Auditor Finds Misspending, Intimidation in Kentucky Agency

A state agency that oversees Kentucky’s response to weather disasters and other emergencies was slammed Tuesday by a team of auditors who found misuse of taxpayer money, intimidation of employees and an overtly hostile workplace.

Auditor Adam Edelen said Tuesday that Kentucky Emergency Management may have misspent millions in recent years, some of it on alcohol, entertainment and door prizes at conferences.

The findings, released at a Frankfort press conference, drew an immediate response from Gov. Steve Beshear, who called for improvements within the agency that he has worked closely with through 11 federally declared weather disasters over the past years.

“I fully expect Emergency Management to take corrective action promptly to make sure every dollar is used appropriately to help our citizens prepare for and recover from emergencies in our state,” Beshear said in a statement.

Edelen also said his staffers who conducted the review found documents had been altered to hide inappropriate expenditures by the agency, headed by retired Kentucky National Guard Brig. Gen. John Heltzel. Edelen said his team identified as much as $5.6 million in questionable spending.

“The report paints a picture of agency leadership that does not believe the rules apply to it,” Edelen said. “The findings raise concerns about waste and abuse that may have gone undetected and jeopardize federal funding meant to prepare the commonwealth for emergencies.”

Managers of the agency disputed the auditor’s findings, which are being turned over to the U.S. Office of Homeland Security, the Kentucky attorney general’s office and the Kentucky Executive Branch Ethics Commission. In a written response, the agency said taxpayer money has not been misused and that no employees have been intimidated, though they do work in an intense environment during natural disasters.

Edelen said current and former employees reported threats of retaliation and intimidation that produced a hostile work environment and discouraged them from identifying waste, fraud and abuse. He said the agency also has had significant employee turnover, which has affected the stability of its day-to-day operations.

Several employees reported being afraid to communicate with auditors on their office phones, through email, or in person at their desks because they believed their phones and offices were bugged and their emails were being read. Edelen said he found no evidence of that being true.

As auditors were wrapping up the exam, Edelen said some of the employees told the team that they were threatened with retaliation for talking with his staff, which, if true, would be a violation of the state’s whistle-blower law.

“The atmosphere of intimidation perpetuated by the KYEM administration is alarming,” Edelen said. “It has led to waste and abuse at one of the most vital agencies in state government, one that citizens are wholly dependent upon to manage the emergency response to disasters like ice storms and tornadoes.”

Edelen said his staffers found spending on conferences held in 2010, 2011 and 2012 that didn’t appear reasonable or necessary. At least $103,000 in taxpayer money was spent on entertainment, including a riverboat cruise, after-hours receptions, meals, alcohol, door prizes and gifts.

The agency spent $113,000 on lunches at a Frankfort hotel between 2009 and 2013. Auditors questioned the necessity of those expenditures and noted that many of the meals exceeded the state’s maximum per day allowance.

“In a state that has its share of horrible natural disasters in recent years, wasting tax dollars intended for emergency response is inexcusable,” Edelen said.