BVU board discusses plans to address dozens of audit findings, create new policies

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BRISTOL, VA (WJHL)- Friday a major Tri-Cities utility discussed how to move forward after a state-mandated audit pointed out dozens of things it needs to change.

Bristol Virginia Utilities continues to be at the center of an ongoing federal corruption investigation that started in 2013. It has resulted in the conviction of nine top executives, contractors, and board members with BVU.  They are serving time on multiple  felony charges including falsified invoices, kickbacks, bribes, tax evasion, and fraud.

Because of this, state law required an overhaul of the board and an audit from the Virginia Auditor of Public Accounts.

That audit has revealed more than 50 recommended changes.

According to the audit,  the  former BVU  board  and  management  created  the  opportunity  for  fraud  by  not  developing or  enforcing  good  internal  controls.

To fix that the BVU board plans to put policies and procedures in place.

“Part of the process that you heard today is prioritize it, I mean we can’t do 57 things at once, but let’s prioritize it, and if we can bring somebody in to help us remediate these things quicker than we’re certainly open to it,” BVU Board Chairman Saul Hernandez said.

The board discussed the possibility of hiring an outside firm to help them fix the issues in the audit so employees can continue to manage day to day operations.

Some recommendations from the audit include putting policies in place for board approval of large financial transactions, travel expense limits, and management of economic development grants and awards.

CEO Don Bowman said the goal is to address many of these issues by June of 2017, but some may take up to two years.

One of the key issues the board talked about is overhauling BVU’s economic development program.

BVU’s contract with Tennessee Valley Authority allows spending up to $500,000 a year on economic development projects that will benefit the electric system.

But the audit reveals BVU did not always follow that guideline in the past or keep much record of what they did with that ratepayer money.

Past projects between the years of 2008 and 2015 include businesses that have since closed down, a website, and more than half a million dollars toward things for BVU like sports tickets, lobbyists, and even salaries, according to a presentation at the BVU board meeting.

Virginia Delegate Terry Kilgore said some of the things found in the audit were expected, but others, “Some of the ones that caught me by surprise, they didn’t really have a, a way that they vetted projects, a way that they made sure grant monies were spent properly and things of that nature,” Kilgore said.

Kilgore said he is pleased with what the new board is doing to correct past issues.

“We have to remember that we are a ratepayer funded organization so any dollars that we spend in the name of economic development have to benefit the ratepayers,” Hernandez said.

In the meeting Friday, the board discussed drafting a new policy for these projects, creating a formal application, and increasing transparency.

BVU is also in the middle of an internal audit, and Bowman said after the federal investigation is complete the IRS will come in and do a federal audit.

Copyright 2016 WJHL. All Rights Reserved.

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