State university system officials released a blistering audit report yesterday that blames Bowie State University President Nathanael Pollard Jr. for much of the misspending of nearly $182,000 in scholarship and campus activity money from the school's fund-raising organization.
In response to the report on the Bowie State University Foundation and recent articles about mismanagement at the Salisbury State University Foundation, the university system announced the formation of a special commission to review the oversight of all fund-raising organizations affiliated with Maryland's public universities.
The problems came to light after investigations by The Sun showed how foundation officials at Bowie and Salisbury had set up business contracts involving family members, made personal purchases with university credit cards and gave questionable deals to university employees.
The 22-page audit report revealed fresh details of Bowie State's misspending, criticizing the university's top fund-raiser for such personal expenses as $2,000 in local trips around town in an Enterprise Rent-A-Car, $116 for Kennedy Center tickets, $102 worth of pet-care products and $51.35 in silk clothing.
The report also questioned $29,726 in banquet, luncheon and other food expenses the foundation paid and an improper $2,910 pay raise for the foundation director -- all with restricted scholarship and campus activity money.
"We reviewed the audit of the BSU foundation and we report that there were many managementproblems there, lack of communication, a deficit approaching $182,000 in unrestricted funds," said former Gov. Harry R. Hughes, who is a member of the regents' audit committee. "There was a lack of checks and balances over the foundation's funds and they could not find any budget.
"They did not find any fraudulent activity, with the possible exception of the credit card being used for personal purposes and that's being investigated," Hughes said.
In their report, auditors blamed Pollard in part for these and other expenditures, stating that the president should have overseen the organization more closely to prevent misspending.
"We did not, however, find evidence that Dr. Pollard had routinely requested or received the relevant information he needed to assure himself that the foundation's finances were in good order and that the foundation was able to support the many demands placed upon it -- many of which came from his office," auditors stated.
"Based on the conversations we had with those who managed the foundation, there was a conviction that Dr. Pollard had ordered many of the unrestricted expenses. On the other hand, Dr. Pollard maintains that he did not order these expenses, but only requested them, expecting to be rebuffed if funds were unavailable."
Pollard would not comment on the audit, saying, "I think the report to the board today closes the issue on the foundations."
The Board of Regents is considering whether Pollard and others should be punished.
"It has been referred to the organization and compensation committee, which decides evaluations and pay for university presidents. It is up to them to determine responsibility and if any action will be taken" against Pollard, said John Lippincott, a spokesman for the university system.
Bowie's chief fund-raiser, Alvin Major, who made the personal purchases, left the university under pressure in April in the wake of the controversy. The audit report stated that the foundation has billed Major for the expenditures.
The report also criticizes the organization's treasurer, Henry Arrington, who signed checks for a lobbying contract with his son, Michael Arrington, a former state delegate.
The $12,000 contract was for Michael Arrington to represent Bowie State's interest in the state legislature during the 1997 General Assembly session.
But auditors found little evidence that Michael Arrington did any work to earn those payments, only attending one meeting. The )) foundation paid him, even though he was not an employee and did not have a contract, the auditors said.
Moreover, the foundation failed to report to the Internal Revenue Service that it was spending money on lobbying -- a violation of IRS tax law, according to the foundation's tax records.
The auditors warned that the lobbying contract "might jeopardize the foundation's nonprofit status."
The foundation board's chairman, Ira Moss, told auditors that Henry Arrington was a "patsy" for Pollard who would "sign anything" to approve any money Pollard wanted, according to audit records.
In return for this favor, Pollard allowed the payments to both Henry Arrington's son Michael and also hired Henry Arrington's wife as a university employee, according to the account Moss gave auditors.
Auditors also cited Henry Arrington in their report for having used Redskins tickets with the chairman of the foundation board. The foundation signed a $50,773 contract for five years' worth of Redskins season tickets.
The foundation used the first year of the tickets but didn't pay the bill. The Redskins waived the remaining four years of the contract, but are still demanding $12,890 for the used tickets.
"This purchase and other purchases have jeopardized the solvency of the foundation at a time that the university has launched a major fund-raising effort," John K. Martin, president of the University of Maryland Foundation, wrote in a letter to the Redskins on June 3.
The auditors are also seeking the whereabouts of $2,300 in furniture the foundation purchased for the offices of university fund-raisers but which appears to be missing.
That was part of $31,513 in furniture and art the foundation bought for university officials when the organization had already gone in debt.
Lance W. Billingsley, the regents' chairman, said he wants the commission that the university system set up yesterday to make recommendations about how to ensure that the foundations operate above reproach.
He has said in the past that he favors folding all of the university system's affiliated foundations into the larger University of Maryland Foundation.
The commission will consider that proposal as well as what role the regents and the university presidents should play in oversight and how much access the public should have to the foundations' records, Billingsley said.
Currently, the foundations are not subject to scrutiny by the state legislature or the state's public information law.
Billingsley said he plans to appoint members of the commission within the next two weeks and expects the commission to present its findings by Dec. 31.
"Shortly, thereafter, the regents will be acting on those recommendations," Billingsley said. "We will be responsive."
Excerpts from the audit
Here are excerpts from the audit of the Bowie State Foundation released yesterday by the University System of Maryland Board of Regents:
In our opinion, the fiscal affairs of the foundation were mismanaged due to lax control procedures and what appear to have been excessive pressures on the foundation to provide support to [Bowie State University] that was beyond the foundation's means. Moreover, foundation management ignored red flags that the independent auditors of the foundation had made, an which, if properly addressed, could have prevented the problems that developed over the last two fiscal years.
Lobbying Expense
A total of $12,000 was paid to a legislative consultant (Michael Arrington) who was contracted to help BSU achieve its legislative agenda. We found that little documentation existed to support the actual work that Mr. Arrington may have done for these fees. Michael Arrington is the son of Henry Arrington, who is the treasurer of the foundation and who signed the checks for these legislative consultant payments.
Relocating Advancement Office to Staff House Building
The Office of Institutional Advancement was relocated from the Henry Administration building to the Staff House Building. To facilitate this move, and to purchase furniture items for the Henry Administration building, a total of $31,513 was paid in fiscal year 1998 towards the purchase and finance of some furniture, artwork and equipment.
Redskins Tickets
This item does not appear on our schedule of expenses since payment has not yet been made. However, the foundation entered into a five-year contract with the Washington Redskins football team, in the amount of $50,773, for the rights to the purchase of four loge season tickets. The tickets were used last football season and the foundation owes the Redskins $12,890 as a result. However, the Redskins have since waived the remaining four years on the contract.
Cruise Expense
A $3,356 cruise was planned for major donors to solicit funds and also used as a form of appreciation for volunteers assisting with the president's gala. This event was poorly organized and the tickets were not obtained until the day before the cruise was to be held. As a result, some of the tickets were given to BSU students so that the tickets would not be wasted.
Support of Book Publication
The foundation spent $5,757 in unrestricted funds assisting a BSU faculty member to publish a novel entitled Colored Girl in the Ring. The foundation did not receive ownership of the book nor income from its sale. We also found another book publication project that was funded through a restricted operational account of the foundation that was entitled TriCentennial Celebration of Faith. This commemorative book documents the various houses of worship in Prince George's County. $1,150 in unrestricted funds was spent in support of this project.
Banquets, Luncheons and Food Expenses
In fiscal years 1997 and 1998 the foundation spent a total of $12,720 on banquet and luncheon functions hosted by other organizations. In addition, during this same period, the foundation paid the university's dining services contractor $17,006 for the catering of unspecified events. (The invoices and payment requests did not indicate the type of event for which the caterer was hired.)
Personal Expenses
Toward the completion of our audit, the foundation brought to our attention a variety of expenses that had been charged on foundation American Express Card used by Mr. Alvin Major, the former interim vice president for institutional advancement. The foundation has billed Mr. Major for $2,998 of these charges, which are considered to be personal in nature. The largest portion of these charges ($2,034) was for car rentals in the local area.
Pub Date: 8/29/98