Local News

N.C. Auditor's Review Critical Of Regional Economic Recruiter

Posted June 5, 2006

— A nonprofit economic-booster group for 13 eastern counties managed some recruiting events poorly and its former executive director was reimbursed for expenses without proper documentation, the state auditor said in a review Monday.

The audit on the North Carolina's Eastern Region economic-development group is the second critical audit of such a group in two months. A performance review of the Northeast Partnership criticized its executive director for staying on the job after agreeing to work for a partnership client and questioned hundreds of thousands of dollars in bonuses.

The Eastern Region has received millions of dollars in state tax money and fees since its creation in 1993. The report from the office of Auditor Les Merritt said the group failed to provide adequate oversight for at least three events and questioned their usefulness.

"There's a lack of accountability here," said Kris Bailey, general counsel for the auditor's office.

The group spent $15,566 for a guesthouse, tickets and refreshments at the 2005 U.S. Open golf tournament in Pinehurst as a way to attract prospective business operators to the region. An Eastern Region document declared the event helped successfully develop business relationships, but the report questioned the results because the staff couldn't initially list the people who came to the event. A later list provided by the executive director had discrepancies, Merritt said.

The review also questioned $2,357 in expenses for a two-week trip the executive director took to Ireland. Initially a personal golf trip, the executive director tacked on meetings during the second week of the trip to visit another economic-development organization and look at Ireland's education system.

"Any benefit to the Eastern Region from this trip appears to be minimal at best," the review said in recommending greater oversight by the group's leaders.

Tom Greenwood, who left his post in February after nearly 11 years on the job, also acknowledged making up some receipts for meal expenses when he forgot to get them. The report quoted Greenwood as saying: "It's nobody business where I eat or what I have to eat."

"It's the taxpayers' business -- when you're spending taxpayer dollars -- where you eat and what you eat," Bailey said.

The review recommended that the Eastern Region develop policies for reimbursements of out-of-pocket staff expenses.

The review also found the group failed to report all interest revenues on the $7.5 million it had received in 1993 and loaned to its 13 counties. The state's seven other regional partnerships should have received a combined $1,385,063 since 1996 under the state's interest revenue sharing plan, the review said. Instead, the Eastern Region kept the money.

In a prepared response, Eastern Region leaders said they had already developed a more restrictive expense-reimbursement policy and imposed more board oversight of trips and events. They said they have correctly reported interest earnings to the state but will seek guidance from the Commerce Department and legislative analysts.

"Although the review indicates that the allegations primarily concerned the executive director, the review did not result in any finding by your staff of criminal conduct," Region commission Chairman Calvin Anderson wrote to Merritt. "Even so this present board of commissioners takes very seriously the review findings."

Anderson said the review questioned events and decisions that occurred before a new, smaller 19-member board was seated in February. The board previously had 36 members.

The Eastern Region, once called the Global TransPark Development Zone, covers Carteret, Craven, Duplin, Edgecombe, Greene, Jones, Lenoir, Nash, Onslow, Pamlico, Pitt, Wayne and Wilson counties.


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