CHARLESTON - The results of a preliminary legislative audit have found evidence of mismanagement of a $5 million revolving loan program administered by the West Virginia Department of Agriculture.
Auditors found that 25 of 40 outstanding Rural Rehabilitation Loan Program loans are delinquent. Moreover, in nearly half the loans audited, there was no evidence of any effort to collect on delinquent loans. A number of loans lacked sufficient collateral.
The audit also found evidence of potential conflicts of interest between the former commissioner of agriculture, Gus R. Douglass, and either the loan committee or loan recipients. The audit did not elaborate on the conflicts or identify the loan recipients.
Currently, the fund has about $1 million, with about $4 million in loans outstanding.
The Legislative Auditor's Office released the findings Monday at an interim legislative committee meeting, media outlets reported.
A message left at a telephone listing for a Gus R. Douglass in Leon was not immediately returned Tuesday.
"We've got some kind of a rogue loan program without any sort of rules, regulations or oversight," Senate President Jeff Kessler, D-Glen Dale, said during the meeting.
Auditors could not find any formal policies or procedures for awarding loans, or requirements that loan recipients have a good credit history or proof that they could repay the loans.
"One of the business plans was literally one sheet of notebook paper," Legislative auditor Aaron Allred told the committee.
Current Agriculture Commissioner Walt Helmick said Monday that he requested the audit of the department when he first took office in January 2013.
"The rumor when I first took office was, you better look at that loan program," he said.
Helmick said he placed the loan program on hiatus but that he would like to continue it.
"We would like to continue this program. We think it fits our mission, and fits it very well," he said. "We feel there's tremendous opportunity in agriculture, and we have to have this loan program."
House Speaker Tim Miley, D-Harrison announced last week that the audit's findings had been turned over to the U.S. Attorney's Office for further investigation.
Miley said Monday that it would be up to the Legislature to decide whether the department should continue the program.
The complete audit is scheduled to be released in February.