News

April 7, 2004

Auditor Robert Hicks charged that County Executive Tom Gordon, Councilwoman Karen Venezky and attorney Timothy Mullaney temporarily blocked publication of his first internal audit of a county government function "over a minor technical matter."

He told County Council's executive committee that Mullaney, who heads the county law department, threatened him with a lawsuit and with not approving his being indemnified by county government if he were sued. Venezky, Hicks said, told him she had the necessary four votes lined up to have Council order him to change "the manner in which one aspect of this audit was being performed."

"This is an extremely serious and dangerous threat to the county auditor's ability to conduct internal audits," Hicks, reading a prepared statement, said.

Mullaney, who attended the committee meeting on Apr. 6, denied that he said the county would sue Hicks, but said that he told the auditor that unidentified persons referred to in the report would likely sue if the report, which Mullaney said contained "libelous content," were released.

Venezky said she "did not say I had four votes," but did say that "I would vote [to require] an exit interview face-to-face" before publishing the report. Hicks replied that he stands behind his charge.

Council president Christopher Coons told Hicks, "The issues you raise are serious and troubling." Councilman Penrose Hollins said that the alleged "threats, intimidation and harassment [of Hicks] is equivalent to suing [me as] a member of Council if I disagree with [the administration]."

Referring to Hicks's entire statement, Mullaney said, "You have to know the whole thing in proper context."

Hicks later told Delaforum that a four-hour meeting with Gordon "and numerous other people" after his appearance before the executive committee resulted in his being shown some additional documents and given some further explanations.

There was "nothing that causes us to change our findings," he said.

"However," he added, "we did agree that the characterization of one of the findings probably should be changed so as not to mislead the public." He said the audit report will be made public, but did not provide a date when that will be done.

Gordon told Delaforum that the subsequent meeting generally resolved the conflict. "It's calmed down now," he said.

Initially, the audit report "was dropped on us without an interview," he said. All he was doing, he added, was seeking the opportunity for a meeting "where protocol calls for information to be exchanged back and forth." That, Gordon added, is standard practice and one with which he is personally familiar, having experienced it in connection with annual general audits of county finances during his seven years as executive.

Hicks's leveling his charges brought into public view what observers have recognized as growing tension with the Gordon administration over his role. That is especially pointed in light of recognized outstanding management of county finances by the Gordon administration, which has resulted not only in clean bills-of-health from outside firms which conducted annual overall audits during the past several years but also top scores from all three major Wall Street bond-rating firms.

There is state legislation pending in the General Assembly designed to bolster the county auditor's independence. Council also professed to move in that direction with recently enacted legislation to establish an auditing committee composed of outside professionals. By law, Hicks is an employee of Council and there has been some squabbling over whether he is 'County Council's auditor' or 'the county auditor'.

Somewhat ironically, the previously prepared agenda for the executive committee's meeting included a discussion of the process for establishing the oversight committee and interviews with the first two candidates for potential membership.

That part of the meeting occurred after Hicks had left to keep his appointment with Gordon and other officials.

Although he did not directly refer to Hicks's charge concerning indemnification in the event of a lawsuit, one of the candidates, Araya Debessay, said that providing indemnification to all members of the committee would be a prerequisite to participation for most, if not all, of them. "Corporations are finding it difficult recruiting for audit committees. ... Conflicts often arise and you can still face litigation," he said. Indemnification involves the government or a company paying for legal representation and assuming responsibility for any judgment arising from the suit. That generally applies only to civil lawsuits, not criminal actions.

Debassay, a University of Delaware professor who is on sabbatical leave and working as a consultant for W.L. Gore & Associates, and the other candidate, John Baxter, an auditor in private practice who held the county position on an interim basis before Hicks was hired, were present when Hicks's charges were made and discussed. Coons, a lawyer who works for Gore, said he is not involved with nor was he, until recently, aware of Debessay's association with that company.

Hicks's statement and subsequent discussion at the committee meeting provided a general, but incomplete, account of the dispute. Coons cautioned his colleagues, and presumably Hicks, against 'leaking' any of the substance of the report to the news media before it is officially published.

From what was said, it could be determined that the audit had to do with county procurement practices. 'Fieldwork', Hicks said, was "outsourced" to an auditing firm, which he did not identify, "due to the lack of an internal staff to complete this engagement [sic] within a reasonable time frame."

As is customary with an audit, its subjects have a right to include comments on the results as the report is being drafted. What Hicks intimated was the last of three 'exit interviews' was held on Apr. 2, with Hicks attending in person and someone from the unidentified outside firm participating by telephone. That person's not being physically present at the session evidently was the 'technical point' in dispute.

Mullaney and Venezky said that having the auditor who actually performed the work present at a final interview is standard auditing procedure. "My intention [in that regard] was that a proper 'exit interview' be held," Venezky said. Hicks said the procedure was proper because "I am the auditor of record; I am the auditor ultimately responsible for this audit."

Gordon later said that the outside auditor should also have been at the meeting in order "to get the facts right." That auditor was at the meeting which followed the Council committee meeting, he said.

Hicks's statement identified Gordon, Venezky and Councilman William Tansey as being present at the Apr. 2 meeting, but others presumably attended as well. Tansey said at the executive committee meeting that he was there "because you (Hicks) asked me to come." Tansey made no other comments regarding Hicks's allegations.

Hicks said that, if Council, at the administration's behest, were to order that the report changed, that would be tantamount to interfering with an audit, which he described as "a probable violation of state law."

He said that if Gordon or members of his staff had lobbied Council members to secure the four votes that Hicks alleged Venezky and Gordon claimed during the session, it would amount to "an attempt to interfere with an audit." Four votes constitute both a quorum and a majority of Council members.

Hicks also said Gordon refused to provide documents which the executive reputedly said would "prove that one of the more significant audit findings has errors" unless the outside auditor who performed the audit were present. Those documents evidently were the ones to which Hicks referred after the subsequent meeting.

2004. All rights reserved.

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