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State Audit Confirms Misspending At Nashville Electric

State Audit Confirms Misspending At Nashville Electric

CREATED Dec 13, 2012

By Phil Williams
Chief Investigative Reporter

NASHVILLE, Tenn. -- Nashville Electric Service purchased more than $17 million in cable under a no-bid contract, while an NES vice president used utility accounts to buy and sell items on eBay and Amazon, a new state audit concludes.

That audit also confirms a "questionable" deal between NES and Gaylord Entertainment that provided free tickets to utility executives as part of a contract between the two entities, as well as improper travel claims by NES executives and board members.

Those allegations were first uncovered by NewsChannel 5 Investigates, prompting the special audit by the Tennessee Comptroller's Office.  The Tennessee Bureau of Investigation also assisted in the review of the Metro-owned utility.

"The issues uncovered during our review are very serious, and I applaud NES officials for the corrective measures they have adopted in response to our findings," Comptroller Justin P. Wilson said in a news release.

Following release of the audit, Davidson County District Attorney General Torry Johnson announced that no one would be prosecuted as a result of what auditors uncovered.

"While some of the practices were questionable from a business perspective, none of that rose to the level of criminal activity," Johnson said in a statement.

In a late-morning news conference, NES President Decosta Jenkins downplayed the findings.

"We get audited constantly, and there's going to be findings," Jenkins said. "And when we have findings, we'll do just what we've done here. We are going to correct them and we'll move forward and get better."

Perhaps most damning was the discovery of how one company, Kerite, pulled strings to get some $17 million in NES contracts to supply power cables.

NES put the contract up for bids, but wrote out the specifications so that was the only company who could bid -- apparently because engineers liked the product.

Read the state audit

"The cable did work," Jenkins said. "Now we should have had it so that more than one bidder could bid it -- and that was a mistake on my part and the engineering department. But, again, did it do what it was supposed to do? Absolutely."

An NES field superintendent also did work for that same company on the side without disclosing it, telling auditors "it was no one's business what I do outside of NES."

The audit also criticized N-E-S for a deal with Gaylord.  It supplied free transformers for Opryland's Country Christmas. In exchange, Gaylord provided NES officials with free tickets, free room nights, even free golfing -- drawing the ire of one vocal ratepayer.

"If NES wants to buy some Rockette tickets and golf courses, let them pay Gaylord back," Ken Jakes said at the time. "What's this swapping back and forth?"

The audit calls that deal "questionable," adding: "We question the legitimacy of this type of contractual arrangement since there is no apparent economic benefit for NES ratepayers."

As NewsChannel 5 first revealed, the audit confirmed personal expenditures by NES executives and board members, including alcohol purchases and hotel charges by one board member for a getaway weekend.

The agency's chief financial officer even used an NES credit card to buy a baby gift for a board member.

"From time to time, people may make mistakes, and they may have some personal expenses charged to their credit card or whatever," Jenkins added. "All we ask is once that is discovered you pay it back, and that's what happened."

Jenkins said NES officials are already implementing most, if not all, of the reforms suggested by state auditors.

E-mail: pwilliams@newschannel5.com

Related Stories:
NES Officials Wine, Dine At Ratepayers' Expense
NC5 Uncovers More Questions About NES Spending
Occupy Protest Gets Attention of NES President
Council Members Request Audit of NES Spending
State Auditors Direct Review of NES Spending
NES Brass Reap Perks From Gaylord Deal
TBI Confirms Nashville Electric Service Investigation

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