City auditor asks council member to retract comments

lblackford@herald-leader.comMay 28, 2010 

The director of Lexington's internal audit division has demanded that a city council member retract "potentially defamatory" comments that she made to him at a city council meeting.

Bruce Sahli sent a letter late Thursday to all city council members about a discussion they had Tuesday about the mayor's proposed budget. During that discussion, Sahli wrote, council member KC Crosbie "attacked my credibility and reputation and the credibility and reputation of the Internal Audit Board."

For the past few weeks, Crosbie has requested documents related to fraud allegations made by Patrick Johnston, director of the Division of Risk Management, in 2008 and 2009. The city has refused to release them, saying they belong to the external auditor. Johnston also has refused to make them public because he is worried about potential liability.

On Friday, Crosbie said she was surprised by the letter, but she plans to address his concerns at the Tuesday council meeting.

"We want to make sure all employees are treated fairly," she said.

In the letter, Sahli disputed Crosbie's assertion that he had never spoken with Johnston about his allegations.

In fact, he wrote, he and Johnston spoke a week before the city's external auditor, Mountjoy Chilton Medley, contacted him about allegations of fraud that Johnston made in a questionnaire that external auditors use to ask employees whether they know of any fraud.

In a Sept. 22, 2009, letter to Johnston, Sahli said he agreed with Mountjoy's auditors that "there is no credible evidence that a fraudulent act has occurred, is occurring and/or will occur."

On Thursday, a council committee declined to approve a reorganization plan that would have eliminated Johnston's job after a lengthy discussion about the fraud allegations. Council member George Myers, who is on the Internal Audit Board, which oversees Sahli's department, said board members had never heard about Johnston's allegations.

In his Thursday letter, Sahli requested that Crosbie "publicly retract these false statements in the next council work session as it would constitute the same public venue, and would therefore present the best opportunity for it to reach the same audience to which she made her false statements."

The dispute is sure to become political. Crosbie's husband, former city council member and attorney Scott Crosbie, has endorsed Vice-Mayor Jim Gray in the mayoral race. The chairman of the Internal Audit Board is DeWitt Hisle, the finance chairman for Mayor Jim Newberry's campaign.

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