The former chief executive of a nonprofit economic booster group in northeastern North Carolina created a conflict of interest by staying on the job after agreeing to work for a partnership client, the State Auditor's Office said Wednesday.

The performance review also criticized the Northeast Partnership and its parent organization for giving more than $600,000 in bonuses and consulting fees without solid guidelines or knowing whether work was completed.

The state provided about $4.1 million to the partnership and the Northeastern North Carolina Regional Economic Development Commission for the three years ending last June 30. The groups, which also additional money from government and private sources, were created to improve the economic climate in 16 northeastern counties.

Rick Watson, the former executive director of the partnership, had been criticized by local officials since announcing in October that he would step down to work with Randy Parton, the brother of country singer Dolly Parton, to build a proposed $129 million entertainment project. The partnership helped bring the proposed project to Roanoke Rapids.

Watson left his post in March, but still will receive a year's salary as part of the terms of his original contract.

Watson had said he would not benefit financially from the Carolina Crossroads project while he was still receiving his $165,000 salary from the partnership. Watson had been offered an equity interest in the Parton project, he had said.

The partnership and commission received legal opinions about the matter from two law firms, but not the state Attorney General's Office, the review said.

The review from the office of Auditor Les Merritt said any reasonable person would view the relationship adversely.

Watson "has created a conflict of interest and has created a situation in which his decisions, however inconsequential, could be questioned as to their motivation," the review said, adding that the boards needed to more closely scrutinize their operations.

The auditor's review also questioned $572,000 in state money for bonuses over the three-year period to partnership employees, contractors and state Commerce Department workers. The review said there were no predetermined criteria to justify the payments. Watson received more than $200,000 in bonuses during that period.

The partnership and commission said it would create standards and not to pay out any award in the meantime.

Two unidentified contractors also had been paid $50,340 over the past three years but there was no documentation to show what work they had performed, the review said. One consultant has since provided documentation.

Meredith Norris, a former political aide to House Speaker Jim Black, D-Mecklenburg, has been under contract to do public relations work for the Northeast Partnership. Some commission members told The News & Observer of Raleigh recently they didn't know what Norris had done for the partnership.

Contracts show she has received $1,000 a month since March 1, 2004, as well as a $40 per hour fee. It was unclear how much she had collected in hourly fees.

Norris' work as a lobbyist and consultant while still working for Black have prompted a state investigation into possible lobbying law violations. A federal grand jury also has sought documents from organizations where Norris has worked.

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