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Charlotte Amalie
Sunday, July 14, 2024


Dec. 20, 2002 – The federal audit agency that raised Gov. Charles W. Turnbull's hackles in criticizing operations of the Public Finance Authority is now recommending the Legislature get involved, and possibly the U.S. Attorney's Office, too.
The U.S. Interior Department’s Office of Inspector General officially released its PFA audit report this week, two months after a draft version was leaked to the news media and became the subject of public debate. (See "Audit faults PFA for management, spending ills".
The now-released final report details what auditors say was misuse of PFA resources spanning parts of two administrations — Turnbull's and that of his predecessor, Gov. Roy Schneider.
New in the final report is a recommendation by Arnold van Beverhoudt, regional audit manager for the Office of Inspector General of the U.S. Department of Interior. He recommends that the Legislature "consider amending the legislation that created the Public Finance Authority to provide for a greater level of legislative scrutiny and public disclosure of day-to-day operations than currently exists."
The PFA was created in 1988, in the administration of Gov. Alexander A. Farrelly, to help the government issue bonds to borrow money for capital projects, and to help manage those projects. It operates generally out of the public eye and is exempt from standard procurement practices that bind other government agencies to get competitive bids for major purchases or construction projects.
Structured to be closely controlled by the sitting governor, it is run by a five-person board — the governor, who is chair, and four persons he appoints — the commissioner of Finance, the director of the Office of Management and Budget, and two private sector representatives.
Responding to the administration's assertion that the audit did not identify any instances of fraud, van Beverhoudt says in the final report that "finding of fraud is a matter for the U.S. Attorney. As such, we have provided a copy of this report to our investigative office for its review and possible referral to the office of the U.S. Attorney."
Among the audit findings:
– The Office of the Governor dipped into PFA funds repeatedly for its own operations, including sending two Office of the Governor employees to a holiday party in New York and sending a "private citizen" to a meeting in Norway.
– The PFA paid $367,000 to a former U.S. senator as a consultant to the government without documentation of any work having been performed.
– The government failed to use bond proceeds in a timely and efficient manner.
– Inadequate planning for school construction may cost as much as $17.3 million.
– PFA funds were used to guarantee a loan to a private entity and the government failed to collect its interest on the loan in a timely manner.
The final report includes Turnbull's 21-page response to the 30-page draft report, in which he rejects the audit findings in general, arguing that the document was full of "findings which are legally or factually incorrect." He questioned the capability and objectivity of the audit office, charged that it had overstepped its authority, and demanded that the draft report "be substantially revised before it is issued as a final report."
(For details of the governor's response, see "Turnbull wants PFA audit report revised".)
Many instances cited in the audit report as problems took place over the objections of the man actually paid to run the PFA — Amadeo Francis, who was director of finance and administration for the authority from 1995 until Turnbull fired him at the end of last year.
Van Beverhoudt has denied leaking the draft audit report. Turnbull charged that it was released before the November elections in order to embarrass the administration. His critics charged that he was stonewalling on his formal, written response to the draft document — which had been given to the administration in July — in order to keep it under wraps until after the election.

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