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Grand Forks Events Center Commission
Regular Monthly Meeting
June 23, 2010

Executive Session Transcript

Randy Newman – This is Randy Newman the chairman of the Grand Forks Events Center Commission at our regular meeting. We are going into executive session at 8:15. All Commission members except David Evenson are present also Saroj with the Grand Forks City treasurer and Brady Martz representatives are here for executive session. So, with that we will call the executive session in order and Joe anything from Brady Martz that you would like to alert the Commission of.

Joe Martin – Well I would guess that the underlying theme of really all of our findings if you are trying to find a common denominator it really stemmed from probably a management override of controls out here. That’s really where that unauthorized travel and lack of following the procurement policy which is kind of the finding that you see over and over again. The management that was here was really doing some things that really just signing off on their own credit cards and some of the procurement things without getting Wendy’s approval or City’s approval and that’s really what was causing a lot of it. So when Laura asked the question do we expand on the sample we did and we pulled all the credit card statements for the whole period and looked at everything to find out what was the magnitude and, you know, around $13,000 or a little over $13,000 was on things that going to some pretty fancy hotels out in Boston and Atlanta and different places and extravagant meals and things like that. VenuWorks reimbursed the Alerus Center for everything that we questioned; they just wrote a check. And then the extra time that we had to spend because we had to expand our sample they ended up paying for that plus more. It was $10,000 that they agreed to pay because of the extra work we had to do because of what we found.

Dwight Thompson - Do you feel like Wendy or Vione that they weren’t empowered enough to say more (inaudible).

Joe – Well, they didn’t feel empowered before. I think they knew it was wrong and we talked to them and they knew it was wrong they just felt trapped.

Randy Newman – I think with small businesses and you know Saroj you could probably speak to that I don’t want to put words in your mouth but you might, in fact you might want to discuss the relationship from your staff with the prior director at that time.

Saroj Jerath – Yeah. I know on occasion because Wendy and Wendy had some and Joe had said she wasn’t that much empowered to say anything. So indirectly she was hinting a little bit but she couldn’t say a lot. It was whatever Steve wanted then she did.

Laura Block – But as a governance body going forward do we have the right checks and balances.

Saroj Jerath – Now we do.

Laura Block - For instance our CEO’s travel is signed off by a board member just because I don’t think you should expect any direct report to really have that ability to say no.

Joe Martin - It’s too hard and that’s what we had recommended by keeping Rick Duquette or somebody in that position in a Senior position instead of the board.

Laura Block – How about a whistler blower hotline?

Saroj Jerath – In the City it is like that. Under the (inaudible) rules if put in any travel then it is signed by (inaudible) and if any employee (inaudible).

Joe Martin - But yet your question on a whistle blower hotline would be

Laura Block – Does the City have one that staff can (inaudible).

Joe Martin - I don’t think there is anything formal but you’re right. Wendy should feel that she could tell Saroj there is something going on. And then Saroj could do something about it.

Laura Block – Maybe even briefing the staff on what is fraud and why (inaudible). Maybe I shouldn’t use the term fraud but if you could talk about financial impropriety and conflict of interest and they would know where they should elevate their concerns.

Joe Martin - That’s a good idea; Rick could have some training and then (inaudible).

Saroj Jerath – There were some expenses also which we didn’t think it should have been in sole procurement and it was being done that way.

Randy Newman – Certainly as you can see from the report there were things that went on that none of us were aware of and there was some difficulty in Saroj and her staff in getting those receipts back to justify those expenses. When we found out about it which I think was in December or so, we had a meeting with Brady Martz, Curt and I attended and that’s when we did our job as a Commission we held those people accountable that were not in compliance with those policies.

Duane Hafner – The question I would ask is he came from an environment where he worked for a City with I assume a City that had similar rules that we have. Then he comes to VenuWorks. Somewhere along the line he must have gotten the idea that he could do this. So is there something missing in when a new director comes along and think he can bypass the rules.

Randy Newman – Are you talking about the prior director?

Duane Hafner – Right. Prior.

Randy Newman – And your question was what? Because he hadn’t been with a city for 20 years.

Duane Hafner – He’s been with a city prior to this.

Randy Newman – 20 years ago.

Laura Block – What my thought is Duane what I am concerned in going forward have we orientated Roger. Does he know what policies

Duane Hafner – Right, that’s exactly what I’m suggesting

Laura Block – And does the staff know where they’d go if something like this happens.

Randy Newman – Well, it’s greatly, greatly improved from what it was. Because clearly no denying the prior director felt that they could do what they wanted to do and you know we were able to as you can see again I applaud us from the standpoint that we asked Brady Martz to help us investigate when we found out about it. We made a change.

Dwight Thompson – Are you comfortable, Randy and others I guess, that VenuWorks didn’t know this was going on?

Randy Newman – No they did not know which concerns me, you know, to be quite honest with you that concerns me. So you know, we have another thing that we need to do is to review our relationship with VenuWorks and you know what we decided to do in light of a number of things, you know, we needed to replace leadership, we did. We needed to resolve the issue with VenuWorks contract or the fee, we did. We’ve got some other important operating issues regarding the event fund and everything. I mean we are trying to take things in a very orderly period of time because you know like my word I said, you know, Humpty Dumpty fell off the wall last year you guys. I mean right now you can’t just snap your fingers and make sure that all these things occur.

Laura Block – And I don’t think we should take any knee jerk reaction.

Randy Newman – No. No.

Laura Bock – They tried to do everything to make it right.

Randy Newman – Right.

Laura Block – I would just again raise my concern that going forward do we feel everyone is adequately. You talked about tradeouts. I worry about (inaudible) and could somebody be working with certain and getting some kickbacks and that’s very um. Do they know what their level of due diligence is and where they report it if they thought improprieties were going on. We probably should know that (inaudible).

Randy Newman – Anyway, any other questions of Brady Martz.

Dwight Thompson – This was very informative and useful.

Laura Block – Very.

Darrell Larson – We need to bear in mind that the tape is a public record once our reason for the executive session privacy ends.

(Inaudible) - Any idea?

Darrell Larson – We’re not certain.

Curt Kreun - Well this is the (inaudible) and understanding of our audit with our auditors in private conference that we’ve gone through and when we come out of Executive Session we’ll have to make a motion to accept the auditors review and recommendations for what this was about.

Laura Block – Should there be any commentary though on strengthening employee and staff understanding of policy, process

Curt Kreun – I think we would do that after we get out of executive session when we make a motion to accept this audit and report. Maybe you want to do that and indicate that just that if nothing else at least the ability is there to have strengthened policies and have the ability to do what your indicating. I would put that in a motion.

Randy Newman – When we look at internal controls one thing we could do is ask for a list of all Alerus Center policies and procedures and which of those fit with the City’s policies and which are unique to the Alerus Center and then are with VenuWorks and then simply ask and maybe have a little training session or understanding with staff and to make sure that everybody, do you understand the policy and are you, are you conforming to the policies that we have in place.

Laura Block - And so you are not aware if the City has any kind of a conflict of interest or a whistle blower or those type of policies.

Joe Martin - There’s conflict of interest policy but as far as a specific whistle blower hotline I don’t know if that exists.

Laura Block – That’s very common in the last decade.

Randy Newman – Do we need a motion to go out of the executive session. Darrell do you know?

Darrell Larson – I don’t recall.

Randy Newman – Curt do we need a motion to go out of executive session. I don’t think we do.

Curt Kreun – No, we don’t just that we are out of executive session.

Randy Newman – It is 8:26. We are out of executive session and we will go back into the regular meeting of the Alerus Center.

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