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Audit: Foundation lax in grant oversight

Posted November 2, 2009

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— A Rocky Mount-based foundation that uses money from cigarette companies to award economic development grants needs better oversight to ensure the grants are producing results, according to a state audit released Monday.

State auditors also scolded Golden LEAF for awarding some grants behind closed doors and for limiting access to its records.

Golden LEAF sign Golden LEAF defends its operations

The General Assembly created Golden LEAF, or Long-term Economic Advancement Foundation, a decade ago to handle part of the money the state receives every year under the nationwide legal settlement with cigarette manufacturers. The foundation has awarded more than $325 million in grants, which are supposed to boost the economies of rural areas that have traditionally relied on tobacco money.

Recent projects include laptop computers for Edgecombe County students and a $100 million grant to help bring an aircraft manufacturing plant to the struggling Global TransPark in Kinston.

The foundation doesn't independently verify information contained in periodic reports submitted by grant recipients, cannot determine whether some positive results are directly linked to grant awards and doesn't check on the financial condition of the organizations receiving grant money, according to the audit.

"They don't have any rhyme or reason. They don't look at areas of risk where there might be some misappropriation of funds," State Auditor Beth Wood said. "(This is) typical for what we find in a lot of state agencies."

Golden LEAF officials responded that foundation staff members make site visits to check on some grant recipients, often withhold grant money until specific requirements are met and require all recipients to undergo a training session on grant management before money is released. Yet, officials agreed that tighter rules would be beneficial.

"We're dedicated to accountability and transparency," foundation President Dan Gerlach said. "We have some areas to improve upon. We'll do that, and we'll move on."

The audit also questioned the potential for conflicts of interest or political influence in investments and raised concerns over the amount of risk involved in some investments of state money. Foundation officials said influence has never played a role in investment decisions and said they try to achieve top returns on investments to make grants without eating into the endowment created by the annual payments from cigarette makers.

"The foundation's investment goals are different than those for state funds," Golden LEAF wrote in its response to the audit. "The foundation's asset allocation and investment practices are similar to those used by other foundations with similar investment objectives."

The State Auditor's Office also criticized Golden LEAF for not providing its investigators timely access to records and for violating the state open meetings law by approving $15 million in grants in a closed session of the foundation board. Foundation officials said there has been only one instance where grants weren't approved in open session, and they apologized for not having documents readily accessible.

"We've clarified that for people, and we won't make that mistake again. But that was one time out of 429 (board meetings)," Gerlach said of violating the open meetings law.

"The fact that there was even one meeting where they didn't comply with the law is important," Wood said.

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  • tarheel4eva Nov 2, 2009

    I think it's about time for these organizations to be checked into. I know of an organization that received $100k from them several years ago and from what I understand they've not made much improvements on the project the money was to be used for.

    http://www.rrdailyherald.com/articles/2005/12/06/news/news3.txt&cid=0

  • WHEEL Nov 2, 2009

    What did you expect. Easley put his No 1 GOPHER in charge of Golden Leaf when he couldn't get anyone else to give him a position. Notice I didn't say job. Sort of like his wife's position.

  • sweetsea Nov 2, 2009

    They give a lot of funds to community activists who run non-profits, hire their friends and relatives and haul democrat voters to the polls on election day. It is purchasing political support. The board is controlled by democrat activists. The foundation should be abolished and the funds given to the general fund of the state who will waste most of it but not quite as much as Golden Leaf. I knew that very little would find its way to true economic development when it was created. and it will not get better with time unless the board is dismissed in total and replaced with people whose sole mission is economic development. This would result in real job creation.

  • Just Ice Nov 2, 2009

    State audit criticizes Golden LEAF, By Mike Hixenbaugh, Rocky Mount Telegram, Monday, November 02, 2009

    "The audit also scolds the foundation for approving a $15 million grant behind closed doors in April 2005 and for deficiencies in keeping record of board minutes."

    "Golden LEAF officials, in a written response, acknowledged the foundation violated state law in approving a grant in closed session and agreed that the minutes for some meetings were not provided upon initial request."

    They acknowledged (admitted) that they violated state law. So, who has been charged with violating state law?

    Can somebody forward this article to the N.C. Attorney General's Office?

    http://www.rockymounttelegram.com/news/state-audit-criticizes-golden-leaf-932977.html

  • aintbackingdwn Nov 2, 2009

    Bubba gets a new house at my lungs expense

  • Just Ice Nov 2, 2009

    firehog400: "Thank you Just Ice"

    Wait...there's more.

    Ex-medical director quits OIC, By John Henderson, Rocky Mount Telegram, September 22, 2009

    "The new staff is being hired with the help of a $300,000 grant from the Golden LEAF Foundation, an organization that awards tobacco settlement money. Blackwell served on the committee of officials and citizens who decided how to dole out the grants to Edgecombe County totaling $1.8 million from the foundation’s Community Assistance Initiative."

    http://www.rockymounttelegram.com/news/ex-medical-director-quits-oic-851930.html

  • firehog400 Nov 2, 2009

    Thank you Just Ice

  • firehog400 Nov 2, 2009

    How much was it they gave to a medical center operation in Rocky Mount that was managed, directed or associated with a member of the Gold Leaf Board??????????????????????????

  • beachpeggy27 Nov 2, 2009

    To whatelseisnew.... Golden LEAF is funded with 1/2 of the money from the tobacco settlement. The other 1/2 of the tobacco settlement money is earmarked to help smokers. The General Assembly controls that money.

    Also: let me remind everyone that Golden LEAF has given a great deal of scholarship money particularly to community college students. This is a great program.

    And may I remind all of you Easley haters -- Mike Easley did not like or approve of this program so you know there must be something right with it.

  • Just Ice Nov 2, 2009

    LEAF cash spread out to aid county, By John Henderson, Rocky Mount Telegram, September 7, 2009

    "Last August, residents debated who should sit on the committee that would recommend how this grant money and other millions from the foundation’s Community Assistance Initiative would be doled out in the coming years."

    "Rocky Mount City Council member Reuben Blackwell, who was one of the moderators, ended up becoming a member of the committee making the final decisions."

    "$300,000 to the OIC’s Family Medical Center for salaries and contract services for two physicians, a physician assistant, an outreach worker and technology and computer equipment for the office."

    "$338,960 to the OIC's Hope Program, a dropout prevention program. "This helps compliment a grant awarded by the state to expand (the program) to other schools on the Edgecombe side of Rocky Mount,"

    Reuben Blackwell is CEO of the Rocky Mount OIC. Does that sound like a conflict of interest?

    Follow the money.

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