LONDON – A special audit carried out on the City of London and the City of London Tourism Commission by the office of State Auditor Mike Harmon was delivered on Tuesday morning – and listed several discrepancies.
The duration of the audit was from July 1, 2019 to June 30, 2021. The report listed 12 findings and 3 observations. The audit report says two of the three observations were sent to the city’s ethics board “for further review and possible action.”
“Our auditors identified several issues within the city and the tourism commission, ranging from a mayor’s family member being hired at a higher salary level than originally established without city council approval, to payments paid to sellers without any written contract. Simply put, the tourism commission did not have proper oversight of how its public funds were used, but instead the decisions were made by the city,” Auditor Harmon said. “Our review refers the issues identified in two findings to the city’s ethics committee, but given that the committee has not met in nearly a decade and there is no record of appointments to the ethics committee since 2016, this makes the current operating atmosphere all the more troubling.
The two issues the auditors referred to the city’s ethics board relate to tourism commission funds being used to purchase a vehicle for a city maintenance worker and allowing the employee to use the vehicle. to operate a personal HVAC business. The other issue is the hiring of the mayor’s daughter-in-law in January 2016 at a higher rate of pay than allowed by the ordinance setting pay scales for city employees.
• Funds from the city’s tourism fund – which are generated by the catering tax – were used to purchase a vehicle for a maintenance employee, who then used the vehicle for a private HVAC company. The cost of the van was $23,500. The Commissioner’s Chair was advised that the vehicle would be used for Levi Jackson Park. In interviews with listeners, the mayor said the employee used the vehicle for personal business in exchange for using his personal tools for work with the city. The employee confirmed this arrangement, although there was no written agreement.
Auditors said this matter will be referred to the city’s ethics board. The ethics board includes Harriet Hubbard, Judy Nicholson, Donna House Robinson, Brian House and Beth Wilson.
• The staffing plan and pay scale for some City employees were also criticized by the auditors. The audit report says the mayor’s daughter-in-law was hired in January 2016 at a higher rate of pay than the ordinance stipulated. The mayor’s daughter-in-law has been hired as deputy manager of inner city London for more money than expected when the job was created. The mayor, according to the audit, said the salary was “erroneously labeled at a lower grade”, but no action was taken to correct this amount. The measure was also not approved by the city council. The report says the city lacks an updated and consistent staff and salary classification plan and salary schedule for employees.
This question will be referred to the City’s Ethics Council.
Another issue discovered during the audit concerns the prepayment of $45,000 to the Gospel Bowling Family group. The check was issued in January 2000 as full advance payment for the Bowling Family Music Fest. However, due to COVID-19 restrictions, the concert has been postponed with the intention that the concert will take place in 2021. In the meantime, the group Bowling Family has disbanded and the report states that as of February 23 2022, funds paid by the City of London Tourism and Convention Commission had not been refunded.
Financial practices were an important part of the records of the state auditor’s office.
• The lack of a written reimbursement agreement between the town and the tourism commission created another concern. Between July 1, 2019 and July 30, 2021, the tourism commission reimbursed the city over $2.7 million for shared resource costs and expenses made by the city on behalf of the tourism commission. Of this amount, four payments totaling more than $465,000 were found for which the commission chair had not signed and the payment checks were not signed by any member of the commission. Instead, they were signed by the city clerk and the deputy city clerk. The city did not regularly send reimbursement requests to the commission and did not provide details of what was being reimbursed.
• The Mayor of London authorized a city employee to provide cleaning services for the city and the tourist commission without the approval of the city council. This employee brought in $131,000 between January 2013 and December 2021. Between February and October 2021, more than $9,700 from tourism commission funds went to this employee’s business. The report says Mayor Troy Rudder said the city council was verbally notified of the service. but had not approved the hiring of the company of the municipal employee. Under state law, the city cannot enter into a contract with a business owned or operated by a current, appointed, or elected employee, unless that business is the sole bidder for advertised tenders or the sole vendor. of this service.
• Massive spending at the Levi Jackson Wilderness Road Park was another topic covered in the audit, which indicates the tourism commission had little or no control over spending over $1.5 million. This did not include any oversight or control over the hiring of staff, the setting of salaries, or the planning of park operations. The funds for these expenses, however, came from the city’s restaurant tax, which is supposed to be paid by law to the city’s tourism commission. According to the auditor’s report, tourism commissioners said they failed to oversee spending at Levi Jackson Park, and current and former commissioners said the mayor oversaw the $1.5 million spent. during fiscal years 2020 and 2021. The fiscal years run from July 1 of one year to June 30 of the following year.
• In two years, the mayor has spent more than $114,000 on bonuses for city and tourism commission employees. These bonuses were not part of the city’s compensation or benefits plan and were not approved by the city council. The audit report states, “The awarding of bounties from public funds generally violates Section 3 of the Kentucky Constitution, and the practice of awarding bounties should be discontinued.
The final deviation in city operations involved the hiring of family members of city employees.
• Although the city enacted an ethics ordinance in June last year, the audit found that a quarter of city employees, officials and commissioners had some form of family connection with “at least one another person in town. The report says that of 202 current and former employees, 50 had family ties. Although the city passed an ethics and nepotism ordinance in June 2021, it “barred” those same employees and placed no restrictions on supervising or managing family members.
Auditor Harmon sent a letter to Mayor Troy Rudder and Tourism Commission Board Chairman Starr Handy saying, “The purpose of this review was not to provide an opinion on the financial statements, but to review specific matters brought to our attention and make recommendations to strengthen and improve internal controls to ensure that financial management activities are accurate, transparent and comply with applicable laws.
Harmon said in a press release on Tuesday: “It is imperative, if only for the people they serve, that City and London tourism officials look into the issues we have identified and implement. recommendations made by our audit team,” said Auditor Harmon. “The city’s goal should be to achieve good government through better accountability and transparency, and our review provides the roadmap to that path.”
Rudder responded in a letter to Harmon’s audit saying many of the worrying circumstances have been remedied with London Tourism’s decision to become a special purpose government entity and the others will be remedied.
A special London Tourism meeting has been called for 1 p.m. Thursday and a special London City Council meeting has been called for 5.30 p.m. Thursday.