5 at SHA fired for purchases of overpriced merchandise


Five employees of the State Highway Administration were fired yesterday for their roles in a procurement scandal in which the agency bought supplies for up to 28 times their retail cost.

Transportation Secretary Robert L. Flanagan said SHA Administrator Neil J. Pedersen acted one day after receiving information from the attorney general's office about the transactions with companies that charged exorbitant prices for common household goods.

"That information was sufficient to warrant a decision to terminate five of the employees," Flanagan said. He said a criminal investigation is continuing.

The five were among nine employees whose government-issued credit cards were taken away Wednesday. Flanagan said the SHA has not decided whether to take disciplinary action against the four other procurement officials.

Jack Cahalan, a Transportation Department spokesman, said the fired employees were "maintenance shop support staff" and not supervisors.

The SHA is one of three state agencies that came under the scrutiny of legislative auditors over $1.4 million in purchases of cleaning supplies and other merchandise at inflated prices from 17 companies.

Only one of those companies has been identified publicly - Stone Cold Chemicals. The firm, whose Web site lists offices in Florida and Georgia, sold more than $425,000 to the SHA in 1997-2003. It has come under investigation in at least four other states amid allegations of bribery and kickbacks.

Bob Sparks, a spokesman for Florida Attorney General Charlie Crist, said yesterday that the main defendant in the case, top Stone Cold executive Lloyd Glynn Barnard, pleaded guilty to racketeering, conspiracy and other charges in Daytona Beach last week.

Sparks said 16 of the 20 people indicted in the case - including Stone Cold employees and public officials - have pleaded guilty and received sentences from two years' probation to two years in jail. He said three, including Barnard, have pleaded guilty but have not been sentenced, and one is expected to enter a guilty plea soon.

Stone Cold employees - along with public officials they are alleged to have bribed - have also been indicted in Georgia. The company's activities are under investigation in Oregon, and a former Pennsylvania state official has been charged with taking kickbacks from the it.

Flanagan said yesterday that he could not identify the fired employees because of state personnel law and the criminal investigation. Neither could the department say specifically what prompted the firings.

Still bristling from criticism of the SHA's handling of the matter by state Democratic Party Chairman Terry Lierman, Flanagan defended Pedersen's decision to keep the employees on the payroll until he had the evidence against them in hand.

"Disciplinary action had to be based on the merits and not based on partisan criticism," Flanagan said. "When we got the evidence we acted immediately but we didn't overreact before we got the evidence."

Flanagan said it was not until Wednesday - one day after a legislative hearing at which Pedersen was criticized for not acting more quickly - that Florida law enforcement authorities gave the Maryland Attorney General's office the green light to share information about the investigation with the SHA.

Other investigations

The SHA, which also faces two other criminal investigations of possible procurement abuses, has announced a series of measures to tighten its purchasing practices. They include hiring a chief procurement officer, additional training and stricter rules on competitive bidding for small purchases.

"SHA is committed to reinforcing a culture of ethics and integrity," Pedersen said.

Meanwhile yesterday, two other Maryland agencies that did business with Stone Cold were looking into them.

Mark Vernarelli, a spokesman for the Department of Public Safety and Correctional Services, said procurement officials were still examining records of about $17,000 in credit card purchases from the company during 2003.

LaWanda Edwards, a spokeswoman for the Department of Juvenile Services, said an agency investigator had determined that there was nothing wrong with two purchases from Stone Cold last year totaling about $750.

Morgan, Springfield

At Tuesday's hearing, the auditors identified Morgan State University and the Springfield Hospital Center as the two other state government units where purchasing officials had paid unwarranted amounts for merchandise.

In a report completed in August, they detailed such examples as the SHA's purchase of cans of windshield de-icer for $26.99 and Morgan's purchase of the same product for $12.25 when it can be bought in local stores for 97 cents.

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