Panel accepts audit on UA deficit spending, asks no questions


LITTLE ROCK — Without hearing any testimony, a legislative committee on Friday accepted a state audit report that found a multimillion-dollar shortfall in the fundraising arm of the University of Arkansas.

Despite suggestions by some lawmakers that many questions remained unanswered, the Legislative Joint Auditing Committee bypassed testimony and proceeded directly to a vote to accept the audit findings that included a report by the Washington County prosecutor that said no evidence of criminal activity was found.

“The motion is made on the basis that no fraud occurred,” said Rep. Nate Bell, R-Mena. “There is legal evidence that fraud occurred, and I would appreciate the opportunity by the members of this committee to be heard.”

Sen. Bryan King, R-Green Forest, co-chairman of the committee, agreed, saying that for the committee “to close this report at this time … would be an injustice to trying to find out and hear their side of the story.”

Sen. Bill Sample, R-Hot Springs, who made the motion to accept the report, said the committee’s job was to refer the audit to the Benton County prosecutor and that the prosecutor found no evidence of criminal wrongdoing.

“Why do we refer this to the prosecuting attorney and not accept their findings?” Sample said. “Let’s accept (the report) and get on with the job we’re supposed to do.”

Sample did not immediately return a call seeking comment Friday afternoon.

The vote was 21 to 13 to approve the report.

UA Chancellor G. David Gearhart requested the state audit earlier this year after administrators discovered that the Advancement Division had overspent its $10 million budget last year.

Brad Choate resigned as vice chancellor of the division in February after the shortfall became public. Razorback Foundation Executive Director Chris Wyrick replaced Choate. Joy Sharp, the division’s budget director, also stepped down at the end of February.

John Diamond, who was dismissed from his job as associate vice chancellor of university relations, told the committee in September that there was a “culture of deception that developed and grew” within the UA administration and that Gearhart ordered the destruction of financial records requested by state auditors and media outlets.

Choate, Sharp and Diamond attended Friday’s committee meeting and were ready to testify. Choate said after the meeting he was surprised by the committee’s vote.

“It’s pretty outrageous that they won’t even listen. It’s like ‘don’t confuse me with the facts,’” Choate told reporters.

He said he had signed an agreement with the university not to discuss anything about the deficit or investigation unless asked by a legislative committee.

“It’s a shame, it’s a real travesty,” Choate said. “I think most Americans would want to hear all sides, and Sen. Sample and this committee just decided not to hear it.

“There’s a lot of information that has not come forward.”

Choate, who showed reporters his written comments in a binder decorated with a picture of several people lying underneath a bus, said he “really, really wanted to talk.”

“I’ve been under a gag order for 18 months, and today was the opportunity to speak publicly,” he said, adding Gearhart sought the gag order “that included clear threats to fire me.”

Diamond told reporters he also disappointed and that the prosecutor’s investigation failed to adequately review his allegations that documents were shredded under Gearhart’s orders.

Gearhart, who also attended the meeting with a number of people on the UA staff and several of the UA system’s trustees, left without talking to reporters. He has previously denied ordering any documents shredded.

Rep. Kim Hammer, R-Benton, co-chairman of the committee, noted after the meeting that the Washington County prosecutor had said in the report that there was a possible jurisdictional question and that Pulaski County Prosecutor Larry Jegley could further investigate.

“As I legislator I don’t like what happened today because I think we should have been able to hear what those who came here today had to say,” he said.

At the September meeting, lawmakers reviewed a state audit that revealed deficits in the division budget of $2.14 million in fiscal 2011 and $4.19 million in fiscal 2012. That audit, and comments made by Diamond, Gearhart and others who testified, were referred to the Washington County prosecuting attorney.

The Legislative Audit Division listed the deficit as a cumulative $4.19 million over fiscal 2011 and 2012, including both university and UA Foundation funds. UA spokesman Mark Rushing has said a deficit in the Advancement Division still exists and the university is working to eliminate it.

In a news release late Friday, Rushing said “The prosecuting attorney’s report was consistent with the university’s long-standing findings that the Advancement Division’s deficit did not involve theft, fraud or misappropriation of funds.”

In the same release, Gearhart said the university is “actively implementing all of the recommendations provided by Legislative Audit” and that the improvements “will make the university’s fiscal checks and balances stronger than ever.”