Auditor General Eugene DePasquale says he’s going “to follow the facts where they are” with regard to whether “all $10 million was spent in accordance with the grant agreement” for the 2016 Democratic National Convention.
“No matter what the use of state funds – whether for schools, for a state agency operation, or for support of a major national event that generates economic benefits – the public has a right to know that those funds were spent appropriately and lawfully,” DePasquale said during a Thursday morning state Capitol press conference. “I have directed my team to conduct a thorough review of the grant agreement that provided $10 million in state funds to support the event.”
The Philadelphia Inquirer late last week reported the 2016 Democratic National Convention Host Committee, which received a $10 million state grant for the event, ended with a $4 million surplus of funding, of which at least $1 million was used to pay out bonuses and grants.
Those reports prompted Gov. Tom Wolf – who expressed his displeasure state taxpayers didn’t see any of that surplus – and state Senate Republican leaders to ask DePasquale to review how the host committee spent the money it received.
Regarding the planned audit, Senate GOP spokeswoman Jenn Kocher said it was “a step in the right direction,” but she said the Senate Republican Caucus continues to be concerned about “the spending of taxpayer dollars” for such an event and the expectation taxpayers are the first to pay for such things.
“We look forward to a full accounting of the spending,” said Kocher. “We would hope private dollars would be used first, ands taxpayers dollars are returned.”
“My guess is from the perception situation, if these were salaries paid for at the beginning, there would be less of an uproar than because they were bonuses,” said DePasquale. “But I also think part of that is related to the idea that there was $4 million left over and $10 million of state money went to the convention.
“I think if it were all private money, this wouldn’t be a news story; I think the $10 million from the state is what makes it a news story and makes it worthy of an independent review.”
DePasquale thanked former Gov. Ed Rendell, who served as chairman of the host committee, for reaching out to him and offering to be available to the Office of Auditor General during the review.
The host committee, in a Thursday morning statement from committee spokeswoman Anna Adams-Sarthou, indicated its willingness to work with DePasquale: “The Host Committee is ready and willing to help the Auditor General in this review, and we will provide his office with whatever documentation it needs. This morning, we sent a letter to the Auditor General’s Office stating that we have directed the firm that compiled the original audit of how the state funds were spent to be available for an inquiry from his office. We remain confident in our accounting and look forward to this additional review to clarify the matter.”
DePasquale said the review will start off with the question, “How critical was this $10 million to actually securing the convention?”
Saying he was basing most of his comments off of prior news reports, DePasquale noted “the fact that they had $4 million left over shows that, at a minimum, they would have only need six [million dollars].”
The audit will then look to see how the grant money was spent and if it was segregated from the privately-raised DNC funding, as the host committee has said it was.
“If the funds were commingled, our work gets significantly more challenging … because now it’s mixed with another $76 million of funding that may have gone to other items that weren’t part of the grant agreement – that means private money could have gone toward a public purpose and vice-versa,” said DePasquale. “It gets much more challenging.”
“If the funds were commingled, we’re going to ask to see everything,” he later added.
And if the audit ultimately determines grant money wasn’t spent appropriately according to the contract?
“Then we would have a recommendation for the state to try to recoup that funding – but that’s a big ‘if’ right now,” said DePasquale.
“I would rather the bonuses not happen, but if they were paid for in private money, there’s not much we could have done to stop it,” he said, although he acknowledged the potential for conflicts of interest to further color the situation.
“That’s why I don’t want to prejudge anything until we go through the review,” he explained.
There have been concerns raised about the $300,000 bonus received by host committee executive director Kevin Washo, who signed off on the state grant contract.
The state grant contract contains provisions regarding financial interest conflicts, and they will factor into the Office of Auditor General’s examination, said DePasQuale: “Anybody that’s part of the contract, that potentially violated the terms of the contract, that would be part of our independent review, whoever they are.”
“If someone is part of the execution of the contract, and there’s a provision in there that says no conflict, and we find through our independent review that they violated that provision, then we will outline that … it doesn’t matter who it is,” DePasquale explained.