DOT Watchdogs Taking a Nap?

March 25, 2015

Investigative Reports

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Sleeping DogsIn November, State Law Enforcement Division agents arrested Joe Edward Butler, then a state Department of Transportation worker, on two felony charges of selling traffic control equipment valued at over $10,000 on separate occasions last year in Richland County, records show.

One of the incidents was “audio and video recorded” by SLED agents; in the other, Butler “provided a verbal confession,” according to arrest warrants. In both cases, the warrants state, Butler did not have the “authority to sell the said item,” described each as a “traffic signal cabinet” that he allegedly sold to a “cooperating witness for $7,000 cash money.”

Less than two years earlier, Paul Townes, DOT’s chief internal auditor, said in a report – obtained this month by The Nerve under the S.C. Freedom of Information Act – to Clem Watson, then-chief engineer for operations, that the “security of the stock is also important.”

“This includes protecting items from being stolen to careful and deliberate record keeping of the placement of equipment,” Townes, a certified public accountant, wrote in his Feb. 26, 2013, report.

In the five-page report, Townes said he investigated allegations that signal poles were “stolen and other equipment was being ‘loaned’ but not returned out of the Florence shop,” and “alleged fraud involving signal controllers at the Charleston airport.”

His report also noted, among other things, an investigation of “two possible conflicts of interest” – one involving the wife of a recently departed employee who had a business that contracted with DOT, and the other involving software used by DOT and produced by a company where a spouse of a DOT employee worked.

But, as The Nerve reported in July 2013, Townes was stripped of his authority to conduct independent investigations of waste and fraud at the massive agency, which has about 4,300 employees and a current total budget of about $1.6 billion.

In a 2013 memo to DOT employees, Eddie Adams, then-chairman of the DOT Commission, announced the “role of fraud and waste investigations will no longer be an area of focus of the Office of the Chief Internal Auditor,” and that the agency’s fraud-hotline phone number and post office box would be discontinued.

The Nerve earlier this year asked DOT under the FOIA for all investigative reports by Townes for the past several years. Nothing was provided for 2014; when asked for an explanation, Janet Tucker, the agency’s FOIA officer, said in a written response Tuesday, “The documents submitted to you in response to your FOIA request were all of the documents I received from Paul Townes.”

The Feb. 26, 2013, report was the most-recent document from Townes provided to The Nerve. Adams’ memo to DOT employees – obtained in 2013 by The Nerve – was dated Jan. 7, 2013.

DOT spokesman Pete Poore did not respond Tuesday to written questions from The Nerve, including:

  • Whether DOT addressed any of Townes’ recommendations in his February 2013 report; and if so, what specific actions were taken;
  • How allegations of waste and fraud have been handled internally by DOT given that Townes’ investigative authority was stripped in 2013; and
  • Whether the alleged crimes that Butler is charged with might have been prevented if related issues raised in Townes’ 2013 report had been addressed then.

In his January 2013 memo to DOT employees, Adams instructed workers to report waste or fraud to the state Office of Inspector General. In a written response later that year to The Nerve, DOT lawyer Linda McDonald said the DOT Commission was “interested in focusing the OICA (Office of the Chief Internal Auditor) on audits of SCDOT processes, rather than investigations of fraud, waste and abuse.”

In a separate revised-policy directive from then-Transportation Secretary Robert St. Onge, any DOT employee who “suspects fraudulent or unethical activity is expected to notify the Office of State Inspector General immediately and should not attempt to personally conduct investigations or interview/interrogations related to any suspected fraudulent or unethical conduct.” The directive said the state inspector general will “coordinate all investigations of fraudulent or unethical conduct with SCDOT’s Legal Office,” which is under the control of the transportation secretary.

Under state law, DOT’s chief internal auditor reports to the eight-member DOT Commission, which determines policy for the agency and is appointed mainly by the General Assembly. The transportation secretary, who is appointed by the governor and oversees the daily operations of the agency, has no authority over the internal auditor.

Asked Tuesday by The Nerve how his agency handles DOT reports of waste or fraud, Inspector General Patrick Maley replied, “A lot of minor leadership personnel issues get turned over to them (DOT).”

Maley, a former longtime FBI agent, noted his agency, which has only six investigators including himself, is responsible for monitoring approximately 100 state agencies, boards and commissions.

Asked whether his agency has conducted any major investigations of DOT, Maley replied, “I have not done a significant audit of DOT.”

On March 4, state Sen. Lee Bright, R-Spartanburg, formally requested that the Legislative Audit Council – the General Assembly’s investigative arm – conduct a “comprehensive” audit of DOT. His letter requesting the audit was signed by 22 other lawmakers.

Last week, Sen. Larry Grooms, R-Berkeley and the Senate Transportation Committee chairman, introduced a bill (S. 561) that would, among other things, put DOT’s auditing functions under the inspector general’s control.

Meanwhile, Butler, 56, of Elgin, is free on a $10,000 personal recognizance bond – which means he didn’t have to put up any money – pending his trial, according to Richland County Circuit Court records. Contacted Tuesday night, Butler’s attorney, Greg Harris of Columbia, told The Nerve no trial date has been set, adding, “It’s going through the process that all cases go through.”

Poore did not respond to The Nerve’s question about whether Butler is still with the agency. Harris said his client is no longer employed by DOT.

“They parted ways some months ago,” Harris said.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.