Panel readies subpoenas for UA-deficit witnesses

Choate
Choate

Subpoenas will be ready if witnesses don’t show up or become reluctant to testify during a meeting of the Legislature’s Joint Performance Review Committee scheduled for Tuesday.

Six witnesses with ties to the University of Arkansas at Fayetteville have accepted invitations to testify at the meeting, where legislators want details about a multimillion-dollar deficit in the fundraising division.

But if any witnesses change their minds, subpoenas could be issued right then and there, said state Rep. Terry Rice, R-Waldron, who is co-chairman of the committee.

“If there’s any hesitation, that is an option of the committee,” Rice said. “These are tools we’ll have there should we need them. I greatly appreciate all parties saying they will come voluntarily and testify.”

Even with a subpoena, a witness can’t be forced to testify, Rice said. But subpoenas could take precedence over confidentiality agreements signed by former UA employees.

“If a subpoena made somebody feel like they could be more open, even though they were already there, that could more advantageous for them,” Rice said.

The Joint Performance Review Committee is addressing this issue because two people at the center of the controversy have never been given the opportunity to tell their side of the story, at least orally. Many people following this story have waited for a year and a half to hear what they have to say.

Brad Choate, former vice chancellor of advancement,and Joy Sharp, who was the Advancement Division’s budget officer, traveled to Little Rock for a Dec. 13 meeting of the Joint Auditing Committee but weren’t allowed to speak in a meeting that left many legislators parliamentarily puzzled.

Some legislators felt the issue should have gone to the Performance Review Committee instead of the auditing committee in the first place.

Notice was given to members of the committee late Monday afternoon about the subpoenas, and a revised agenda was posted on the Legislature’s website, arkleg.state.ar.us. Item C on the agenda is “Issuance of subpoena(s) regarding the management of Advancement Division funds at the University of Arkansas, Fayetteville.”

By giving notice a week before the meeting, a simple majority of both the committee’s 20 House members and 10 Senate members would be required to issue a subpoena, said Rice. If notice hadn’t been given in advance, it would have taken a two-thirds majority of House members and a two-thirds majority of Senate members to issue a subpoena, according to Arkansas Code Annotated 10-3-901(f)(1)(B).

The committee will hear testimony about the Advancement Division, which ran up a $4.2 million cumulative deficit as of June 30, 2012.

The cumulative deficit was caused primarily by the hiring of staff for a fundraising drive when there was no money for those salaries, according to investigations by the university, state auditors and a Washington County prosecutor. There has been some cost cutting in the Advancement Division but no layoffs because of the deficit.

Besides Choate and Sharp, others scheduled to testify at Tuesday’s meeting include G. David Gearhart, chancellor of the Fayetteville campus; Donald Pederson, vice chancellor for finance and administration; Treasurer Jean Schook; and John Diamond, a former UA spokesman.

Diamond has accused Gearhart of ordering documents to be destroyed to keep them from auditors and public view. Deputy Washington County prosecutor David Bercaw found no evidence of that. But the issue has been referred to Pulaski County prosecutor Larry Jegley because Diamond and Gearhart had conflicting testimony during a Sept. 13 meeting of the Joint Auditing Committee in Little Rock. If perjury occurred, it happened in Pulaski County, according to Bercaw’s report.

It was Gearhart who called in UA System and state auditors in February, seven months after university administrators realized there was a problem in the Advancement Division.

Rice said the committee hasn’t used its subpoena power during the year he has served on it.

Choate said the subpoenas are to ensure he and others get a chance to speak. Choate traveled 462 miles from his home near Austin, Texas, to Little Rock to speak before the Joint Auditing Committee on Dec. 13, but he wasn’t allowed to testify after the committee voted to accept a report by the Division of Legislative Audit finding no evidence of crimes in connection to the deficit.

There seemed to be confusion among legislators as to what happened and why Choate and Sharp weren’t allowed to testify. State Rep. Kim Hammer, R-Benton, has said the vote had already been taken and there was an objection to hearing testimony from the two afterwards, so he adjourned the meeting.

“With a subpoena, that will alleviate any games like were played last time,” said Choate. “I want to come there, as I did last time. I want to talk. But I think it’s helpful to have a subpoena, and it will keep them from being able to prevent me from speaking.”

State Sen. Uvalde Lindsey, D-Fayetteville, a vice chairman of the committee, said he believed the subpoena would allow Choate to be compensated for traveling again from Texas to testify before a legislative committee in Little Rock.

Rice said the subpoena would allow the committee to reimburse Choate for mileage. Choate said he was not concerned with being reimbursed.

State Sen. Bryan King, R-Green Forest, was also concerned about Choate’s expenses. King said he offered to personally pay Choate’s expenses for his last trip to Little Rock. But Choate refused to take the money.

“I don’t like to see anyone cheated from testifying like that,” said King. “I felt embarrassed about it. That was one of the most shameful things I’ve seen at the Legislature.”

Choate, who began working at the university in 2008, had a salary of $348,175 in his final year. Choate’s employment with the university ended June 30.

Lindsey said the Joint Performance Review Committee’s role needs to be kept in perspective. Tuesday’s meeting won’t be a legal proceeding, and the committee has no judicial authority, he said.

“I am concerned that this [could] turn into a witch hunt,” he said. “Errors happen. I think everybody acknowledges that.”

In interviews with auditors, prosecutors and Schook, Sharp has taken the blame for the deficit, saying she made mistakes. Gearhart has said she was “in over her head” but no fraud occurred for personal gain. No money was stolen, Gearhart has said. Bercaw reached the same conclusion.

Investigations by state and UA system auditors also cited Choate for a lack of managerial oversight.

Lindsey said one error in the Advancement Division apparently led to another.

“It’s a culmination and a multiplicity of errors, it would seem,” said Lindsey. “As long as it’s gone back and forth, it’s discomforting.It tarnishes the bedrock of the institution, and I’m concerned about that.”

At this point, the committee isn’t looking for someone to blame, said Lindsey. They just want to hear everyone who was involved and look for ways to make sure it doesn’t happen again.

“I would hope this meeting will serve as a platform to completely air these issues,” said Lindsey. “These are the errors that were made and what can we do to correct them and put the issues behind us?”

UA officials said the cumulative deficit was reduced to $3.2 million as of June 30, 2013, but the Advancement Division continues to struggle with annual operating deficits. A $4 million transfer from reserves in January 2012 helped primarily with fiscal 2013 and another $2.2 million transfer is expected in fiscal 2014. As of Oct. 31, UA had $13.3 million in reserves that is available for “unexpected expenditures” in fiscal 2014. The total will decrease after the $2.2 million is transferred.

Front Section, Pages 1 on 01/01/2014

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