Newberry says he won't stop auditors from releasing fraud allegations

Clears way for council to get papers

vhoneycutt@herald-leader.comJune 23, 2010 

Lexington Mayor Jim Newberry said he will not block the city's external auditors from fulfilling a request made Tuesday by an Urban County Council investigative committee for documents containing fraud allegations.

The committee has been seeking the documents, which are at the center of the committee's investigation and an ongoing audit by State Auditor Crit Luallen, from Mountjoy Chilton Medley since June 17. On Tuesday, members voted to give the auditing firm a deadline of 2 p.m. Friday to turn over the papers.

The records are part of an audit survey in which city employees were asked whether they knew of any possible fraud.

At issue is whether the records pointed out problems with the city's insurance procurement and whether they are related to the proposed elimination of Patrick Johnston's job as the city's director of risk management. Johnston made the allegations in 2008 and 2009; in both years, external and internal auditors found them to have no foundation.

Bruce Sahli, the city's director of internal audits, has denied a request by the committee to see the documents, saying they belong to the external auditor.

In a June 17 letter, council member George Myers, the chairman of the investigative committee, asked the firm to provide the documents the next day. In a June 18 letter shared with the committee Tuesday, firm officials asked for an extension until June 30, saying they were evaluating the request.

Instead of granting the June 30 extension, the council set the Friday deadline.

The company said in the letter that its professional code of ethics prohibits it from disclosing any confidential client information without the permission of its client, the Urban County Government.

Mountjoy Chilton Medley said it would ask Newberry for his consent to disclose the information. In response to questions from the Herald-Leader on Tuesday, Newberry said he would give consent.

"Mayor Newberry has always fully supported the release of the documents," spokeswoman Susan Straub said Tuesday. "The document belongs to Mountjoy, which has previously promised confidentiality to the government employees they interviewed in the course of conducting city audits," Straub said. "Mayor Newberry hopes that the document will soon be made public."

Councilman Julian Beard, a member of the investigative committee, said Newberry's decision to allow the external auditor to release the documents was "a good move."

"When people see extreme stonewalling, whether it be him (Newberry) or people who work for him, when they hear we aren't having any luck getting the documents, they can start saying, 'What are they trying to hide?'" Beard said.

The city previously denied a request by the Herald-Leader for the records under the state's Open Records Act. The newspaper is challenging that denial.

Last week, the council committee voted unanimously to subpoena the records if they were denied by the external auditor, but it hasn't taken that action yet.

Sahli's legal counsel, former Urban County law commissioner Terry Sellars, has said the investigative committee doesn't have subpoena power. Myers said in an interview Tuesday that the committee's attorney, retired Judge Roger Crittenden, disagrees with that assessment but wants to research the issue.

The investigative committee meets again on June 29.

Reach Valarie Honeycutt Spears at (859) 231-3409 or 1-800-950-6397, Ext. 3409.

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