A newly unveiled audit of city bureaucrats’ tax-exempt credit cards faults Mayor Catherine Pugh’s office for making thousands of dollars in “questionable purchases” late last year, not following protocol for documenting transactions or submitting documentation and, in the case of one staffer, using the card for personal use.
It also faults other city agencies for inconsistently following administrative rules for city-issued credit cards, everything from paying sales tax (from which cardholders are exempt) to making non-permitted purchases and falling months behind on submitting paperwork for their expenses.
The city allows specific staff procurement cards, which are tax-exempt and include the employee’s embossed name. Thereafter, solely that cardholder must maintain an activity log of all purchases, and they or an administrator are required to keep a journal attributing all charges to specific agency accounts.
But that’s not happening in many cases, according to a report from city auditor Audrey Askew.
The audit, presented at this morning’s Board of Estimates meeting, covered the final three months of 2017 for Pugh’s office and raised questions about $5,274 in purchases. Included: $1,321 spent buying a homeless person household products and furniture—perhaps noble, but still considered personal property or gifts, which isn’t an allowed purchase; $513 spent on concessions for 12 members of the mayor’s Squeegee Core at an Orioles game; and $338 on lunches in the mayor’s office, many of them lacking receipts and all without documentation for why they were work-related.
It also found the mayor’s office had upped the limit on its card by $25,000—intended as an emergency change to help pay for coats for homeless individuals last fall—without written documentation or approval, and without meeting criteria for what constitutes an “emergency purchase” under the City Charter.
More broadly, the audit of mayoral staffers’ card usage found “no evidence to support that procurement card transactions were adequately reviewed and approved by appropriate Agency personnel.”
At Pugh’s weekly press briefing today, the city’s finance director, Henry Raymond, shared that the holder of the card was Kim Morton, the mayor’s former chief of staff. Erin Sher Smyth, the city’s designated procurement agent and chief purchasing officer, said there were two of the tax-exempt procurement cards in the mayor’s office at the time, but now there’s only one. Morton is now transitioning into a new role as deputy director of the city’s Department of Public Works, mayor’s office spokesman James Bentley said in an email Wednesday night.
For her part, Pugh said she was not privy to any of the non-permitted purchases, and apparently wasn’t even aware her office had tax-exempt credit cards. “As mayor, I didn’t know we had credit cards. Never used one, even when I travel. I don’t charge food… the only thing we charge is if it’s a flight or a hotel.”
Addressing the $25,000 credit limit bump suddenly made late last year, Raymond said it was within Smyth’s delegated authority to approve it. “The only reason this issue was a finding is that we did not document the process. We didn’t put a memo in the file to indicate on this particular date, we increased the card by x amount. Other than that, there was nothing inappropriate with that particular transaction.”
WBAL-TV’s Jayne Miller brought up the city’s ugly history with officials misusing funds, specifically former Mayor Sheila Dixon, who resigned after being found guilty of embezzlement after she was found to have stolen gift cards reserved for helping the poor. Asked if there’s a better or “firm process” for tasks like raising the credit limit on a card, Raymond replied, “the answer is yes. In this particular instance, the appropriate administrative policy was not adhered to.”
And as for the $338 in lunches without business documentation?
“The lunches are lunches that the chief of staff and other folks have had in the office, I’ve had lunches in the office as well,” Pugh said. “Again, my meals are always paid for, because I just don’t use credit cards to do that.”
Raymond acknowledged a “very small group of people” had been using Morton’s card regularly. He declined to share whether any disciplinary action had been taken, calling that a personnel issue.
The mayor’s office has taken a couple corrective steps, the audit notes, including now requiring staff to fill out a request form for procurement card purchases–apparently not in place before–and holding a workshop this past June to train staff on how to use the cards.
The audit, signed Aug. 30 by city auditor Audrey Askew, suggests broader problems with city agencies’ understanding of how to use the special credit cards, including paying sales tax when they’re not supposed to, failing to specify the business reasons for what appear to be personal purchases and neglecting to file statements or journal entries with the Bureau of Procurement for months as a time.
Retailers where employees made “unallowable purchases” or erroneously paid sales sax included Comcast, Best Buy, Rite Aid and Walmart; the audit cites a failure by the Department of Recreation and Parks to submit 22 statements in a two-month span, some of which were late by six months; a Department of General Services card was used to pay for two months of an Amazon Prime membership (recurring purchases are prohibited, the audit notes).
Smyth said today that are around 120 of the cards in use by city agencies. She defended the reasons that city employees are using the cards, overall, saying the issues lie more with “documentation and process.”
Those protocols that were audited last year were more labor-intensive, and are now being upgraded, she said. “We are improving that to make it easier for [agencies] to follow the procedures, but also easier for us to follow up behind them.”
This story has been updated.
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