Governor Releases Scathing Preliminary Audit Report on Alabama State - Higher Education

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Governor Releases Scathing Preliminary Audit Report on Alabama State

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by Pearl Stewart

 

Joseph Silver

The report credits former Alabama State President Silver with initiating the investigation, stating that after his departure, he received “on his doorstep” a box of financial documents the administrators had not allowed him to obtain.

Alabama Gov. Robert Bentley released preliminary findings of a scathing forensic audit report Monday that alleges fraud, conflict of interest and abuse of public funds by members of Alabama State University’s board of trustees including its chairman, Elton Dean, and its vice chairman, Marvin Wiggins.

The 36-page report vindicates former Alabama State President Dr. Joseph Silver, who was fired last December after three months on the job. Silver said he was terminated because he uncovered “questionable and troubling” information about the university’s finances. He later released a statement in which he said, “In reviewing the financials, contracts and other pertinent information of Alabama State, I discovered some items I considered questionable and troubling, at best, and a conflict of interest at the least. When I asked for clarifications, I did not get answers. When I asked for supporting data, the data was withheld…and I refused to go along to get along. That is not my operating style.”

The audit, conducted by the firm Forensic Strategic Solutions, stated that their auditors found multiple examples of acts of fraud, waste and abuse at Alabama State including but not limited to:

  • Conflicts of interest
  • Numerous contracts with no deliverables
  • Financial waste
  • Inappropriate relationships
  • Payments to family and friends of ASU board members
  • Inappropriate payments and intentional obscuring of inappropriate payments
  • Circumventing policies and procedures
  • Charging administrative fees to fund the Center for Leadership and Public Policy reserve account.
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In just the category of contracts with no deliverables, the report stated that those payments amounted to more than $2.5 million. In payments to Wiggins’ family members alone, the report alleges payments of more than $250,000. Another board member, Dr. Lawrence Lemak, heads a sports foundation that received $864,000 from the university between 2007-2013 without having any contracts with ASU, according to the report. His son and daughter-in-law were on the payroll of that foundation.

The report credits former president Silver with initiating the investigation, stating that after his departure, he received “on his doorstep” a box of financial documents that he had requested as president but which administrators would not allow him to obtain. Silver turned the documents over to the auditors, according to the report.

Silver told Diverse when contacted Monday that he did “not have any comments on the matter.”

The audit contained several references to violations of the conflict of interest policy. The auditors called for additional investigation in order to determine further extent of the alleged violations, stating that their investigation was hampered by a lack of cooperation from university officials. The auditors also state that there are $200 million in construction contracts that they were not able to examine.

Monday evening, Dean and Wiggins fired back, strongly taking issue with the governor’s actions.

“I absolutely and categorically deny the baseless allegations made today about me, said Dean. “We worked with this Governor in good faith, and today he betrayed us and released a report that he knows is wrong. I can assure all those in the University family that we will not lie down and allow any Governor to take over ASU. We are being used and abused for political purposes by Gov. Bentley, and I resent it.”

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Wiggins said: “Governor Bentley was provided on Friday with information related to me that clearly and concisely disputed the findings of his report. Instead of basing his actions on facts, he has arbitrarily decided to try to remove me from the board so that he can begin the process of controlling Alabama State University. Our University has gained everything we have through struggles and fights for decades, and if a fight is what Gov. Bentley wants, he will certainly get it.”

 

Alabama State responds

Prior to the responses from the top board members, Alabama State attorney U.W. Clemon issued the following statement in response to the audit report:

“ASU is deeply troubled by Governor Bentley’s release this afternoon of a “Privileged and Confidential” document titled “Preliminary Update.” The release of this document is unfair and is in violation of an express agreement reached with the Governor’s Office two weeks ago that ASU would be allowed to review and respond to the forensic audit before it was released.

 

We have not had a reasonable opportunity to review and analyze the Preliminary Update, but what we have reviewed is incorrect. Several items are immediately obvious:

 

  1. Nowhere in the 36-page preliminary report is there any allegation, claim or finding that any ASU Trustee, administrator or staff member stole or otherwise misappropriated funds.
  2. The report alleges various “conflicts of interest” with respect to three Trustees. Nowhere in the report does it find that these Trustees sought or received a personal benefit from the contracts listed, nor does the report find that these Trustees caused the contracts involved to be executed between ASU and individuals/entities listed. In one case, the alleged conflict is based solely on rumors.
  3. The alleged “conflicts of interest” were declared by a firm that was handpicked by the Governor without a bid and was paid for by funds under his control.
  4. Much of the report questions ASU’s accounting procedures and codes. All of ASU’s accounting procedures during the five-year review period conformed to generally accepted accounting principles in the industry, as has been confirmed through regular, periodic audits.
  5. The firm’s allegations of “obstruction” during the review process are based solely on the fact that ASU hired outside legal counsel to represent the University’s interests during its investigation. The procedures for the exchange of information were necessary and were clearly explained to the firm. The University had a rational basis for the implementation of these procedures, which were designed to minimize the impact that the investigation process had on the day-to-day operations of ASU.
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We are only now beginning to review the information but questions remain about the true motivation behind this investigation. I would urge that no one rush to judgment. Obviously, we will carefully review all of the information, work aggressively to separate fact from fiction, and then respond as quickly as possible.”

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One Response to Governor Releases Scathing Preliminary Audit Report on Alabama State

  1. All Trustee members should be replaced at once. Gov Bentley needs to step in and firmly take charge of all the trustee responsibilities.

    Joycelyn Singleton
    October 16, 2013 at 2:18 pm

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