Key legislators want to hear other views concerning a state audit report into deficit spending by the University of Arkansas at Fayetteville’s fundraising division - including from the division’s former chief Brad Choate and budget officer Joy Sharp, they said Monday.
“We’re discussing the possibility of asking more questions from some of the people involved,” state Sen. Bryan King, R-Green Forest, said Monday.
The Legislative Joint Auditing Committee heard Sept. 13 from UA Chancellor G. David Gearhart and his top budget officers as well as former university spokesman John Diamond.
The audit, which Gearhart requested, is still under review, and legislators say they’ll likely ask more questions, perhaps at the audit committee’s Oct. 11 meeting in Little Rock.
Meanwhile, a Washington County deputy prosecutor won’t say how his office will go about looking into whether anyone broke the law in connection with $4.19 million in overspending by the university’s Advancement Division in fiscal 2012.
Prosecutor David Bercaw also won’t say whether he will interview Advancement Division leaders who attended a disputed Jan. 14 meeting.
Diamond, who was an associate vice chancellor and was at that meeting, has accused Gearhart of ordering the fundraising division staff at that meeting to get rid of documents and to refrain from creating new ones that might be subject to Arkansas’ Freedom of Information Act.
“Any comment on an active investigation would be inappropriate,” Bercaw said. He did promise: “I’m going to follow the evidence as faras it takes me.”
Gearhart has denied his former spokesman’s accusations.
Gearhart and Diamond were both under oath when they made the contradictory statements at the Sept. 13 meeting of the joint auditing committee in Little Rock.
Gearhart referred to Diamond as a “disgruntled employee.” Diamond has said he was fired Aug. 23 because of disagreements with Gearhart and others involving Arkansas public records laws.
The document issue is important because Gearhart has long touted the publicly funded university’s efforts at openness and transparency. It’s also illegal to destroy a document that has been requested under the Arkansas Freedom of Information Act - although it’s not clear whether any of the documents in question wereunder an act request.
Contacted Monday, Choate said he would be “very happy to talk with appropriate people to help get the truth out.”
Sharp, who has declined comment since the overspending became public in December, could not be reached by phone.
In an email, Diamond said he is “grateful that the legislative committee and the investigators are going to continue to work on this.”
Gearhart also declined to comment Monday, saying it wouldn’t be appropriate while the audit and prosecutor’s investigation are still going on, according to spokesman Mark Rushing.
The joint auditing committee sent information about Diamond’s testimony and three issues found in the auditors’ reports to Washington County prosecutor John Threet’s office for investigation. Auditors say it’s not unusual for them to make similar reports to prosecutors if they think any laws could have been broken.
University officials discovered the overspending July 6, 2012, a few days after the end of fiscal year 2012. They didn’t make public the deficit until December and initially set it at $3.1 million. In January, officials said they believed the final deficit for 2012 was $3.37 million.
In February, Gearhart called for state auditors to review the fundraising division’s finances. In their report Sept. 10, auditors said the 2012 deficit was actually $4.19 million. They also said they could not locate as many financial documents as they needed.
Auditors also found questionable or incorrect accounting by top UA finance officers, including Vice Chancellor Don Pederson and Treasurer Jean Schook; failure to provide written budget policies and procedures; and approval of an improper relationship for handling financial transactions between Sharp and her sister, also a university employee.
Gearhart, Pederson and Schook argued accounting issues at the joint audit committee meeting, saying they amounted to “professional differences of opinion.”
But by hearing’s end, they agreed to conform with auditors’ recommendations.
After hearing Diamond’s testimony, legislators decided to continue their review of the financial reports so they could learn more.
“I’d say anybody involved in this, there’s the possibility they could be brought before the committee” for a second meeting on the issue, said King, co-chairman. “That may include Mr. Choate, may include Joy Sharp, may include having the university officials come back.”
The other committee co-chairman, Rep. Kim Hammer, R-Benton, said: “We’re trying to do due diligence and make sure we get the answers to the questions members of the legislative body are presenting to us.”
Legislators also asked Diamond for the names of other staff members who were in the room for the disputed Jan. 14 meeting. He provided them.
Besides Gearhart and Diamond, another seven top administrators regularly attended those weekly meetings of the University Advancement Committee, according to interviews and a university email obtained by the Arkansas Democrat-Gazette.
Those officials haven’t responded to repeated calls, texts and emails from the Democrat-Gazette over the past week.
The officials include: Mark Power, associate vice chancellor for development; Graham Stewart, associate vice chancellor for alumni; Melissa Banks, executive director of donor relations and special events; Denise Reynolds, chief financial officer and director of human relations for advancement; and Laura Villines, senior executive assistant to the vice chancellor of advancement. They are listed as employees on the University of Arkansas at Fayetteville’s website.
Two others have left the university or no longer appear on the university’s website: Bruce Pontious, former associate vice chancellor for advancement, and Kristine Macechko, former director of constituent relations.
Bercaw is making the investigation a high priority for the prosecutor’s office, he said.
“I know it’s kind of causing problems over at the university and having an adverse effect on a lot of people,” Bercaw said Friday.
Asked whether the investigation might take days, weeks or months, Bercaw said: “I certainly hope it’s not months … . How long it’s going to take, I don’t know.”
Front Section, Pages 1 on 09/24/2013