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Review faults former mayor's office for unpaid Anchorage Centennial bills

  • Author: Devin Kelly
  • Updated: September 28, 2016
  • Published December 13, 2015

A recent review by Anchorage's internal auditor found nearly $100,000 in unpaid bills tied to the city's Centennial celebrations and not enough money to cover the costs, a discrepancy the auditor blamed on bad recordkeeping by the Centennial project and poor supervision by the administration of former Mayor Dan Sullivan.

In a Dec. 2 memo to Susanne Fleek-Green, chief of staff for Mayor Ethan Berkowitz, internal auditor Michael Chadwick said he found in a brief review that Centennial "contract administration was poor, municipal processes were often disregarded, and financial records were mismanaged." Chadwick also took to task Centennial coordinator Susan Duck -- though not by name -- for depositing public money into her private bank account without city controls, though he said there was no indication she kept any money for herself.

The review began in October after several vendors contacted the Berkowitz administration about unpaid invoices related to the city's Centennial. The celebration of Anchorage's 100-year history culminated in July and included a documentary film, a book, a website and dozens of community projects and events aimed at highlighting the city's past.

Berkowitz is asking the Anchorage Assembly for $69,000 to cover unpaid bills discovered in Chadwick's review, including train rides for second-graders on the Alaska Railroad in April, advertising with the Alaska Aces and a June solstice concert organized by the Anchorage Downtown Partnership. Assembly member and audit committee chair Bill Starr, meanwhile, said he plans to ask for a forensic audit into Centennial finances that would go into more detail than Chadwick's review.

The auditor's review refers to a pool of money managed directly by Sullivan's office, and not to a larger grant program administered by the Alaska Humanities Forum.

Sullivan and Duck both said in interviews they had counted on revenues from the book, movie and other merchandise to cover outstanding invoices. Duck also said that starting in April, with a new administration on the horizon, she became a private contractor for Centennial work. She used a private bank account for her business, Duck and Associates, to manage revenues and expenses. Duck said the setup was aimed at bridging the transition between outgoing Sullivan and incoming Berkowitz administrations. She said she wasn't trying circumvent city accounting procedures for public money.

In an email, Sullivan described the Centennial as a "unique, once-in-a-lifetime event" that involved various funding sources.

"It looks like the auditor was unaware of the unique policies and procedures developed for the Centennial Celebration by the Committee and reviewed and approved by me," Sullivan wrote, referring to the event's 16-member advisory committee. "Also, given that this was a huge undertaking with many transactions and events, having just one invoice in question and one check that went through account B instead of account A is amazing and a testament to the outstanding work that was performed."

The chair of the advisory committee, Jim Barnett, highlighted the Centennial's accomplishments in an interview. But Barnett and other committee members said the committee was not involved with the details of how the mayor's office managed its Centennial money.

Sullivan said Duck, a former director of Fur Rendezvous, was responsible for financial accounting and contract management when she was given the city job of Centennial coordinator before she officially left city employment in April and became a contractor with a similar role.

But Duck said she didn't know what happened to contracts after she sent them to the mayor for approval. She also said she has no formal accounting education, but that she relied on help from other employees while she worked for the city.

Private account used

Duck was hired by the mayor's office in 2012 as the city's Centennial coordinator. On April 15, at the request of Sullivan's office, Duck started work as a private contractor with city tourism bureau Visit Anchorage, according to bureau director Julie Saupe. A $48,500 grant from the mayor's office paid for the arrangement, which ended July 31.

With a new administration about to take office, Duck said she wanted to keep managing the Centennial but also look for other work. She said she used her private business account at that time to deposit Centennial revenues and record expenses, because she was still managing the event. She said because she was no longer a city employee, she did not have access to the city's accounting system.

Auditor Chadwick said the private account lacked transparency and, in effect, circumvented the city's appropriations process. In his review, Chadwick found that nearly $20,000 in revenue was improperly paid to a vendor, Alaska Destination Specialists, and the payment exceeded an approved purchase order. Chadwick said the city has been unable to get back the money. Calls by a reporter to the company's director, Char McClellan, were not returned.

Also, Chadwick said, unspent Centennial funds of $19,808 were deposited in the private account and did not appear in city records.

Duck said the mayor and others decided her private account seemed like the best way to handle the transition.

"There was no intentional wrongdoing by anybody," Duck said. "It was, 'How do we handle this moving forward with me leaving?'"

Duck said she has paid Centennial vendors what she could out of her private account. She said Thursday she has also returned Centennial retail items in her possession to the city.

Tracking Centennial money

In 2013, the Assembly approved $500,000 in city money for the Centennial. The money was given as a grant to the Alaska Humanities Forum. The Rasmuson Foundation matched the grant, bringing the budget up to about $1 million.

The money paid for a book, "From the Shores of Ship Creek: Stories of Alaska's First 100 Years" by author Charles Wohlforth, now a columnist with Alaska Dispatch News; the documentary film "Anchorage Is…"; and a website, as well as nearly 40 community projects, according to Barnett.

Chadwick said the Humanities Forum appropriately accounted for the money, referencing a June report delivered to the Assembly.

During city budget revisions in April 2014, the Assembly approved another $250,000 for the mayor's office to spend on the Centennial. Duck said the additional money, which was managed directly by the mayor's office rather than the Humanities Forum, was needed for Centennial promotions and community events.

City records provided by Chadwick show the mayor's office spent the entire $250,000; expenses included a Centennial Unity Gala, a red-carpet premiere for the documentary and various promotional materials. But there were additional expenses not recorded in city records, and were instead found in Duck's business account, according to Chadwick's review.

Those included $30,000 to the Alaska Railroad Corp. to take about 4,000 second-graders from downtown Anchorage south to Potter Marsh. The contract was signed between the railroad and the Anchorage School District, but the mayor's office offered to pay for the rides, according to Chadwick's review.

Another $15,000 was owed to the Anchorage Downtown Partnership for organizing a solstice concert in June. Chadwick's review said there was no formal contract, and instead, "good faith and a lot of handshakes sealed the deal."

Duck said she had expected Centennial revenues to cover those and other outstanding costs.

"The revenue stream from the book, film and print are all intended to pay the remaining bills from the Centennial," Duck wrote in an email to Berkowitz chief of staff Fleek-Green on Sept. 14. "If managed, the income will exceed the outstanding invoices."

Berkowitz administration officials say incoming revenues are not enough to cover the invoices.

City spokesman Myer Hutchinson said the city "lacks a funding source" to pay the other debts beyond $7,500 raised from sales. That's why the administration has requested the additional funds from the Assembly, he said.

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