State audit questions economic development group's expenses

The North Carolina Office of the State Auditor has raised a number of questions regarding a state economic development partnership's use of funds to pay for a rental house at the 2005 U.S. Open golf tournament in Pinehurst, a trip to New Orleans during Mardi Gras and more than $2,300 spent during a golf trip to Ireland.

In a special review of North Carolina's Eastern Region partnership, an economic development organization governed by North Carolina's Eastern Region Development Commission, State Auditor Les Merritt highlighted a number of expenses incurred by former Executive Director Tom Greenwood.

According to the audit, which was released Monday, the organization spent $15,566 on rental fees, food and refreshments a during a marketing and client development event at the U.S. Open last year, but investigators could find little evidence as to who attended the event and what business was conducted there.

In February, the organization recorded about $530 in expenses associated with a trip by Greenwood to New Orleans, and in early July of 2005, the organization also paid for more than $2,300 in expenses incurred by Greenwood during a two-week trip to Ireland. The New Orleans trip coincided with the annual Mardi Gras celebrations, and the trip to Ireland was scheduled for the same time as a personal golfing vacation planned a year in advance by Greenwood.

The expenses, as well as the Eastern Region's documentation and handling of them, suggest that the organization's administrative commission had inadequate oversight of the organization's marketing and client development, according to the audit report released Monday.

Greenwood also was found by auditors to have received reimbursements for a number of expenses without "adequate supporting documentation." He ended his 11-year reign as director of the Eastern Region in early February, when he resigned to spend more time with his family, according to an Eastern Region press release.

Not all of the audit's findings directly involved Greenwood. Another employee reportedly was reimbursed more than $1,000 twice for the same expense. The second reimbursement was returned to the organization, Eastern Region Chairman Calvin Anderson said.

Merritt's report indicates that the organization also did not accurately report interest earned on a trust fund that included $7.5 million in state appropriations. All seven economic partnerships in the state have trust funds. Interest from the trust funds are pooled together and then redistributed equally to the partnerships. The incorrect reporting, the audit claims, kept more than $1.3 million in interest from being distributed correctly.

In a response to the audit, which Merritt's office said stemmed from a number of complaints and allegations it received in the past year, the Eastern Region has agreed to implement a number of new regulatory measures to increase internal oversight and documentation of employee expenditures but disputed the auditor's assertion that the organization had inaccurately reported its interest earnings.

The state auditor's report on the Eastern Region partnership follows a similar investigation into the state's Northeast Partnership, which was found to have mismanaged thousands in state appropriated funds.

The Eastern Region elected a new slate of officers, led by Anderson, after Greenwood's resignation in February.