Director accused of openly threatening retaliation against ‘whistleblowers’

Last updated: August 07. 2013 9:18AM - 2488 Views
By Jack Latta



KYEM Director Brigadier General John W. Heltzel
KYEM Director Brigadier General John W. Heltzel
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FRANKFORT - Kentucky Auditor Adam Edelen released a scathing report this week, targeting Kentucky Emergency Management, noting $5.6 million in questionable expenses and what he termed a “total dereliction of duties.”


Edelen released the special examination of the Kentucky Emergency Management during a press conference on Tuesday. “The report paints a picture of agency leadership that does not believe the rules apply to it,” Edelen said. “The findings raise concerns about waste and abuse that may have gone undetected and jeopardize federal funding meant to prepare the Commonwealth for emergencies.”


The report specifically notes that employees of KYEM were intimidated and threatened, documents were altered to hide disallowed expenditures, taxpayer dollars were used to pay for alcohol, entertainment and door prizes at conferences, and procurement processes were ignored.


The auditor described a hostile workplace, where employees were being openly threatened against cooperating with his agency by Brigadier General John W. Heltzel, Director of Kentucky’s Division of Emergency Management.


Edelen says that current and former employees reported threats of retaliation and intimidation that not only created a hostile work environment but also discouraged staff from identifying waste, fraud and abuse. Several employees reported being afraid to communicate with auditors on their office phones, through email, or in person at their desks because they believed their phones and offices were bugged and their emails were being read.


The state’s whistleblower law prohibits employers from threatening retaliation against employees who cooperate with the Auditor of Public Accounts. “Threatening whistleblowers is a serious matter that shouldn’t be tolerated,” Edelen said.


When asked if the KYEM leadership had done anything criminal, Edelen said he did not wish to prejudice other investigations, but that his findings had been referred to the U.S. Office of Homeland Security, Kentucky Attorney General, and the Kentucky Executive Branch Ethics Commission.


Auditor Edelen launched the examination in March to address areas of concern and allegations identified during the agency’s recent annual financial statement audit. Between fiscal years 2007 and 2012, the Auditor’s office financial statement audits identified nearly $5.6 million in questionable expenditures by KYEM.


“Although KYEM has distinguished itself in response to a number of natural disasters, that does not excuse the lack of commitment to effective stewardship of taxpayer dollars,” Edelen said.


The examination by the auditor’s office also turned up altered documents which were created to conceal disallowed expenditures. Auditors found that invoices associated with expenditures at a conference were intentionally altered by KYEM employees and/or by the conference hotel at the request of KYEM to hide meal charges for employees that exceeded the state per diem limitation and alcohol charges.


The exam also found certain expenditures associated with conferences hosted by KYEM in 2010, 2011 and 2012 that did not appear reasonable, including $103,000 in taxpayer money spent on entertainment such as a riverboat cruise, after-hour receptions, meals, alcohol, door prizes and gifts. Edelen said the agency claims that those expenses were paid for through vendor fees. Under examination however, auditors found that money spent exceeded the fees paid by attendees and vendors.


In 2010, the report states that KYEM spent more than $6,000 for pre-conference planning, plus another $12,000 for meals for dozens of attendees who arrived early. Auditors also found $630 in valet parking charges and additional costs for rooms for employees who were not scheduled to work or speak at the event.


Edelen also noted that KYEM spent $113,000 from 2009 to 2013 to host working lunches at a Frankfort hotel. State agencies are not permitted to use public money for such meals.


“In a state that has had its share of horrible natural disasters in recent years, wasting tax dollars intended for emergency response is inexcusable,” Edelen said.


Director Heltzel is targeted several times in the report, which notes that he received perks from the conference hotel that potentially influenced the selection of the conference location and that auditors also found that he did not seek bids when procuring programming services from a software company with which he had a long-time relationship, did not follow state guidelines for using no-bid contracts and did not consult with the Commonwealth Office of Technology as required.


The KYEM director’s relationship with the software vendor gives the appearance of not being objective, and decisions to circumvent procurement requirements raise red flags. However auditors did not note any direct conflict of interest stemming from financial gain by the director.


“The atmosphere of intimidation perpetuated by the KYEM administration is alarming,” Auditor Edelen said. “It has led to waste and abuse at one of the most vital agencies in state government, one that citizens are wholly dependent upon to manage the emergency response to disasters like ice storms and tornadoes.”


Following the press conference, Gov. Steve Beshear released a statement, saying, “Kentucky taxpayers expect every state agency to operate in a transparent and accountable way, providing good stewardship of each taxpayer dollar while delivering needed services. In reviewing the Auditor’s report on Emergency Management, it is clear that in some cases, the agency failed to properly account for some of its activities and costs. I’m disappointed by those findings, and agree that the Auditor’s recommendations to improve transparency and accountability should be implemented quickly.”


Beshear did not specifically mention the accusations of creating a hostile working environment, intimidating whistleblowers, or financial misappropriation which were made against Heltzel.


The full report is available on the Auditor’s website, http://auditor.ky.gov.

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