Panel asks more of Morgan

Officials' response to audit findings unsatisfactory, lawmakers say

General Assembly

February 23, 2008|By Gadi Dechter | Gadi Dechter,Sun reporter

Legislators said they were dissatisfied with Morgan State University officials' responses yesterday to an audit outlining potentially criminal procurement practices on campus construction projects, and insisted on a more detailed investigation.

Yesterday's hearing in the Senate Budget and Taxation committee marked the first time that Morgan President Earl S. Richardson has spoken publicly about the audit, which found that the state school padded a construction contract with a $3.1 million cushion then used those funds to pay the same contractor for different work without getting state approval.

But after hours of explanations from auditors and school officials, senators ended the hearing in frustration.

"Certainly there are a lot of questions that weren't answered," said Sen. Edward J. Kasemeyer, a Baltimore County Democrat who chaired yesterday's hearing. He said he would probably call the attorney general and "ask for advice" about how to proceed.

Auditors have referred their investigation to the criminal division of the attorney general's office. More hearings are scheduled in the House of Delegates next week, and key lawmakers said they anticipated more heated questioning then.

In his testimony, Richardson acknowledged that "an error has been made" but urged lawmakers not to jump to conclusions about his administration's ability to manage its own construction projects.

"We should not have spent any money beyond the project" approved by the Board of Public Works, Richardson said. "There was an error made, it was an error in judgment, and I am the first to admit it."

In January, Morgan's director of design and construction, Peeter Kiik, resigned. The university has said it believes Kiik "acted independently" in managing the deals with the Whiting Turner Construction Co. that caught auditors' attention.

Whiting Turner has declined to comment on the contracts, as has the attorney general's office.

The audit, which covered the period Nov. 2003 through Jan. 2007, found:

Morgan spent $2.4 million of the $3.1 million cushion in "questionable payments" to Whiting Turner and could not explain where some of the money went.

Whiting Turner was overpaid $825,250 by the school in duplicate billings.

The college appeared to artificially divide projects into smaller pieces in order to avoid Board of Public Works scrutiny.

Two university employees were simultaneously paid as both regular and contractual workers, resulting in overpayments of $121,400 that were not discovered for months.

When Morgan officials came to the witness table, lawmakers tried to ascertain who at the university was ultimately responsible for approving the $4.3 million contract that contained the questionable $3.1 million allowance.

"I am the one, sir," said Abraham Moore, the university's vice president of finance and Kiik's boss. "Yes, sir."

But when asked repeatedly to clarify why the allowance was built into the contract, Moore said that he was "inhibited in my explanations" because of the potential criminal investigation.

Lawmakers also expressed incredulity that the $4.3 Whiting Turner contract ever passed muster with the Board of Public Works.

"Nobody asked about this $3.1 million?" asked Sen. Nathaniel J. McFadden, a Baltimore Democrat.

Ermer said the board "approved it without discussion."

In the lengthy hearing, lawmakers struggled at times to comprehend the scope of the problems at Morgan and then to extract explanations from university officials.

J. Lowell Stoltzfus, an Eastern Shore Republican, repeatedly interrupted the auditors' presentation.

"I'm getting lost," Stoltzfus said. "What is the total amount you could not verify?"

"$2.4 million," said Mark A. Ermer, an audit manager with the Office of Legislative Audits, which conducts routine fiscal compliance reviews of all state agencies.

Stoltzfus: "$2.4 million that you don't have any proof how it was spent?"

Ermer: "Yes, for example, they purchased equipment items, but we couldn't find the equipment. ... We went around with them, and they couldn't find it. That was about $450,000."

Next week, auditors will brief lawmakers in the House about the audit. Del. John L. Bohanan Jr., the St. Mary's County Democrat who chairs the House Appropriations Committee's education sub-panel has promised "strong scrutiny" of Morgan's dealing with Whiting Turner.

Bohanan has said the procurement scandal could cause some lawmakers to question whether Morgan, which is not part of the University System of Maryland, is capable of managing procurement and construction operations.

McFadden, a Morgan alumnus, said the university "needs to more clearly delineate what happened," but that any action by lawmakers would be hasty before a full investigation is complete.

"At the end of the day, if anything egregious has occurred, then we have to think about that," McFadden said.

gadi.dechter@baltsun.com

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