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January 7, 2014

Barbourville audit finds 'mismanagement' and 'abuses'

CORBIN — Times-Tribune

Staff Report

A special audit of the City of Barbourville "found lax controls and oversight that led to financial mismanagement and abuses," according to Kentucky State Auditor Adam Edelen.

The report, released today (Tuesday), indicates Mayor David Thompson and others exerted "undue influence" over the city's financial activities and "likely" benefited personally from that influence.

Edelen said the report, which includes 28 findings and recommendations, will be referred to the Attorney General, the Kentucky Department of Revenue and the Cabinet for Health and Family Services.

The exam was launched last summer upon request by five of the six city council members.

The exam found problems with work performed by a general contractor, plumber and electrician, with Edelen saying the work could have been done by city departments at little or no cost to the city. It was also determined a contractor was paid more than $73,000 for work that wasn't put out for bids and invoices for that work didn't include necessary details.

Auditors found that the mayor and his wife cashed checks for employees and vendors, which gives the appearance of comingling public and private funds. "It indicates the possibility that payments to some individuals were not solely for the benefit of the city," Edelen said in a press release.

Auditors identified several issues with the Barbourville Brickyard Waves Water Park, which the city leases from Union College.

"The mayor appears to have a conflict of interest between fulfilling taxpayers‚ interest and his private financial interest in securing the position of water park manager for his wife. The mayor should have removed himself from the hiring process but did not," the release states.

Thompson also routinely authorized free water park passes to certain individuals — a practice Edelen said Thompson was not authorized to do, was excessive and that resulted in a loss of revenue for the city.

Water and ball park concession revenues and expenditures were not reported to the Recreation Board as required. Edelen said Thompson and his wife did not provide that documentation to auditors upon request.

"The public has no idea how much money these park concessions made or how it was spent," Edelen said. "Parks may seem like small potatoes to some, but they are important community assets."

Auditors also found that the former water park manager potentially reaped greater profits by reporting inaccurate payroll expenses to the city.

Auditors identified abuses elsewhere in city operations, resulting in lost revenue to the city, failure to bid for fuel and asphalt and an improper bid award for a Civil War park.

"I hope the Barbourville City Council will implement the recommendations in the report and restore taxpayers' trust," Edelen said.

See Wednesday's edition of the Times-Tribune for more details on this breaking story.

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