Unofficial fund skirted city rules

Firefighter used credits and rebates from vendor to buy gear for department, bypassing city oversight

Sun Exclusive -- Baltimore City Fire Department

June 10, 2007|By Annie Linskey | Annie Linskey,SUN REPORTER

The Baltimore Fire Department made more than $250,000 in unauthorized purchases through an off-the-books account maintained for years with a major supply company, according to detailed financial reports and invoices.

City and federal funds intended for purchases from Draeger Safety Inc. were held in the account to help pay for unapproved equipment for the department, records obtained by The Sun show. City officials were unaware of the changes, which shifted money from transactions for air masks and related equipment.

There is no indication that the account was used for anything but fire-related equipment; purchases over a five-year period included thermal-imaging cameras, hazardous-materials meters and a public address system for the fire academy, records show.

But auditors say the account circumvented rules designed to protect taxpayers' money by ensuring that governments get precisely what they pay for - and by providing levels of oversight.

"If [the Fire Department was] in business for themselves, they'd have some flexibility, but this is taxpayer money," Bruce A. Myers, auditor for the Maryland legislature, said after the account was described to him. "Why are they above the rules?"

City Hall officials promised an investigation, saying the practice violates city procurement regulations. "This is not the way we do business," said Edward J. Gallagher, director of finance.

Fire Chief William J. Goodwin Jr. said he believed that the account started in 2000 but was limited, legitimate and had ended years ago. "It appears that this was a continuation of a practice that just seemed to be accepted in the late 1990s into early 2000 to 2001," said Goodwin, a veteran firefighter who became chief in 2002.

Goodwin said that the account still holds a balance of about $2,600 and that he wants the money returned to the department's account with the city.

The Fire Department is still recovering from a training fire in February that killed a cadet, violated dozens of national safety standards and brought unwelcome scrutiny to an agency once heralded as among the best in the nation. Goodwin's leadership of the department is being questioned by rank-and-file firefighters, and he has received only lukewarm support from the mayor.

Records indicate that the account - used for major transactions at least until September 2005 - was directed by a low-level official in the department's fire academy with the knowledge of Draeger, a Germany-based manufacturer of fire and mining safety equipment.

The firefighter, Douglas V. Campbell, says he did nothing wrong and worked for the benefit of the Fire Department. He most recently was assigned as the head of the air mask repair office at the fire academy on Pulaski Highway.

Campbell was one of the eight supply coordinators who recommend equipment purchases to the fire department's finance section, which then asks the city for money to pay for those purchases out of the department's budget.

Beginning six years ago, Campbell started to buy items for the department from Draeger, a sole-source supplier for breathing equipment, without going through the normal procurement system.

He used the account to make at least 35 unauthorized purchases - including 15 purchases of more than $5,000 that would have required approval by a city spending panel. Even the smaller purchases should have been approved either by the city purchasing agent or the Fire Department's finance department. None was, according to documents.

In total, the Fire Department spent at least $257,578.72 without city approval, documents show. The largest unapproved purchase was $52,499.97 for nine thermal-imaging cameras.

But he also directed Draeger to buy items for the Fire Department from other vendors, including an $11,294.91 public address system installed at the academy, folding tables and chairs for $3,876.50 and space heaters for $572.

Campbell used what city officials now say, and records show, was a nonstandard purchase order number and a private ledger to track his transactions. The purchase order number, which does not conform to city naming standards, was P-6720-DVC - the numbers of the address of the fire academy, 6720 Pulaski Highway, and Campbell's initials.

To pay for the purchases, Campbell tapped a source of city funds that Baltimore officials say they didn't know about: a kind of revolving bank account maintained by Draeger.

Draeger held on to funds left over from authorized city purchases that were not delivered. The account also included equipment rebates, discounts and returns. When Campbell wanted to buy something, Draeger debited the account.

Draeger, which has done business with the city for 20 years, says it viewed that money as credits the city could use for purchases, not refundable cash.

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