Special Reports

Gray: Audit 'confirmed our worst fears'

The Urban County Council was right to request a state audit of expenses at Blue Grass Airport, state Auditor Crit Luallen told the council Wednesday.

Luallen said she "could not agree more strongly" that the independent audit was needed.

Luallen's comments appeared to be vindication for a council that disregarded Mayor Jim Newberry and members of the airport board, who opposed council involvement in the airport expense investigation.

At the time, Newberry asked the council to let the airport board address the issue before requesting an audit, although Newberry said he wasn't opposed to an audit.

Vice Mayor Jim Gray began the call for an audit just two days after articles about former executive director Michael A. Gobb's expenses ran in the Herald-Leader in November. The council officially passed a resolution asking for the audit in early December.

"The report confirmed our worst fears about the extent of the abuse and how deeply it had infected the culture," Gray said.

In addition to requesting the audit, the council asked former airport board chairman Bernard Lovely to end his term as chairman early. He declined the request.

On Wednesday, Newberry said the audit was "well done, thorough, quick and it identified a number of problems that need to be fixed."

He was pleased that the airport board has already adopted some of the recommendations from Luallen's report, Newberry said.

It's "disgusting" that inappropriate spending went on for so long, but with the number of people involved made the improprieties difficult to ferret out, Newberry said.

The 256-page report details more than $800,000 in expenses racked up seven airport executives over three years. More than $500,000 of those expenses were questionable, the audit found.

Council members said they will likely ask for a meeting with the airport board to further discuss the audit's findings.

During Wednesday's briefing, Luallen told the council that other public boards could learn from the incident by making sure they also comply with the more than 100 recommendations detailed in the audit.

Councilwoman Diane Lawless said she still has many questions about spending at the airport.

"Who knew what when and where there red flags?" Lawless said.

One "red flag" that disturbed her was news of a car accident involving Gobb in July that was never reported. The airport has a policy that all accidents be reported.

The board learned about the incident in August when Gobb was on medical leave, said Thomas Halbleib, the airport's attorney.

Councilman George Myers said he was concerned that the airport board didn't take action sooner.

"People sat on the board, they knew the Herald-Leader was doing an investigation, they didn't come to you or ask for an audit," Myers told Luallen.

While the board shares the blame for allowing a culture of "shameful" spending at the airport, there was more than one person trying to hide inappropriate expenses from it, Luallen said.

"There was complicity among the top management staff and once you have more than one person trying to cover something up and you have cooperation in that, then it's very difficult even under the best of controls for oversight to be conducted meaningfully," Luallen said.

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