The News & Observer
 

January 24, 2006

Wake Technical Community College should beef up its conflict of interest policies in light of school business deals that resulted in personal gains for two trustees, according to a letter released Monday by the state auditor.

The letter from Auditor Les Merritt said one of the transactions appears to violate a state law designed to make sure public officials don't benefit directly from contracts they approve.

But an attorney for the trustees disagrees, saying he didn't think laws were broken.

At issue are two separate transactions involving the purchase of land and the lease of a building.

The deal that drew the response from school attorney Blen Gee involved a 2001 purchase of property by the school.

The college signed a contract for the property in Zebulon with a company named Zip Capital, a wholly-owned subsidiary of Zip Developers. Don H. Perry, chairman of the school's board of trustees at the time, owned about 8 percent of Zip Developers at the time of the deal.

Perry acknowledged receiving $5,610 from the sale of the land, according to the audit letter. He could not be reached for comment Monday, but he has said previously that college officials were aware of his stake in the company and did not object.

Gee, the school attorney, also said state law governing Perry's involvement had changed since 2001 and he had not violated the criminal statute as it existed then.

Wake District Attorney Colon Willoughby said he was not aware of the auditor's findings, but would review the letter when it is forwarded to his office.

Meanwhile, Wake Tech President Steve Scott said the board had already made changes to the school's policies and would "accept the auditor's recommendations verbatim" to make them stronger.

The auditor recommended the board adopt the state ethics policy that says "a public official shall not knowingly use his or her position in any manner which will result in financial benefit, direct or indirect," to the public official or family members. The policy goes on to apply the same rule to any business, organization or group associated with a public official.

Benefits for a family member was one of the issues involved in the second transaction reviewed by the auditor.

That business deal involved the lease of property from the son of a college trustee.

According to property records, trustee Harvey Montague negotiated on behalf of the college and and on behalf of his son in 2002. The college eventually signed a $229,000 three-year lease with Montague's son for a building near campus.

The relationship was disclosed in the board's minutes and the college's financial statements.

But trustees did not approve the lease agreement until after it was signed and there was no evidence that Montague abstained from voting on the issue, the auditor said.

Merritt said the arrangement created "at a minimum, the appearance of a conflict of interest."

State law does not allow spouses of public officials to benefit from public contracts, but that law does not address any financial benefits to children.

Because of that, Merritt said he did not think any laws had been broken.