Monday, September 16, 2013

University of Arkansas audit discrepancies referred to Fayetteville prosecutor

Posted By on Mon, Sep 16, 2013 at 3:29 PM

click to enlarge JOHN DIAMOND: His allegation of document destruction will be reviewed by a prosecutor.
  • JOHN DIAMOND: His allegation of document destruction will be reviewed by a prosecutor.
Roger Norman, director of Arkansas Legislative Audit, has formally notified legislators that he's referred conflicting testimony about handling of University of Arkansas financial records to the prosecuting attorney in Fayetteville to review for potential criminal violations.

John Diamond, the former chief spokesman for the university's advancement division, testified Friday during discussion of a special investigative report on the division that Chancellor David Gearhart had ordered him to destroy documents. An angry Gearthart disputed Diamond and said his allegations were those of a disgruntled ex-employee who'd been fired. No doubt Diamond is disgruntled. But that doesn't mean he's lying. There's no doubt  that auditors concluded that the University of Arkansas hadn't always been open about facts in its possession and had engaged in accounting practices that fell short of auditors' standards.

Roby Brock at Talk Business reports on Norman's letter:

In a letter delivered today to the General Assembly’s Joint Auditing Committee, Norman said:

“As you know, the above-referenced Investigative Report was discussed at the Legislative Joint Auditing Committee’s September 13, 2013 meeting. While under oath, witnesses presented conflicting testimony regarding the alleged destruction of budget-related documents in the Division of University Advancement.

“Ark. Code Ann. § 10-4-419(c)(1) states: “The Legislative Auditor shall notify and cooperate with the appropriate prosecuting attorney on all matters that appear to involve a criminal offense.” Based on the testimony presented, I determined that the testimony given at the September 13, 2013 meeting should be forwarded to the appropriate prosecuting attorney for further review. That has been done.”

Speaking of UA's messy finances: The unviersity announced today that it had hired Timothy J. O’Donnell, vice president and former treasurer of Southwestern Energy Co., as associate vice chancellor for budget and financial planning at the University of Arkansas, effective Oct. 7. It's a new job. He'll report to vice chancellor Don Pederson, one of those who failed to find anything untoward that needed to be reported to legislative auditors. It is tempting to snark that, as a long-time employee of gas producer Southwest Energy, O'Donnell is well-versed in the business of handling toxic waste. Sometimes, it's injected deep underground.

Also, I inquired of John Diamond for more information about specifics on destroyed documents. He said, considering the continuing investigation, it would be best if he stuck to what was said in the audit committee meeting last week.  Here's what he said in full.

PS — Yes, Fayetteville Prosecutor John Threet is married to a stepdaughter of Frank Broyles, retired athletic director at the UA. I think I read that he has said he doesn't believe that's a conflict in assessing UA financial issues. I think he's right, at least in a technical sense. But it's a measure of how important most people believe athletics — and Broyles himself still — are in decision-making at the university that many people think it IS a conflict. The new head brought in to "clean up" advancement — Bro. Honky Christ Wyrick, the man who fired John Diamond — after all came directly from the athletic department fund-raising apparatus. Its secretiveness naturally made him an obvious choice to transition into a similar operation with the University of Arkansas Foundation. He promptly continued the division's old practice of booking in private money to cover deficits without calling it an account receivable. Auditors have said this is a no-no and the university now begrudgingly says it will change the practice.

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