CHARLESTON - A legislative audit of the West Virginia Department of Agriculture has uncovered poor record keeping, questionable reimbursements and other issues with a loan program that may have cost the state hundreds of thousands of dollars during the tenure of former Agriculture Commissioner Gus Douglass, according to findings released Monday.
The audit was requested by Agriculture Commissioner Walt Helmick shortly after he took office in 2013. It said auditors found numerous faults in the Rural Rehabilitation Loan Program's loan application, review, calculation and repayment process.
The report released Monday by the Legislative Auditor's Office also said poor record keeping made it impossible to track the accuracy of a $4 million outstanding balance in the Rural Rehabilitation Loan program.
Nineteen out of 35 loans were examined, revealing six miscalculated loan payments, inaccurate interest amounts and missing loan documentation in 19 instances, according to the report. It added that loans were granted with insufficient collateral in five of 19 instances studied by the auditor.
Furthermore, the audit states the Rural Rehabilitation Loan Program was not advertised to the public and that there were several instances in which friends and relatives of the former commissioner and the Loan Committee were granted loans. For instance, the audit said the former commissioner's son, Tom Douglass, received a $45,000 loan followed by a refinancing with an additional $18,500 loan.
It said a former secretary of the Loan Committee received a loan of $146,000, which was refinanced to forgive interest and granted a 25-year repayment period. Another WVDA employee received a $6,500 loan that has been delinquent since October 2012, it added.
In addition, the audit findings reported that two loans were not issued for agricultural purposes. It said one loan of $200,000 and another totaling $50,000 were used to pay off bank debts.
The findings also said auditors questioned some of Douglass' travel reimbursements from a stay at the West Virginia State Fair in 2012. According to the report, the former commissioner submitted receipts for a campsite that were significantly higher than other nearby sites. When the auditors contacted the fair, they discovered it is state fair policy to provide a campsite for the Commissioner of Agriculture free of charge, the findings said.
Checking back through 2008, the auditor's office said it found a total of $3,987.04 in questionable campsite receipts had been submitted for reimbursement. At the further request of the Legislative Auditor, the audit team then obtained Douglass' travel reimbursements from 2003 to 2007 and noted similar campsite reimbursements totaling an additional $3,785, according to a footnote in the report.
Additionally, more than $2,000 in overnight stays in Charleston, meal reimbursements without lodging expenses, and meal reimbursements excesses not covered under the WVDA Travel Policy were submitted by the former Commissioner, the report said.
The former commissioner, Gus Douglass, said he was not personally contacted during or since the audit and has been instructed to refer questions to his lawyer at Bailey & Glasser, of Charleston.
Calls placed Monday to Mike Hissam of Bailey & Glasser were not immediately returned.
According to the report, employees claimed extra mileage in 215 instances across 44 documents. The most mileage misreported in once instance was 188 miles. In all, more than $4,000 was overpaid in travel reimbursement to WVDA employees between July 1, 2011, and Dec. 31, 2012, according to the findings released Monday.
Lastly, the Department of Agriculture misclassified its former general counsel as a full-time employee for 21 years, the report said. According to the auditors, the general counsel worked about 250 hours per year for the agriculture department. Employees must work 1,040 hours per year to be considered fulltime. As a result, the department paid $64,960 in salary, employer-matching FICA and insurance premiums. The audit states this matter has been referred to the W.Va. Public Employees Insurance Agency and the public retirement board.
In a news release Monday, Helmick said many of the audit recommendations have already been addressed and the department is working to ensure full departmental compliance with policies and guidelines.
"I want to assure all West Virginians that the Agriculture Department intends to operate with sound, proven business practices that include an emphasis on accountability at all levels," he stated.