Editorial: Museum audit finds no serious wrongdoing

If the only notable finding of an audit of the county museum foundation was an internal communication problem, the audit was a considerable waste of time, effort and money.

The audit is, we hope, the final chapter in a years-long dispute between York County officials and the foundation that previously supported the county’s public museums. The dispute centers on how the Culture and Heritage Foundation and its real estate development arm, the Sustainable Development Group, or SDG, spent money and managed land donated to the foundation in 1998 by Jane Spratt McColl.

The audit was the culmination of a lawsuit lodged by the county against the foundation in 2013. County officials claimed they wanted to protect money and land given to the foundation to support local museum programs. The lawsuit was settled last year, but only after the York County Council and the foundation board agreed to jointly pay for an audit of the foundation’s finances.

The long-running dispute centered primarily on 400 acres of land donated to the foundation in the 1990s. The foundation planned to use the land as both the site for a new York County museum and to generate revenue for the museum system by developing the bulk of the property located along the Catawba River near Sutton Road.

But the development deal fell through, and the land not designated for the museum site has been sold to a private company. The foundation has contributed more than $12.6 million to the public museum system, most of which came from proceeds from the land sales.

The Greer-Walker auditing firm, which issued its report late last month, reviewed thousands of transactions starting with 1998, the year the foundation was established.

The one issue raised by the audit report concerned the transfer of $800,000 from the foundation to SDG in 2007. Foundation trustees initially were told the money would help fund the design of the new museum, but instead it was used to help pay for a real estate project.

Auditors wrote: “It appears to us that a material fact was not communicated” and foundation trustees were not “overtly informed” about where the money would be used.

York County officials zeroed in on this portion of the audit report, issuing a statement that called the $800,000 transfer “evidence of fraud or wrongdoing.” York County Council Chairman Britt Blackwell said the results amounted to evidence the county was right to be skeptical of the foundation’s money management.

“This proves we did the right thing,” Blackwell said. “It shows our concerns were legitimate.”

But Bill Easley, the most recent chairman of the foundation board, challenged that. He noted that the only issue raised by auditors concerned “internal communication between (the foundation) and its subsidiary SDG.” He added that details about the transfer were shared with the board through meeting minutes and other communication.

The SDG essentially is the part of the foundation; they’re one and the same entity. It is highly implausible that the foundation covertly schemed to deceive its own board of trustees.

Fraud, as both the auditors and 16th Circuit Solicitor Kevin Brackett have stated, has a specific legal definition. And Brackett said his office has not received any evidence for a potential criminal investigation in this case.

Calling the transfer of the $800,000 evidence of fraud is reckless and ingenuous on the part of the county. If anything, the fact that this was the only thing auditors took issue with is evidence that the county was mistaken about the foundation’s mismanagement of the donated money.

At the time county officials demanded this audit, they had compiled a list of concerns, which they submitted to auditors late last year. But despite being public officials, answerable to constituents, they have steadfastly refused to make public that list of concerns.

It is apparent now that whatever those concerns were, they were largely, if not totally, unfounded.

Easley said the foundation spent at least $368,000 on legal fees associated with disputes with the county. That is money, he said, that could have been used to support local museum programs.

The county spent more than $140,000 of taxpayer money on the legal dispute. This was an expensive fishing expedition with almost nothing to show for it.

This story was originally published July 11, 2015 at 1:30 PM with the headline "Editorial: Museum audit finds no serious wrongdoing."