August 23, 2011

Probe finds mismanagement, but no fraud at Maine Green Energy Alliance

By Tux Turkel tturkel@pressherald.com
Staff Writer

AUGUSTA -- The now-defunct Maine Green Energy Alliance had weak financial controls and informal practices that created a high risk of the misuse of federal funds, a government auditor has determined.

However, a three-month probe by the auditor found no fraud or inappropriate use of federal money, only appearances of wrongdoing attributed in part to a start-up organization that had poor oversight.

That's the final conclusion of the state's Office of Program Evaluation & Government Accountability, or OPEGA, which the Legislature asked to examine the spending, administration and accountability of the alliance. The office's director, Beth Ashcroft, presented its report Monday to the Legislature's Government Oversight Committee.

In the wake of the report, committee members want to explore how state or quasi-state agencies that administer grants can do a better job of making sure future grant recipients have the capacity and controls to handle public money.

"In this case, we were fortunate," Ashcroft told the committee, noting how poor oversight created the potential for fraud.

OPEGA also offered several recommendations to avoid similar problems going forward. The committee is expected to take them up at a public hearing and work session at 9 a.m. Sept. 6.

The committee also plans to look further into how a summary of OPEGA's draft findings came to be published earlier this month in The Portland Press Herald. Some Republican members of the committee want the attorney general to investigate the matter, but the panel agreed Monday to wait until after the upcoming hearing to make a final decision.

The nonpartisan accountability office looked into how the alliance spent roughly $500,000 of a $1.1 million federal grant meant to expand home energy audits and weatherization through community organizing and education.

The alliance was phased out last winter after falling far short of its goals. The remaining money was shifted to a successful rebate program that helped owners insulate their homes.

However, questions raised in media reports about the origins of the alliance, its spending and hiring practices and apparent links to the Maine Democratic Party led to legislative scrutiny and an investigation by OPEGA.

The office attributed some of the problems to the start-up nature of the alliance. It was critical of the alliance's board and of Efficiency Maine Trust, the quasi-state agency that oversees weatherization efforts and was administering the federal grant.

The Efficiency Maine Trust board was ineffective and not in compliance with state law, the office determined, and the organization didn't have sufficient oversight into the alliance's operations.

An accounting firm hired to review the alliance's spending found more than $272,000 in questionable costs, which led OPEGA to look more deeply into the matter. No instances of inappropriate uses or missing funds were found during a subsequent review.

Some Republicans on the committee said they remain frustrated about the lack of accountability and poor management of public funds. They continue to harbor suspicions that some Democratic candidates employed by the alliance may have been conducting campaign business on the job, a charge that OPEGA's review didn't substantiate.

In her presentation, Ashcroft walked the committee through a tangled, confusing history of how the alliance was formed in 2009, and how its focus changed after Efficiency Maine Trust -- itself a new agency -- won a $3 million federal stimulus grant.

She also outlined the shifting role of former Gov. John Baldacci's legal counsel, Thomas Federle, who helped start the alliance and later became a paid consultant and board member.

These and other factors led to questionable relationships, potential conflicts of interest and poorly documented spending decisions, she explained.

"During our review," Ashcroft summarized from the report, "it was also clear that federal grant funds had been disbursed to an organization that was not yet ready to administer, account for and make decisions about how to use those funds in a manner expected of entities that spend public funds."

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