Audit of port authority requested
WEIRTON City and county leaders have asked the State of West Virginia to audit the Weirton Area Port Authority, saying they have questions about its operations.
The request, contained in a letter dated Feb. 21, urged Senate President Jeff Kessler to order a post-audit of the port operation, saying a “thorough review of all real estate transactions, contracts, deposits, invoicing, accounting, billing and the procurement processes used by the Weirton Area Port Authority should be undertaken.” It was signed by representatives of city and county government – Brooke County Commission President Tim Ennis, Hancock County Commission President Dan Greathouse, Weirton City Manager Valerie Means and Pat Ford, the executive director of the Business Development Corp. of the Northern Panhandle.
The Weirton Daily Times obtained a copy of that letter this week through the Freedom of Information Act.
The port is a three-pronged public-private partnership – the Weirton Area Port Authority; the nonprofit Weirton Area Port Authority Inc., a “quasi-public, membership-based corporation established to manage and administer programs”; and the for-profit Tri-State Port Management, a group of investors who oversee port concessions.
As of Tuesday, no audit had been initiated because state officials still are trying to determine if a post-audit is appropriate or if audit responsibility actually lies with Auditor Glen B. Gainer III’s office.
A post-audit is an in-depth examination of the financial records of state-funded agencies, beginning at the source and auditing expenditures from the point where the work was done all the way to who benefits from the service. Findings are reported to the Legislative Post Audit Subcommittee of the Joint Committee on Government and Finance.
West Virginia Deputy Auditor Stuart Stickel said his office was “still looking into the statutes governing port authorities” and said they expect to decide “in the very near future” which agency is empowered to perform the audit.
“There’s more than one port authority out there, so, obviously, it’s an all-or-none situation for us,” he said.
In requesting the audit, local leaders cited a number of areas of concern, including WAPA’s organizational structure which they described as “complicated, unclear” with limited governmental oversight – and lack of transparency to the advisory role being played by Karl Keffer, who was previously associated with a port project in the Eastern Panhandle and was named in a pair of lawsuits alleging his company had failed to pay two vendors for hundreds of thousands of dollars in work they’d done for him there. Default judgments against Keffer totaling more than $500,000 are on the books in Berkley County and Fairfax County, Va., where the suits were filed.
Keffer has been described in some WAPA communications as a “strategic planning adviser.” WAPA Board Member Chuck Wright, Weirton’s Ward 2 councilman, said Keffer represents Tri-State Port Management, WAPA’s for-profit arm; another board member, who did not wish to be identified, said Keffer routinely refers to Weirton as “my port.”
Frank Hoagland, an ex-Navy Seal and founder of S.T.A.R.T. in Mingo Junction, said WAPA owes his company more than $200,000, a claim WAPA has disputed. Hoagland, though, insists his company was “brought on board by Karl Keffer to help establish” security protocols for the port and inter-port operations and had memorandums of understanding and non-disclosure agreements signed by WAPA Chairman B.J. DeFelice as well as “hundreds of e-mails and directives given to S.T.A.R.T.”
At least one other local vendor has complained of non-payment.
Other concerns cited in the audit request include WVPPA board members receiving calls from WAPA employees questioning why they aren’t getting paid, and complaints that WAPA is characterizing individuals who work at the site as independent contractors rather than employees, allowing them to avoid paying the city’s municipal fees, federal and state payroll taxes and workers comp insurance.
DeFelice said he was unaware an audit had been requested but welcomed the opportunity, pointing out that since they haven’t received any public funding “an audit would be an easy request.”
He disputed suggestions that companies are not getting paid for services rendered, saying, “With everything we do, there’s a deliverable to the contract service base and there’s a payment for that deliverable.
“If anybody’s not getting paid here, they didn’t complete the work that was required or didn’t complete the contract documents,” he said.
Likewise, he disputed reports that individuals working at the site haven’t been paid.
“What happened is the not-for-profit (WINC) arm had contracts with various people that ended in November. After that, anybody who stayed on and participated would be a volunteer,” he said, reiterating that, “If somebody says they are owed money, they didn’t get paid because they didn’t perform or they didn’t have a contract.”
DeFelice said he was aware Keffer had been sued by contractors in the Eastern Panhandle, but said “lawsuits happen in business.”
“As a businessman, I wouldn’t be able to work with city, county or anybody else if it was based on lawsuits,” he said. “We’d gone through the whole due-diligence aspect prior to the board engaging with Keffer and the other federal advisers.”
He said he was not aware that default judgments had been entered against Keffer, and said the port authority “has been working diligently over the past three years to do everything we do in public. We have monthly public meetings, every contract, every resolution is posted on our website.”
“Some of the comments I’ve heard, I don’t think those officials have ever been to the port authority,” he said. “How often do they attend meetings? What meetings have they been to?”
He also said he communicates with board members regularly and “…they don’t have any negative view…that I’m aware of.”
West Virginia Public Port Authority Director James D. “Doug” York, meanwhile, said local leaders had asked him nearly a year ago to audit the port’s books and financial statements, “but I told them, it’s not within my statutory authority to do that stuff.” York said he cannot intervene “as long as they are completing the mission they were empowered to do legislatively through the port authority of the state, and the biannual reports they file reflect that they are doing the mission they were empowered to do.”
“We are responsible and have to be good stewards of public monies,” he added. “If you are receiving funding from me, you have the duty and I have the responsibility to monitor how the public money is being spent. But they haven’t asked me for $1 of state taxpayer money, nor have they received state taxpayer money.”
York said the Legislature could, if it wishes, order an investigation. The Auditor General also has the power, “even the West Virginia State Police fraud unit could investigate if they thought something was going on.”
He also said the public portion of the statute allows port authorities to create not-for-profit corporations, and to receive donations from private entities to make it work, “but Weirton has not requested any state funding at all. That doesn’t mean in the future they won’t, but since no money has been allocated or appropriated there’s nothing at this point that would require my intervention as executive director of the West Virginia Public Port Authority.”
Wright, a WAPA board member and city councilman, said he has no objection to local leaders requesting an audit.
“Being on council and also on the board for the port authority, it puts me in a difficult position,” he said. “But as far as I’m concerned, I have no objections to them asking for this. Obviously, if the city administration feels something needs to be addressed, then by all means it should be addressed.”
Wright said if community leaders have questions “and they feel like they’re not being answered, they need to do whatever they have to do to get answers.”
“I’m a big believer in transparency,” Wright added. “I know that’s a word that gets tossed around nowadays, a lot of people say it and don’t necessarily do it. But I believe in it.”
Ennis said he and the other local leaders want nothing more than to “see the port move forward with economic development.” A former state legislator, Ennis said the audit “would show the port area where it’s lacking in, where it excels.”
“There were some concerns,” added Brooke County Commission Jim Andreozzi. “The potential for development over there is humongous. We just want to be sure all the questions are answered, all the I’s are dotted and the T’s are crossed. It sounds wonderful, there’s great potential for Weirton and Brooke County, but we want to make sure everything is done correctly.”
Andreozzi said if nothing else, a state audit will ease concerns about how public-private partnerships should and could work.
“This public-private stuff is so new, but it seems to be the wave of the future in development,” Andreozzi said. “Using public and private money to bring in industry, it’s just so new. I don’t think anyone knows what is 100 percent right, and we just want to get a handle on it to protect ourselves going forward. We want to move slow, make sure everything is done right.”
Greathouse agreed an audit “is a good thing for everybody.”
“It’s just the smart thing to do, it puts to rest any kind of rumors anybody might have, any kind of fears they might have,” he said. “I think we need transparency.”
He said he’s aware that concerns have been raised about the port’s operation.
“With any business, in any way, shape or form, you’d like to have an audit,” he added. “We get asked all the time for financing, we’d like to have an audit” for peace of mind.