Thursday, December 13, 2012
Around Town State Audit Finds Improper Spending Practices at NES
Posted by Steven Hale on Thu, Dec 13, 2012 at 3:09 PM
A report from the state Comptroller of the Treasury's office released this morning revealed a number of improper spending practices at the Nashville Electric Services, including a failure to ensure competitive bidding on contracts, personal purchases made on the company credit card, and a particularly friendly arrangement with Gaylord Entertainment.
After the report's release, NES president Decosta Jenkins held a press conference to address the findings.
From The City Paper:
NES president Decosta Jenkins told reporters at a press conference Thursday morning that the city’s electric utility had already begun responding to many of the problems cited in the audit. Policy changes cited by Jenkins included “revised and strengthened” policies with regards to bidding practices, a more restrictive travel reimbursement policy — which includes a prohibition on the purchase of alcohol — and a process under which hospitality items such as hotel rooms and event tickets are donated to charity.In his report, Comptroller Justin P. Wilson said he “applaud[ed] NES officials for the corrective measures they have adopted in response to our findings.”
According to the audit, NES has maintained an exclusive arrangement with Kerite and Utilicor since 1998. NES, however, could only provide records for cable purchases dating back to the 2005 fiscal year.
Auditors from the comptroller's office found that NES specifications for electric power cable were “tailored to match” cable provided by Kerite.
Asked what ratepayers, who fund NES, should think about such a practice, Jenkins pointed to the success of the system during the 2010 flood, but acknowledged that some of the requirements and specifications for the cables were too restrictive.
Auditors found that NES entered into a contract with Gaylord Entertainment that allowed NES employees to attend events and play golf at Gaylord-owned properties for free in exchange for the lease of NES transformers.
The audit also found improper use of an NES credit card by the company’s vice president/chief information officer, stating that the vice president mixed personal and business accounts, many of which were established in the name of NES. The same vice president admitted to selling surplus NES items without authorization, according to the audit.
Jenkins told reporters that issues related to NES vice president and chief information officer, Vic Hatridge, had been handled internally. He declined to specify what disciplinary actions had been taken against Hatridge or others cited in the report.
Also, auditors found that six NES employees used altered documents to get reimbursement for education or training programs, according to the audit.
Jenkins said NES is “actively seeking restitution” for those claims of fraud by the employees and that those involved had been terminated.
The whole report from the state comptroller can be read here.
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