Connecticut Port Authority audit shows skyrocketing spending
An audit of the Connecticut Port Authority shows that salaries and legal and consulting costs ballooned in recent years, with the quasi-public agency spending 67 percent of its operating budget on those expenditures alone last fiscal year.
State auditors released the 33-page audit Thursday, revealing several deficiencies at the agency, which has faced increased scrutiny over questionable spending and operating procedures. The audit, which reviewed the authority's written policies and procedures, financial records, meeting minutes and other information, covered fiscal years 2018 and 2019.
The auditors found that most of the deficiencies can be traced to a lack of oversight by management.
In one glaring example, the port authority spent $541 for hotel stays in Mystic. Port authority records show that one of the hotel stays was in correlation with a conference in Darien, which is about 90 miles away from Mystic. The other Mystic hotel stay was related to a one-day hearing in New Haven in which the executive director presented for about an hour.
"CPA could not tell us why it paid for a 2-night hotel stay in Mystic for this hearing," the audit says.
In total, travel, meal and entertainment expenditures totaled $21,977 during 2018 and 2019 fiscal years. In many cases, supporting documentation did not substantiate the business purpose for the expenses, the audit says. Eight of those transactions amounted to $1,910, including alcohol that "appeared expensive," the auditors said.
The audit does not name any specific individuals or describe who did the spending. Evan Matthews, the former executive director of the port authority, said in an emailed statement sent early Thursday evening that at no time during his tenure did he receive a performance review — a point made by the auditors — or receive feedback "that I was mismanaging the organization or failing to follow the direction given to me."
"I received approval for all expenditures by either the board chair or finance committee members," he said. "At no time was I told that my actions or purchases were improper or violated a policy."
Matthews resigned Oct. 1 after being on paid leave since July 12 for what David Kooris, acting chair of the port authority's board, has said were comments made to the news media that were "unbecoming of a public sector leader." Matthews said Thursday that he resigned "largely because I was not given any opportunity to defend myself and my actions, or to change the direction of the organization."
The audit also showed that salaries and benefits and legal fees increased substantially from 2017 to 2019.
The port authority, in its response to the audit, mostly agreed with the findings and detailed how it would address them, frequently citing oversight measures put in place by Gov. Ned Lamont late this summer.
"Frankly my goal, knowing this audit was underway, was to be able, upon its arrival, to demonstrate that we've proactively taken action. We were able to do that. There's nothing in there that caught us by surprise," Kooris said by phone Thursday afternoon. "There's no finding for which we haven't already completed action or, at a minimum, launched corrective action."
Lamont released a statement Thursday responding to the audit, saying it showed much of what his administration turned up in a separate review of the port authority.
"What was happening at the Port Authority under the prior management was inexcusable and below what we should expect from an entity such as this. My office has worked and will continue to work to ensure the Port Authority is accountable and that measures are in place to make that happen," he said.
The audit found the port authority did not have basic accounting practices in place, an issue that was brought to light at an August hearing convened by the General Assembly's Transportation Committee, and that it did not have proper documentation for many of its transactions.
Of the 252 transactions from the port authority's bank accounts that were reviewed, 52 of them, totaling $17,401, had no supporting documentation. Of those, 36 pertained to restaurant and hotel expenses totaling $5,754. Kooris has said he discontinued the use of the port authority's credit card and all travel and entertainment expenses require his approval, and must pertain to expenses critical to the purpose and mission of the agency.
Auditor John Geragosian said by phone Thursday that his office is still reviewing a whistleblower complaint received earlier in the year alleging mismanagement and misuse of funds at the port authority and that he expected to refer it to Attorney General William Tong in the "near future."
The primary source of the port authority's revenues during the audited period was through a fixed annual fee and 6.75 percent of gross revenues from Logistec, the port operator of State Pier in New London for much of that period. The port authority's total revenue was $1,507,811 in the 2019 fiscal year, which ended June 30.
Salary and benefit costs, labeled "personal services" in the audit, increased from $193,079 in fiscal year 2017 to $613,119 in fiscal year 2019. Over that same period, legal services rose from $85,740 to $670,720 and consulting fees grew from $54,989 to $470,434.
The auditors said the port authority, in many instances, had attorneys perform tasks that would usually be assigned to agency employees.
"For example, outside attorneys responded to our general audit questions, drafted responses to our prior audit recommendations, drafted board-meeting agendas, assisted with the preparation of annual reports, and drafted various policies and procedures," the audit says.
The increased legal fees can be attributed, in large part, to the search for a new port operator for State Pier and the ongoing negotiations on a major project to redevelop the pier for the offshore wind industry, as well as reviewing and responding to Freedom of Information requests, Kooris said.
Matthews, before being placed on leave, had negotiated a separation agreement with the authority's office manager, Gerri Lewis.
Two of the port authority's board members and most recent chairs resigned in recent months.
Old Lyme First Selectwoman Bonnie Reemsnyder, who headed the board's finance committee, was made chair after Scott Bates, deputy secretary of the state, stepped down in June.
Reemsnyder resigned in late July at the request of the governor after it was reported that the port authority had paid $3,000 to purchase photographs taken by her daughter to hang in its Old Saybrook office. Her daughter since has reimbursed the authority.
Bates, who served as chair for the majority of the audited period, resigned, also at the request of the governor, in August.
Reemsnyder and Bates did not immediately respond to requests for comment on the audit Thursday.
The port authority's board is in the process of searching for a new executive director and Kooris said that "whoever comes in is going to be of upmost integrity," and that controls would be put in place to ensure, at a minimum, that "no one has unilateral authority to perpetuate spending like this without it coming to attention of others."
State lawmakers were quick to issue statements following the audit's release. The Democratic co-chairs of the transportation committee, Rep. Roland Lemar of New Haven and Sen. Carlo Leone of Stamford, said they are "committed to addressing the serious concerns we see in the current structure and will be working with all four legislative caucuses and the Governor's Office to ensure the Port Authority fully meets its obligations to the citizens of our State, while achieving the economic and environmental benefits that were originally envisioned."
Republican Senate Leader Len Fasano said the audit is "screaming for a public hearing."
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