Originally created 07/17/02

Audit agency blasts Commerce

COLUMBIA - The state's audit agency has released a blistering report on the Commerce Department, noting illegal spending, management lapses and a spendthrift attitude that cost taxpayers millions.

"We found that the department has not emphasized cost-effectiveness in its operations and some expenditures of public funds were not authorized by law," according to a report released by the Legislative Audit Council on Wednesday.

The agency bought expensive equipment for a first-class presentation center it opened in August, running up the cost to renovate the rented space to $1.9 million, the audit said. However, the center has been stripped of some items, because it has been used for only about 20 hours."Commerce showed a disregard for cost in its selection of furniture for the center," the audit said.}

House Speaker David Wilkins, R-Greenville, was briefed on the audit Tuesday and didn't like what he heard and read.

"I'm just appalled by the uncontrolled spending," Mr. Wilkins said. "What I see in this report is spending was out of control and we're not getting the bang for our buck."

The report singled out issues tied to Wayne Sterling, the chief of staff who was forced to resign last fall, and Commerce Secretary Charlie Way.

Mr. Sterling oversaw the renovation in the presentation room without a budget, without bids for much of the work and without oversight from the state Budget and Control Board, the audit said.

The plans called for $434,397 in renovations, but "by the time the contract was complete, the price had increased by 80 percent." The biggest reason? Mr. Sterling changed the plans to add 7-by-9-foot projection screens in the 3,000-square-foot presentation room, requiring, "higher ceilings, which led to problems with the HVAC duct work and wiring and caused costs to escalate," according to the audit.

The report also said the agency "was not authorized by law" to pay more than $20,000 for Mr. Way's Columbia apartment.

The Commerce Department defended the action, noting that Mr. Way was not paid for his work with the economic development agency.up to woo economic development prospects. "It is not clear how the above expenditures directly promote a public purpose," the audit said. "Some of the department's expenditures have violated state law."

The Audit Council said the fund, supported with private donations, should be scrapped because it creates the impression that donors may be favored with business from economic development prospects. The Commerce Department said that doesn't happen.

Eliminating the private fund-raising "will place our state at a serious competitive disadvantage," the agency said.

The audit said the agency improperly reimbursed employees for meals.

In some case, workers who should have been reimbursed only when traveling got free meals while in Columbia without prospects at the table.

The agency's air travel policy also needs to be changed, the audit said.

The report lists several expensive trips with high costs, but a single passenger. For instance, the agency paid $5,309 to fly a single employee from Columbia to West Palm Beach, Fla., under a flight service contract in December 2000. It also paid $33,676 under that contract to ferry two prospects from Los Angeles to Columbia and back.

The Commerce Department is a cabinet agency operating under Gov. Jim Hodges. "What's encouraging is there's nothing really new here," said Morton Brilliant, Hodges' spokesman said.

Problems have existed at the agency for years, Brilliant said, but Hodges impaneled two groups to study the agency and recommend changes and is the "first governor to open the hood and say, 'Look, there's a problem, let's fix it.' "

Wilkins said he will file legislation to address Commerce shortcomings. He and others filed similar legislation last fall, but none of it cleared the Legislature before adjournment last month.


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