St. Gabriel audit report: Grace used city funds to buy retirement credit

The City of St. Gabriel paid $55,704 to purchase two years of retirement credits for former Mayor George L. Grace Sr. without the City Council's authorization, a newly released audit report for fiscal year 2011 says.

The amount included $26,735 in employee contributions and interest that Grace should have paid, the report said.

In its “management's” response to the report, the new city administration said the city would refer the matter – and one other – to the district attorney's office.

Grace, who was under indictment on federal charges including racketeering and extortion, lost his bid for re-election last spring. Currently, he is the third week of his trial in U. S. District Court in Baton Rouge on the federal charges.

The city also paid $17,645 in employer contributions and interest and a residual actuarial cost of $11,324 without City Council approval, the accounting firm of Postlethwaite & Netterville said in the audit just released by the Legislative Auditor's Office.

“The city has incurred unauthorized expenditures,” the report said. “The purchase authorization and approval of this expenditure was not properly approved by the City Council, nor was there evidence of a repayment plan by the mayor to the city.”

The accounting firm recommended legal action to obtain reimbursement for the employee portion.

“Management has reviewed this matter with the city legal council and will notify the local district attorney regarding this transaction,” the city responded.

The money was paid to purchase credits for Grace for the period he served as St. Gabriel's appointed mayor from January 1994 through December 1996. Grace was appointed mayor after the city's incorporation in 1994 and went on to serve four elected terms.

Postlethwaite & Netterville also recommended legal action to obtain reimbursement of funds paid to a former city manager.

St. Gabriel City Attorney L. Phillip Canova Jr. said he thought the report referred to former City Clerk Yolanda Andrews-Matteur.

“On July 1, 2011, the city manager was paid, in addition to her regular salary, $6,030 of vacation pay, $1,326.77 of comp time and $4,824.64 of severance pay,” according to the audit report. “It was noted that she had already been paid for vacation time in question in the Payroll Direct Deposit dated April 23, 2010 in the amount of $6,924.18.”

Additionally, the report said, there was no proper authorization or adequate documentation supporting the comp time or severance pay, and the city had not budgeted for the expenditures.

“Such expenditures should be adequately supported, properly approved and authorized by the mayor and/or city council as well as included in the city's budget,” the audit said.

“This payroll transaction was initiated prior to the new mayor taking office,” it continued. “There was a lack of oversight over payroll through this transition.”

Among other findings, Postlethwaite & Netterville also found that the city was unable to provide adequate evidence of compliance with public bid law when it purchased a generator for its community center and began a sidewalk enhancement project on La. 75.

The auditors noted three matters still unresolved from a 2009 advisory services report by the Legislative Auditor's Office, including a significant number of unpaid an delinquent sewer utility service receivables.

“Additionally, certain delinquent balances were reported as owed by some city employees,” the auditors said.

In their response, city officials said they have initiated a water service cut-off process with Iberville Parish Water District No. 2, but has not yet seen results, and also in involving legal council in resolving the issue.