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Second legislative panel hears about UA audit

Posted: January 7, 2014 at 7:03 a.m.
Updated: January 7, 2014 at 3:32 p.m.

Panelists are sworn in Tuesday before a legislative meeting concerning the UA audit. From left to right: UA-Fayetteville Vice Chancellor for Finance and Administration Don Pederson, UA-Fayetteville Associate Vice Chancellor for Financial Affairs Jean Schook, UA-Fayetteville Chancellor David Gearhart, former UA-Fayetteville Vice Chancellor for Advancement Brad Choate, former UA-Fayetteville Associate Vice Chancellor for University Relations John Diamond and former UA-Fayetteville Advancement Division Budget Director Joy Sharp.

The former chief of University of Arkansas' fundraising division who lost his job after a $4 million budget deficit was revealed told a legislative committee Tuesday that he was a "fall guy" to cover up problems that extended throughout the university.

Brad Choate was the first of several panelists to address the Legislative Joint Performance Review Committee as it began a hearing on the overspending.

Choate called it "ludicrous and untrue" that he failed to provide proper oversight, saying instead that he was a victim of a "culture of coverup" aimed at hiding the full scope of financial troubles.

"Ladies and gentleman, something is rotten in Fayetteville," Choate told legislators.

Sitting beside UA-Fayetteville Chancellor G. David Gearhart, who is also expected to testify at the hearing, Choate said the problems in the fundraising division began when Gearhart headed it.

"Dave panicked when his own financial people told him the problem began when he was the division's vice chancellor," Choate said. "I now feel confident that's when a bus began heading my way."

Choate said his dismissal, as well as that of former budget director Joy Sharp, came after "months of convoluted attempts to blame two individuals and conceal information."

He added UA's budget system is flawed at the top because it lacks a true "check and balance." And, he said, the problems include the university "booking non-existing accounts receivable to balance the books."

When asked about the latter, Gearhart said the booking was a standard practice that had been ongoing for many years and was no secret to auditors. It also would not have been a way to hide the fundraising division deficit, Gearhart said.

"Mr. Choate indicated that that made it look like he didn't have a deficit," Gearhart said. "If he had looked the next month … at the statements we put out on a regular basis, he would see that deficit, that debit, was back into his budget. There was no way if he was following his budget that he would not know that."

Gearhart, in his opening statement, said the deficit grew out of hiring staff for an upcoming campaign when no money was available to pay for them. And he blamed Choate for causing the problem.

"Mr. Choate was paid to manage and control all aspects of the operations of the advancement division, including its financial wellbeing," Gearhart said. "But he did not do this."

Gearhart also contested Choate's contention that the deficit started when Gearhart oversaw the fundraising division, noting he left it with a $600,000 surplus.

Choate closed his half-hour opening statements saying the "disturbing result" of the scandal is an "atmosphere of secrecy and coverup" at UA.

"After today, I feel like I've done my duty to report the truth," Choate said.

Also at the hearing, John Diamond, former associate vice chancellor of university relations, detailed what he called "intentional efforts to block the university's compliance with [Freedom of Information Act] laws" and how he believed his objection to the actions led to his dismissal.

Diamond reiterated earlier testimony he provided that Gearhart ordered officials to "get rid of" budget documents. And he described Gearhart's "antagonism toward the news media" that was "ongoing and at times potentially harmful," noting that a "culture of 'delete and destroy' came to exist" throughout UA.

Diamond said Gearhart was angered by a Freedom of Information request from the Arkansas Democrat-Gazette seeking information on the fundraising division's budgets and reorganization plan.

"He repeated something he had said in my presence several times previously — that the media, particularly the Democrat-Gazette, was trying to bring him down," Diamond said in a prepared opening statement. "He said he had sources who had told him that editors within the newspaper boasted that they already 'got' two university leaders and that he, Gearhart, was next."

— Gavin Lesnick, Arkansas Online

EARLIER:

LITTLE ROCK — A legislative committee is to hear from a half-dozen current and former University of Arkansas officials about $4 million in deficit spending by the school's fundraising office.

The Performance Review Committee is to convene Tuesday afternoon, when witnesses are to include two campus officials who lost their jobs after the deficit came to light.

Last month, Republican Sen. Bill Sample of Hot Springs used a procedural move to cut off discussion when the topic was before the Audit Committee. A number of committee members complained about the maneuver, which prevented former fundraising division chief Brad Choate and former division budget officer Joy Sharp from testifying.

North Little Rock Republican Sen. Jane English, a co-chair of the Performance Review Committee, said taxpayers want to know how the deficit occurred.

— The Associated Press

Read Wednesday's Arkansas Democrat-Gazette for full details.

UA audit Jan. 7, 2014 meeting audio


Click here to listen to full audio of the meeting.

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