A draft of a federal audit says there is evidence the Department of Marine Resources deliberately misled the federal agency in charge of the Coastal Impact Assistance Program when it transferred a $7.8 million grant from the University of Southern Mississippi to the Institute for Marine Mammal Studies.
The draft of the audit by the Department of Interior's Office of Inspector General also found a potential conflict of interest because the grant went from Bill Walker, the DMR's former director, to his wife, Sharon Walker. The draft was distributed earlier this year.
IMMS plans to use the money to help pay for a $30 million
aquarium near an Interstate 10 interchange in D'Iberville. USM had planned to use the money to help pay to replace the J.L. Scott Marine Education Center, which Hurricane Katrina destroyed.
What happened next is still in dispute.
Auditors thought it odd that the day after Sharon Walker left the University of Southern Mississippi for IMMS, the DMR asked to switch the grant from USM to IMMS. USM, the DMR request said, was "hesitant to complete the project because of the current economic situation."
"USM was unable to move forward with the future phases of the proposed project due to lack of FEMA funding commitment, uncertain economic conditions and operating budget constraints," the DMR wrote.
But the auditors said they interviewed the former director of the Gulf Coast Research Laboratory, who denied USM hesitated in moving forward with its project. He said USM gave up the grant after "splitting up grants managed by the DMR executive director's wife into those that were 'the university's' and those that were 'hers,' the auditors wrote.
IMMS Director Moby Solangi said Sharon Walker came to the institute after a falling-out over the direction of the education center. Solangi said USM wanted a "virtual" aquarium rather than one with live exhibits.
"If you start changing the scope of the grant, that is not a good thing," he said.
"The federal government approved that grant to go to Sharon Walker," he said. "I was advertising for an education director, she applied for the job and got it. When a professor moves, they can request the funding agency to cancel the grant. Now, keep in mind that Dr. Sharon Walker was already married to Dr. Bill Walker so if there was a conflict of interest, that conflict of interest occurred when she got the grant in 2007 through DMR. We don't believe there was a conflict of interest issue but if there was, it occurred when she was at USM."
He also said it isn't unusual for a grant to follow a person from one job to the next.
"It is common practice, funding agencies award grants to Principal Investigators (PIs) based on their credentials (education, experience, knowledge, reputation, abilities, etc.)," he wrote in an email. "Grant monies flow to the PI through a host entity, such as a university or a nonprofit organization that ensures the success/completion of the grant. Each grant has goals and objectives milestone charts, and a budget, which the PI and the host entity have to adhere by.
"In the event a PI decides to move to another institution, it is normal for the PI to request the granting agency to permit the transfer of the award to his or her new organization."
Only the grantor, who weighs all factors of the request, has the authority to transfer the grant, he said.
In this case, the grantor was the DMR, where Sharon Walker's husband "made the final decision on all state projects and subgrants," the auditors wrote.
"I have never seen the DMR request to transfer my CIAP grant from USM to IMMS," Sharon Walker said, "however, USM/GCRL wished to change the goals, objectives, and scope of work of my grant -- to which I did not agree. This grant was competitively reviewed on the scope of work originally submitted."
She said she had retired from Gulf Coast Research Lab and was working part time. She said she hadn't been administrator of the Marine Education Center until after Katrina when she had the job for 11 months.
"Since I was no longer the administrator of the J.L. Scott Marine Education Center and Aquarium except for 11 months after Katrina, and this facility moved to GCRL and the fact I disagreed with the GCRL/MEC administration on changing the scope of work for the New Beginnings for Marine Education grant, I needed to work with a facility that 'mirrored' my education and outreach philosophy and the goals and objectives of the grant," she said. "I contacted Dr. Solangi in December 2009 and told him I was leaving USM/GCRL as soon as I contacted all my funding agencies for my grants (approximately 12) and would be leaving as soon as these transactions were approved/not approved for transfer."
Not the final word
The draft audit is not the final word on the matter. Typically, those mentioned in a draft are given the opportunity to respond to problems found by the audit before a final audit report is issued.
That report is expected this summer, said Jamie Miller, who took over at the DMR after Bill Walker was fired.
After that report is issued, state and federal agencies will develop a plan for various corrective actions if necessary, Solangi said.
As for the aquarium project, Solangi said he expects to build Ocean Expo, which he said "will make the Gulf Coast a must-see family destination attraction."
He said site work has been completed but they have to determine how to deal with higher noise levels that are likely after the 1-10 exit is moved closer to the site.
"We hope to move forward as these and other infrastructure issues are resolved," he wrote in the email.
The state Department of Environmental Quality earlier this year froze a $3 million BP grant it gave D'Iberville for projects associated with Ocean Expo and demanded it repay $1.4 million of the grant. In April, it gave the city 90 days more to repay the money.