Grand River Dam Authority audit points to major problems during Easley era

The office of Auditor & Inspector Gary Jones has completed a performance audit of the Grand River Dam Authority (GRDA), and reached many conclusions critical of the entity during the years it was led by former state Sen. Kevin Easley, a Tulsa Democrat.
 
Easley was both chief executive officer and director of investments for GRDA. The report from Jones details possible or apparent conflicts of interest involving staff and members of the board of directors, and points to excessive compensation or travel expenditures for top staff of the authority.

In a brief statement accompanying posting of the report online and to reporters Thursday, December 8, Jones commented, “The audit reveals several areas of concern with recommendations for the GRDA Board, its management and the state legislature.”
 
Throughout this report, when possible, page numbers of the audit document are indicated. The full report is available online at the auditor & inspector’s website ( www.sai.ok.gov).
 
A recurring phrase throughout the document, after summary of findings about a particular issue or concern, is this: “The attorney general’s office should review this situation further and determine if any laws were violated.”
 
Among patterns and practices scrutinized in the audit, released today (Thursday, December 8) to members of the Capitol press corps, is the Bricktown office facility that has long been the subject of often dark humor among political observers.
 
In an audit summary, the office of the auditor and inspector observed, “GRDA spent approximately $130,000 on renovations to office space in Oklahoma City’s Bricktown. Although this office may have allowed GRDA to hire and retain qualified staff for certain aspects of their operations, it appears Article 10 § 15A of the Oklahoma Constitution was violated, and one could question whether the Bricktown location was the best use of GRDA’s resources and their ratepayers’ money.” (page 17)
 
The audit covers nearly eight years of the authority’s history, July 1, 2003 to March 31, 2011. Among a wide range of critical conclusions, the audit contends, “Employee survey results and interviews revealed a volatile environment increasing GRDA’s exposure to fraud, waste, and abuse.” (page five).
 
Inadequate oversight by the GRDA board is a recurring theme of the report. One example: “The approximate $140,000 in resources devoted to expand the South Grand Lake Airport Authority was not approved by the Board as required by state law. The economic impact of the project is unknown; as a result, one could question if this was the best use of GRDA’s resources, their ratepayers’ money, and whether it was appropriate given GRDA’s mission.” (page nine)
 
Apparent conflicts of interest are identified throughout the document, including this summary: “Patterns appear to exist where executive management and the Board have acted in manners which could have potentially exploited their official capacities for personal benefit.” (pages 10 and 12).
 
Under state law (82 O.S. § 864.2) the GRDA board was authorized to hire a “director of investments (DI).” This person was “to be paid an amount not to exceed 90% of the general manager’s salary of the Oklahoma Municipal Power Authority.” In the words of Jones analysis, “ They selected the CEO and increased his salary to $225,000 annually because he assumed a portion of the additional duties of the DI. It appears this position was created to allow GRDA to circumvent the statutory limit on the compensation of the CEO and there appears to be a duplication of effort between the CEO and the chief financial officer regarding investment duties.” (page 20)
 
In one of several examples provided that might be characterized as understatement, the report observes, “State statutes recognize GRDA as a unique agency; as a result, we noted they appear to have an attitude similar to a corporation rather than a governmental entity regarding expenditures which included flatware items, dinnerware items, and sound diffusers.” (page 24)
 
Jones and his staff also concluded, “Office of Personnel Management studies indicate classified employees’ salaries have increased disproportionate to comparable positions in other electrical generating utilities.” (page 13)
 
Also scrutinized is the authority provision of car allowances to nine employees: “Factors used in making the decision as to whether to provide a car allowance include consideration of the employee’s circumstances or preference. Financial impacts did not appear to have been considered. GRDA should seek an attorney general’s opinion regarding the use of car allowances.” (pages 26 and 27)
 
Governor Mary Fallin requested the performance audit on February 8, asking Jones to review “the efficiency and effectiveness of current management,” “oversight of the operations of GRDA,” “the reasonableness of the expenditures of the GRDA administration,” expenditures of the administration “for compliance with appropriate state statutes and regulations” and “an assessment as to whether the current structure of the GRDA is in the best interests of the taxpayers of Oklahoma.”
 
The GRDA board gave Easley a $90,000 a year raise 13 months ago.
 
Easley took charge of the authority in March 2004. He left in April of this year, several weeks after Fallin’s letter to Jones, and not long after a grand jury indictment of former state Sen. Mike Morgan, lobbyist William Andrew Skeith and Oklahoma city Attorney N. Martin Stringer.
 
The Tulsa World reported at the time, “Morgan is accused of accepting illegal payments, disguised as retainer fees, from three companies in exchange for using his position to influence legislation.
 
“One of the companies was a power company that originally wanted to build a power plant as part of a project with GRDA. The possibility of GRDA obtaining a broad exemption from public competitive bidding statutes to reduce costs of the project was one of the things discussed, according to the indictment.” 
 
After a national search for a successor, the board of directors named state Rep. Dan Sullivan of Tulsa as the new CEO. Sullivan resigned from the Legislature November 30 and is now running GRDA.