Local Politics

Testimony in Easley probe could create problems for NCSU's ex-chancellor

Posted July 16, 2009 10:22 a.m. EDT
Updated July 16, 2009 7:10 p.m. EDT

— Former North Carolina State University Provost Larry Nielsen testified to a federal grand jury Thursday about the university's hiring and promotion of former first lady Mary Easley – and he's not done answering questions.

Nielsen, who resigned in May over questions about Easley, arrived at the federal courthouse in Raleigh with his wife and his lawyer, Tommy Manning, shortly after 10 a.m.

He declined to comment when he left more than seven hours later, but Manning said he testified for 2½ hours and might appear again Friday if a scheduling conflict can be resolved.

The grand jury is investigating former Gov. Mike Easley's dealings with friends and contributors while in office, including how his wife got a high-paying job at N.C. State in 2005.

Nielsen played a prominent role in hiring Mary Easley and in her promotion last summer to a $170,000-a-year job as a senior lecturer and executive-in-residence.

Former Chancellor James Oblinger and McQueen Campbell, the former chairman of N.C. State's Board of Trustees, also have resigned because of questions about their roles in her hiring.

All three have denied any wrongdoing, but a string of e-mails the university turned over to the grand jury showed Campbell communicated several times with the former governor about a potential N.C. State job for his wife and then communicated with Oblinger and Nielsen to make it happen.

Some e-mails from Oblinger's personal N.C. State account from the months leading up to Mary Easley's hiring were deleted several years ago, and forensic technicians said they cannot be recovered.

Former federal prosecutor Kieran Shanahan said Nielsen's testimony could present problems for Oblinger because they grand jury will likely ask questions about the discrepancies between people's statements and the e-mails.

"My first reaction when I heard about this witness is Jim Oblinger needs to be concerned," Shanahan said, noting Nielsen could seek immunity from prosecution in the case.

He said the grand jury also might inquire about a lucrative payout Oblinger approved for Nielsen after his resignation. The Board of Trustees, which never approved the deal, later reduced the payout.

"If Nielsen was put up to his explanation, which we don't know that he was, that really opens up a whole Pandora's box for anybody who was involved in something that will undoubtedly be characterized as obstruction of justice," Shanahan said.

Oblinger testified before the grand jury last month. His attorney maintains that he might have forgotten about the content of some old e-mails but did nothing improper.

N.C. State terminated Mary Easley's five-year contract in June, citing state budget cuts to the programs she oversaw. She has appealed the move.

Employees of the State Auditor's Office also entered the federal courthouse Thursday morning. The office previously turned over records of an investigation into Mary Easley's promotion.

State Auditor Beth Wood told WRAL News on Tuesday that she decided not to release that audit publicly because she felt it wasn't credible.

Former Auditor Les Merritt, who oversaw the probe when it began, said in a statement Thursday that the investigators who handled the audit had more than 60 years of combined experience and that he doubts their work was flawed or biased. He said he launched the investigation after a number of people called the fraud hotline in the State Auditor's Office complaining about Mary Easley's 88 percent raise.

The Auditor's Office employees declined to comment as they left the courthouse.

The grand jury also has looked at the former governor's travel, his purchase of a waterfront lot in Carteret County at a below-market price, vehicles that car dealerships provided to the Easley family and the sale of a Southport marina.

Two weeks ago, the grand jury also subpoenaed records from the state Division of Motor Vehicles, including all communications since the beginning of 2000 between the DMV and the Easleys, Campbell and several others and documents related to the dismissal of citations against an inspection station owned by Campbell.