BILOXI — A draft federal audit questions spending of $30 million of federal money by the embattled Mississippi Department of Marine Resources and others.
The draft audit, sent to local and state officials in February questions spending not only by the department, but in Hancock and Harrison counties, reports the Sun Herald. Few issues arose in Jackson County, the third coastal county eligible for CIAP funding.
“These conditions allowed grant recipients to operate in an environment rife with conflicts of interest, with no assurance that many of the grants issued in Mississippi were used for intended purposes or benefitted the public in general,” the audit found.
The state received nearly $100 million in Coastal Impact Assistance Program grants from 2009 to 2012. The audit by the U.S. Interior Department’s inspector general sampled $39 million worth of spending.
The audit described “widespread conflicts of interest” involving land purchases DMR oversaw, deficient land appraisals, splitting of contracts that circumvented state bid laws, grant awards that failed to meet federal rules and improper charges to grants.
New director Jamie Miller, who replaced former DMR director Bill Walker, said the agency is working to correct problems. He also said the DMR disagrees with some of the findings, but he did not want to get into specifics.
The audit particularly questioned the transfer of a $7.8 million grant from the University of Mississippi to the Institute for Marine Mammal Studies at the same time that Walker’s wife, Sharon, changes employment from USM to the institute in 2010.
The news release announcing her new job at IMMS said she would “bring millions in grant funding and many marine programs to IMMS,” the audit said. The next day, the DMR submitted what the audit said was an “unusual request” to move a $7.8 million CIAP grant, the state’s largest, to IMMS from USM. DMR explained USM was “hesitant” to spend the money on reconstruction of a Biloxi aquarium Hurricane Katrina destroyed.
A USM official denied this when interviewed for the audit. “He also stated that USM gave up the almost $7.8 million grant after splitting up grants managed by the DMR executive director’s wife into those that were ‘the university’s’ and those that were ‘hers,'” the audit said.
Within months, the audit said, IMMS received an additional $3.3 million grant initially rejected in the state’s CIAP plan.
“I have never seen the DMR request to transfer my CIAP grant from USM to IMMS,” Sharon Walker said, “however, USM/GCRL (Gulf Coast Research Lab) wished to change the goals, objectives, and scope of work of my grant — to which I did not agree. This grant was competitively reviewed on the scope of work originally submitted.”
The audit criticizes the awards of that and other grants to friends and family of Bill Walker and Tina Shumate, who directed the coastal impact program for DMR. A total of $16 million in land purchases and projects had conflicts, including:
— The purchase of Jackson County property owned by Bill Walker’s son Scott Walker using federal money administered by the Land Trust for the Mississippi Coastal Plain.
— A $3.7 million purchase of an Ocean Springs marina and boat storage business that was allowed to operate for another 18 months. DMR must demolish the buildings to make the area green space, but can’t spend the federal money on demolition.
— The $195,000 purchase of property owned by Shumate’s parents in Pascagoula.
The audit finds seven grants totaling more than $8.7 million should have been rejected for having “little or no relevance to the preservation of coastal areas.” The audit deems $5.9 million already spent as “ineligible costs.”
The audit recommends specific policies and procedures the U.S. Fish and Wildlife Service and DMR should adopt to correct the problems. The final version of the audit is expected by fall and should include the DMR’s responses to the findings and intended actions. Fish and Wildlife requested the audit in 2012 when it assumed responsibility for CIAP.
Bill Walker would not talk about the audit.
Shumate’s attorney, Tim Holleman of Gulfport, disagreed with the conclusions. “In my opinion, she didn’t have a conflict,” he said. “We’re a small community.”