Raleigh, N.C. — An employee with the state Division of Marine Fisheries used trucking companies run by his wife's family to haul oyster shells to build reefs along the North Carolina coast, according to a state audit released Tuesday.

The unidentified employee is a biology supervisor responsible for the oyster rehabilitation program. A spokeswoman for Marine Fisheries says he still works for the agency but is being disciplined for violating conflict-of-interest policies.

Auditors found that, over a six-year period, the state paid B.F. Potter Trucking $209,000 to haul oyster shells collected from restaurants and stores through a state recycling program to the coast, where they are used to build artificial reefs and create habitats for more oysters.

Potter Trucking is owned by the father-in-law of the Marine Fisheries employee, and it subcontracted some of the work to Trans Gate Service, which auditors say is owned by the employee's wife and mother-in-law.

The audit also noted that Marine Fisheries didn't seek competing bids for the trucking contract, which violates state purchasing regulations. Auditors said the no-bid situation resulted from a misinterpretation of a 1989 memo from the Division of Purchasing and Contract that said bids weren't needed for recyclers who hauled their own oyster shells to the coast.

The employee also was criticized in the audit for writing up and signing invoices for the oyster shells without the proper approvals.

David Knight, assistant secretary for the Department of Environment and Natural Resources, which oversees Marine Fisheries, said in response to the audit that Potter Trucking was used to haul oyster shells for a few years before the employee became responsible for the program and that there is no evidence the company received preferential rates.

The employee denied knowing his wife owned part of the second trucking company, but he repaid $5,000 his wife received as an expense reimbursement, according to DENR's response to the audit.

Marine Fisheries has placed another employee in charge of the trucking contract and has prohibited all employees from writing or approving invoices for contracts with which they're involved, according to the response. The agency also will begin to solicit bids for oyster shell hauling.