Auditor finds threats, conflicts of interest and partying in Kentucky Emergency Management agency

08/06/2013 01:32 PM

UPDATED — The Kentucky Emergency Management agency, which handles disaster responses, fostered a hostile work environment in which whistleblowers were threatened and intimidated into not reporting improper spending on alcohol and entertainment, according to the state auditor’s report.

Kentucky Auditor Adam Edelen announced Tuesday that his office’s special examination found $5.6 million in questionable expenses between 2007 and 2010. That included funds spent on conferences hosted between 2010 and 2012. The agency spent more than $103,000 on receptions including alcohol, as well as a riverboat cruise, gifts and door prizes.

Several employees told auditors that they were afraid their phones were bugged and their emails were being monitored and that the director, Brigadier Gen. John W. Heltzel, threatened retaliation against those who talked with auditors.

“The report paints a picture of agency leadership that does not believe the rules apply to it,” Edelen said in a statement accompanying his announcement. “The findings raise concerns about waste and abuse that may have gone undetected and jeopardize federal funding meant to prepare the Commonwealth for emergencies.”

The examination report includes nine findings and several recommendations to improve record keeping and accounting standards and to avoid conflicts of interest, including the director receiving perks from the hotel in which one of the conferences was held. The review also found that the agency didn’t put out for competitive bid a contract for software, and awarded the work to a firm that developed a program with Heltzel’s help while he served as CIO for the Kentucky National Guard.

Edelen said the audit report will be referred to the U.S. Office of Homeland Security, Kentucky Attorney General and the Kentucky Executive Branch Ethics Commission.

The Kentucky Emergency Management agency provided a written response to the findings contained in the report acknowledging problems but disagreeing with some of the report’s findings, specifically the allegations of threats and intimidation.

“To the leadership’s knowledge, no employee has ever been threatened or suffered retaliation from KYEM leadership,” the agency’s response to the report says. “At no time has a single KYEM employee ever been singled out, harassed or demoted.”

“We remain confident that the efforts of the Division have been proper and in keeping with the intent of the funds used to prepare the Commonwealth for the inevitable emergencies and disasters we will face. KYEM will continue to work towards compliance in all endeavors,” the agency said.

In a response to the audit, Governor Steve Beshear said he is disappointed in the findings of the report and agreed with Edelen’s recommendations. He said he expects the agency to “take corrective action promptly.”

Later, his office issued a second statement responding to reporters’ questions about potential personnel or disciplinary actions.

“The allegations in the Auditor’s report are very serious, and we are reviewing each one carefully,” Beshear said in the statement. “There is no place in state government for threats or intimidation of workers, and we will consider all appropriate actions as we analyze the report.”


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