates for the internal auditor position out of the 20 applications it received, commission spokesman Julie Baldridge said.
The lottery’s chief fiscal officer, Jerold Fetzer of Little Rock, was also scheduled to be interviewed but pulled his name from consideration Friday morning.
Fetzer has been the commission’s chief fiscal officer since Nov. 29.
“I think it was just one of those where he decided he just wanted to stay where he is,” Baldridge said.
Snay worked as finance director at Little Rock National Airport, Adams Field from March 1997 to September. She cited “difference of opinion” as her reason for leaving the job.
According to her application, Snay earned $134,000 a year at the airport.
She also worked in the airport finance department from 1990 to 1997.
Her departure came a few months after a series of reports about spending irregularities at the airport was capped by an audit that found “two significant deficiencies” in internal financial controls at the airport.
While the deficiencies were “considered material weaknesses,” auditors found no instances of “noncompliance that is material to the financial statements,” according to L. Cotton Thomas & Co., a Little Rock accounting firm that audits the airport.
The audit report stated that in 2010, controls over disbursements were not properly monitored by various department supervisors.
“In addition, management of the Finance Department failed to realize its responsibility to monitor controls over all disbursements,” it stated.
Snay and the airport’s executive director gave no reason for her departure at the time.
Lamberth said Snay’s abrupt departure from theairport did not weigh on her decision.
“She had a wonderful resume. She had been there many, many years and had a very good interview, but he seemed the perfect fit,” Lamberth said.
The commission’s auditor, Michael Hyde, submitted his resignation May 11. It was originally supposed to go into effect Friday, but will not go into effect until next Friday, Baldridge said. Hyde has used accrued leave time since submitting the resignation, she said.
Hyde’s annual salary at the lottery was $120,870.
Shortly before he left, several members of the commission had become exasperated with Hyde for questioning the legality of a contract with scratch-off ticket vendor Scientific Games International.
The contract was never approved through the proper channels, Hyde said, and an amendment made it less advantageous to the lottery.
He estimated that the amendment, approved by former Director Ernie Passailaigue in 2009 without prompt board approval, has cost the state $7.29 million more than was in the initial deal that the commission and the Legislative Oversight Committee approved.
Over the seven years of the contract, Hyde said, Scientific Games would receive an estimated $21.7 million more than it would have under the original deal.
Hyde recommended that the commission seek legal guidance as to whether certain portions of the contract are valid, specifically changes to pricing, responsibilities, fees and exclusive ticket rights that were made through the amendment, which the commission had never formally approved.
The issue had been raised in previous audits and the commission members said they considered it resolved.The commission voted to confirm the contract’s validity and on Monday approved a revision to the contract.
Under the revision, the lottery will pay a smaller percentage of scratch-off ticket sales to the company. The company also agreed to pay the state lottery $2 million in cash.
Northwest Arkansas, Pages 8 on 06/23/2012