Team Gearhart's spin gets a reverse spin in University of Arkansas financial coverup | Arkansas Blog

Team Gearhart's spin gets a reverse spin in University of Arkansas financial coverup

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A ROOMFUL OF EXCUSES; Team Gearhart in spin mode, with Schook and Pederson at left.
  • A ROOMFUL OF EXCUSES; Team Gearhart in spin mode, with Schook and Pederson at left.

A quick scan of the morning Arkansas Democrat-Gazette is most interesting. The tenor of coverage has changed substantially from Tuesday, when Chancellor David Gearhart, abetted by his lieutenant Donald Bobbitt in the UA System president's office, spun a story of ghastly, unknown mistakes by two isolated fall guys in the advancement division deficit spending debacle.

A hurryup news conference for reporters with only minutes to digest a complicated audit report — plus a new report previously kept secret by the University of Arkansas — naturally gave the floor to Team Gearhart's spin machine, a  roomful of highly paid administrators, including some in the middle of the now exposed dealings. They have every reason to tell a story that keeps them in their padded leather chairs, not in unemployed disgrace like former division chief Brad Choate and his former financial officer Joy Sharp.

Headline: "State audit report critical of UA financial officials." Yes, and those officials include Treasurer Jean Schook and Vice Chancellor for Finance Don Pederson, not to mention Gearhart.

The article highlights, as I did Wednesday, the failure of Pederson and Schook in an Oct. 25 meeting with auditors to disclose pertinent information about financial accounting problems. It mentions a dozen instances of shortcomings on their part. Choate, finally getting a chance to speak, cites a lack of institutional control across the university.

I wrote earlier this week that my sources inside the campus have been saying the same thing for weeks and months, particularly since John Diamond got fired as university spokesman and alleged a pattern of withholding information. Is there any clearer evidence that he was correct than this new audit?

The early release of the audit, at the encouragement of legislators, was a good thing. The digestion time should prime legislators for tough questioning today. Those who get the freebie football tickets would do well to show they haven't been bought by their fine seats and free parking at Reynolds Razorback Stadium.

As one of my sources pointed out, the hurryup PR offensive by Team Gearhart Tuesday meant, among other oversights, that reporters, including me, didn't ask at the news conference about some critical points in the audit. For example:

Oct. 19, Schook and Pederson had a report about big problems. Oct. 25, they met with state auditors. No mention was made to auditors of the  findings. This is critical to the case that the UA has intentionally attempted a coverup.

In October 2012, there was no general knowledge of a problem and, on campus, knowledge only among a tight circle of people. Then, in December, an Arkansas Business story blew up any hopes of a total coverup. It also raised the prospect  that legislative auditors might tumble to the problems that the UA didn't disclose. Since then, my source asks "What has the university released of its own free will?"

Answer: Nothing. It has stonewalled, resisted and even forced a lawsuit on FOI requests. Information has been released grudgingly.

Gearhart requested an audit because he had no choice. Who knows? Maybe John Diamond talked him into that and when things went from bad to worse, Gearhart suddenly thought better of the hang-out route. He tried to get out in front of the story Tuesday with the orchestrated spin campaign, conplete with YouTube video of his rehearsed we-did-no-wrong speech. We'll see if that effort was successful later this morning and if Team Gearhart can continue to peddle the story that only Choate and Sharp are responsible.

Lest you think I"m being too harsh, continue to the jump. Read a list of things Schook identified that were NOT passed along to auditors in the Oct. 25 meeting.

A previous version of this post incorrectly reported that the news conference happened on Monday.

· “serious financial management issues were present within the Division of Advancement.” 

· Deficits in both of the Division’s major funding accounts for “a total Advancement operating deficit of $4,340,920” as of June 30, 2012. That deficit was much larger than the university had previously advertised or disclosed until the legislative audit.

· A projected deficit for fiscal year 2013 of $3,593,042. 

· The duplicate payment to Choate of $2,051.87 for an Advancement staff event at the Fayetteville Country club for which payment was also made directly to the country club.

· Although stating “no evidence of intentional acts to misappropriate resources for personal gain have been discovered,” Schook added: “It should be noted that a review of accounting records specifically to identify misappropriated resources has not been performed and will likely be some time before staff resources are available to conduct such a review.”  How's this for a Schook translation: "We didn’t find anything, but then we haven’t really looked and won’t be able to do so any time soon."

· “In what appeared to be an intentional effort to disguise a prior year account sreceivable balance that had not been cleared, the Director (Sharp) deposited restricted funds (a gift for capital purposes) totaling $1.3 million dollars, in May 2012, into the same unrestricted general operating account with the delinquent account receivable balance.” And according to the report, “The misdirection of the funds occurred in spite of the purpose of the funds being clearly described on the face of the check.” 

About that Tyson money that went to cover a deficit account: Gearhart has said, seeming to be nice to Sharp, that maybe this was just a clerical error. My source finds this implausible. Gearhart had worked closely with Sharp for years.

Did she really just write down a wrong account number for $1.3 million?

How many accounts does the Advancement Division have?

How convenient that, of all those accounts, the money went into the one with a big deficit.





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