DMR audit finds 'widespread conflicts of interest'

Sun HeraldJuly 1, 2013 

After more than a year of investigation and negotiation, the federal government still isn't satisfied with the Department of Marine Resource's handling of the Coastal Impact Assistance Program.

DMR Director Jamie Miller said he's just glad to finally see where DMR stands.

"I'm just glad it's out," he said. "Many of those issues and concerns were not surprises.

"We can now move forward correcting issues identified by the OIG in our grant administration and oversight."

An audit released Monday describes "widespread conflicts of interest" involving land purchases the DMR oversaw, deficient land appraisals, splitting of contracts that circumvented state bid laws, grant awards that failed to meet CIAP criteria and improper charges to CIAP grants.

The Department of Interior's Office of Inspector General said seven of its 37 recommendations remain unresolved. Some of those unresolved recommendations include some of the largest CIAP grants handled by DMR and involve conflicts of interest.

For instance, the OIG recommends the U.S. Fish and Wildlife Service, which oversees the six-state CIAP program for the federal government, stop spending moneyon land acquisitions until it can assure land appraisals meet federal standards.

"FWS agree the appraisals did not meet the technical stands for federal appraisals," the audit said. "FWS did not agree that land acquisition funds be should held and put to better use."

The OIG called $12,639,045 of spending based on substandard appraisals an "ineligible questioned cost." DMR developed a $10.8 million plan to buy land, which the OIG says "created an environment that allowed questionable land purchases to occur, including the purchases of the home of the state CIAP director's parents and a yacht club and boat storage facility."

Potential conflict

The audit said at least three people had potential conflicts of interest when the DMR bought the home of former CIAP Director Tina Shumate's parent's home in Pascagoula. It also questioned the appraisal on the $245,000 purchase. It said Shumate, her parents, and former DMR Executive Director Bill Walker all had potential conflicts of interest.

The audit says the state Office of Attorney General warned the sale might violate CIAP grant rules and could "give the appearance of being motivated by desire for private gain for themselves or others ... particularly those with whom they have family ties."

An opinion from the state ethics commission "was the most prudent course of action," the AG's Office said.

The auditors said they could find no evidence that advice was heeded.

It also said Walker had a potential conflict of interest when DMR spent $3.7 million on Harbor Landing, a yacht club and boat storage building owned by Walker's friend David Harris. The OIG says it questions whether DMR ever intended to use the land for green space. It said the buildings would have to be demolished, but DMR couldn't spend CIAP money to do that.

Such an expensive purchase that required even more spending to meet CIAP requirements is hard to justify, the auditors said.

IMMS grant

The report questions "100 percent" of spending under grants received by Walker's wife, Sharon Walker, at the Institute for Marine Mammal Studies. Those grants include the $7.8 million received to help pay for the Ocean Expo aquarium IMMS wants to build in D'Iberville.

When the draft audit came out, Moby Solangi, president and executive director of IMMS, said it followed the rules when applying for the grants.

"IMMS grants have been consistent with the goals and objectives of the CIAP mandate," he said in an email in June. "IMMS has been audited every year for the past 10 years and has been found in compliance with the requirements of all its grants, including CIAP.

"IMMS has followed and complied with all the procedures in the application and management of its grants."

Bill Walker was fired on Jan. 15 by DMR's governing board and Shumate resigned Jan. 31. Walker in June wouldn't comment on a draft of the audit. He has denied any wrongdoing as has Shumate.

Four of 23 reviewed

In all, the OIG found 23 grants with conflicts of interest. Of those, it said, four have been reviewed and considered closed by FWS. However, the OIG wants more detail on the resolution of the four grants and will refer recommendations on all the grants to the assistant secretary for policy, management and budget to ensure they are followed. That office also will track how well DMR implements its plan to strengthen oversight of its grants.

The OIG also wants DMR to publicly announce all land purchases and allow time for the public to comment on them. FWS said it disagrees with this recommendation, calling it "an undue burden on recipients." OIG told FWS to reconsider its stance and said it will refer this recommendation to the assistant secretary also.

Miller, who was not at DMR at the time of the land deals, said he thinks the land acquisition program should continue, but it should be more open.

"We've got to find a way to make it more public," he said.

He also said DMR plans to restore to their natural states the properties it bought through the program, including Harbor Landing yacht club and boat storage.

Unlikely demand

And, Miller said, he doubts the FWS will demand any of the grants be repaid.

"It's certainly in their power to do that," he said. "But it doesn't appear they will. That answer, though, lies with U.S. Fish and Wildlife, obviously."

FWS didn't respond to a Sun Herald request for an interview by deadline Monday.

Also unresolved are questions about grants to the Ohr-O'Keefe Museum of Art, Infinity Science Center, the Old Wire Road Trail Project, expansions of the Long Beach and Pass Christian harbors, and the Joseph T. Jones Park Educational Boardwalk, Pedestrian Bike Trail and Educational Pavilion.

"While these projects may provide a public good and may deserve public funding, we do not believe there is sufficient justification for CIAP to provide that funding," the audit says. "The fact that a small portion of a project may serve for the conservation, protection, or restoration of coastal areas does not justify substantial additional funding that falls outside of those parameters, thus causing us to question whether any project initially determined to provide little or no direct benefit to the natural coastal environment were designed or completed in the spirit of the act."

It says recommendations will be forwarded to the assistant secretary to track its implementation.

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