An investigation by the 1st Circuit Solicitor’s Office at South Carolina State centers around an internal audit questioning use of funds in the university’s finance department, Solicitor David Pascoe confirms.

A copy of the May 2007 audit obtained by The Times and Democrat questions the awarding of contracts to the daughter of Senior Vice President of Finance John Smalls and the use of funds by Smalls’ former assistant, who is not identified by name in the document.

“Because there is a pending investigation, the university will have no comment,” S.C. State spokeswoman Erica Prioleau said. When contacted, Smalls said he also would not comment until the investigation is complete.

Among findings, the audit states that the assistant used a state credit card to purchase $3,500 in clothes from a high-end retailer; several decorating contracts were given to Smalls’ daughter in violation of university policy; canteen funds were used to establish a $10,000 open purchase order at S.C. State’s faculty dining hall; and thousands of dollars were charged to state credit cards to purchase a variety of items for personal use.

The State Ethics Commission investigated in the wake of the audit, with Executive Director Herb Hayden then approaching 1st Circuit Solicitor David Pascoe with the findings.

“After initial review of their findings, I decided to take a closer look at it and make a decision,” Pascoe said last month.

Pascoe confirmed that the internal audit, completed last May by the university, brought about an investigation by his office.

The audit was conducted by former S.C. State Internal Audit Director Christine Glover, who now works for the state. Calls to her office and home were not immediately returned.

However, S.C. State Board Chairman Maurice Washington contends that not everything in the audit is accurate and that any inappropriate actions have been addressed. He declined to be more specific because he said the audit was presented to trustees in an executive session.

Interim President Dr. Leonard McIntyre also said a number of the issues in the audit were addressed, but he did not elaborate.

Washington deferred to former S.C. State President Dr. Andrew Hugine to comment on what actions were taken after the audit was presented.

Hugine said he could not comment at this time on any matter that occurred during his presidency. The audit indicated Hugine requested the review of the finance department.

Washington said the audit had no part in the board’s decision to oust Hugine last December. “Absolutely not,” he said.

n Use of credit cards

The audit states that during 2006, Smalls’ assistant made $5,503.81 in charges to a state credit card. The card is to “be used only for the purchase of supplies.”

The assistant used the card on two occasions to buy clothing at a Columbia-based Granger Owings, the audit states. Of those purchases, only once was a receipt given to the university. That receipt showed two suits and six monogrammed shirts totaling more than $2,000 were purchased.

Also charged to the card was the purchase of a $380.75 pen from Mont Blanc in Charlotte as a Christmas gift to Smalls, according to the audit. That purchase was then charged to the university’s canteen funds, but the audit states that several employees contributed to the purchase of the pen with their personal money.

Canteen funds are revenue taken in from athletic contests, the university’s bookstore and other student activities. The funds are not regulated by the state procurement code.

Smalls also had a credit card assigned to him. During a review period between January 2006 and February 2007, more than $31,000 was charged to that account, of which only $10,974.17 was for office supplies, the audit states.

Two purchases totaling $5,000 were made using that card at Wal-Mart. They were for gift cards ahead of the 2006 holiday season, according to the audit.

On Dec. 7, 2006, Smalls authorized the purchase of $2,877.50 in American Express gift checks, using canteen funds, the audit states.

In addition, nearly $5,000 was charged to the card for travel, which the audit states is expressly prohibited by policy.

Also, 12 different charges were made for snacks in Orangeburg, Barnwell, Denmark and Bamberg, totaling $879.92. Plus, $118.19 was spent on cologne at Belk department store, according to the audit.

Washington said purchases of a refrigerator and television with the card were appropriate, as both were for university use.

n Conflict of interest

The audit identified five circumstances from 2003 to 2006 in which $34,693 in decorating contracts were given to Georgia-based Perfect Creations and Design, owned by Smalls’ daughter. The contracts were authorized by either Smalls or a member of his staff.

The audit states that on four of the five contracts, no bids were taken or received and on three occasions canteen funds were used as payment.

The university’s ethics policy states than an employee cannot engage in any business transaction in which an employee’s family member can profit from that employee’s position with the university.

n Group travel card

According to the audit, Smalls’ assistant used a group travel card that was issued to him when he previously served in the athletics department at S.C. State. A chart in the audit “details glaringly questionable charges to the card totaling $5,376.”

The chart illustrates the card was used to buy meals at both Orangeburg and Columbia restaurants and to purchase $799.27 in gas and $127.19 in flowers.

A description of the card’s intended use said its purpose was to benefit students, but no written policy governed the use of it.

The audit concluded the card should be canceled and S.C. State should be reimbursed for all non-business-related activity.

n Well-traveled Durango

The audit found the use of a Dodge Durango, bought by the finance department, was “a clear violation of state policy” because it was being driven for holiday trips and personal weekend activities, and to attend football games.

A state gas card was assigned to the vehicle, the audit states. Nine instances of weekend gas purchases were discovered during a review period from August 2006 to March 2007, including the weekends of two football games.

During the Thanksgiving and Christmas holidays of 2006, gas was purchased five times. Three purchases were in Macon, Ga. The audit noted that Smalls’ assistant’s hometown is in Georgia.

Also noted in the audit was that two S.C. State employees saw Smalls’ assistant in possession of the Durango on Feb. 24, 2007, in Columbia, the same night he attended an event there.

n Free food?

The audit found that Smalls established a $10,000 open purchase order with Sodexho Dining Services, the company that provides food for the university’s dining halls.

“The Senior VP of Finance, his assistant, and other select members of his staff have been observed eating lunch on a regular basis using this purchase order as payment,” the audit states.

The purchase order was established using canteen funds. The audit recommended the S.C. State board adopt policies to govern use of these funds.

“That subject matter has been properly addressed and it is being followed,” Washington said.

n T&D Staff Writer Lee Tant can be reached at ltant@timesanddemocrat.com and 803-534-1060. Comment on this and other stories at www.TheTandD.com.

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