Audit: State employee gave transportation contracts to family members

Audit cites conflict of interest in Marine Fisheries trucking deals

abaird@newsobserver.comDecember 18, 2012 

An employee of the state Department of Environment and Natural Resources has been singled out in a report by the Office of the State Auditor for giving preference to family members in state contracts totaling more than $200,000 over a seven-year period.

The contracts relate to the department’s efforts to restore oyster reefs along the North Carolina coast. The state pays individuals and businesses for bushels of oyster shells, which are collected around the state and then transported to the coast. DENR contracts with trucking companies to transport the shells, which are then combined with stone material to form viable reefs.

The audit describes how the employee, a biology supervisor with the Division of Marine Fisheries, approved contracts totaling $209,001 between 2006 and 2012 to a father-in-law’s company. The father-in-law’s company subcontracted some of its oyster shell transportation services to a company owned by the supervisor’s wife and mother-in-law.

Some of the money that went to the father-in-law – $5,000 – apparently was used to pay for a vacation at Disney World for the supervisor’s family. The father-in-law gave the money to the supervisor’s wife, according to the report.

Division of Marine Fisheries employees are responsible for avoiding business that could be interpreted as a conflict of interest. Contracting with a business that is even partially-owned by a spouse is described in a state statute as a conflict.

“The conflict of interest may also represent a violation of North Carolina state law,” the report says.

A spokeswoman for the Division of Marine Fisheries, Patricia Smith, declined to name the employee on Tuesday, citing state employee privacy laws.

In its response to the auditor’s report, DENR said the problem was not a matter of bad policy but rather resulted from a misunderstanding and a failure to follow existing policies.

“The direct purchase of shell transport services (without bidding) discussed in the investigative report, which resulted from a misunderstanding (over 20 years ago) about a special purchasing delegation which began in the early 1950s, has been corrected,” the department said.

Smith said Tuesday that contracting with the companies began before the supervisor was hired in that role. She also said there is no indication the department overpaid for transportation services. The supervisor has repaid the $5,000 that was used for the vacation, Smith said.

Shortly after the auditor’s report was released, the Division of Marine Fisheries issued a statement saying it had shifted contracting duties to another employee with no relation to any of the trucking companies.

Baird: 919-829-4696

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