HARTFORD — In a grueling 8-hour session Wednesday, participants at the Transportation Committee’s hearing on the embattled Connecticut Port Authority revealed further details about the quasi-public agency’s financial and administrative woes. After testimony from three former authority officials, as well as the auditors of public accounts, the session culminated in a Lamont-directed plan to overhaul the troubled agency’s workings with an eye toward templating policies and procedures for quasi-publics across the state.
Since July, when Evan Matthews, the port authority’s former executive director, was placed on administrative leave, Bonnie Reemsnyder, then-chair of the board, was asked by Gov. Lamont to resign and Gerrie Lewis, former office manager, was fired by Matthews — followed in August by the resignation of former chair Scott Bates — the agency has been under intense scrutiny. The focus came from a May audit by the Auditors of Public Accounts, followed by a second audit on October 31, that revealed poor bookkeeping practices and what appeared to be lavish spending.
In his opening remarks, Rep. Roland Lemar, who co-chairs the Transportation Committee with Sen. Carlo Leone, said the forum’s purpose was not to uncover wrongdoing but rather to help the port authority operate to its fullest potential and achieve its goals.
“For anyone who is watching this, the Transportation Committee is not a criminal investigatory committee. That’s not the role that we play,” he said. “The purpose of having this hearing is to understand if there are shortcomings in either the construct or operations of the port authority that we need to address through a policy mechanism.”
Former port authority officials
First to testify were Matthews, Reemsnyder and Bates. None of the three attended the committee’s August 20 hearing. In total the three were questioned for more than four hours. Bates read an opening statement that spoke of the agency’s “small staff and budget, operating without a starter kit.”
Matthews’ testimony was consistent with his Nov. 22 interview with CT Examiner in which he explained he’d suffered a stroke on May 26, 2017 that left him with partial paralysis, affecting the port authority’s ability to function. He told the committee that he hadn’t had a chance respond to the auditors because he had been placed on leave and then removed from his position.
When Leone asked if the board had considered replacing Matthews due to illness, Bates answered that the board had voted unanimously to hire Matthews and decided to “stay the course” until Matthews could come back to work.
Reemsnyder did not make a formal statement, but said she served as chair of the port authority for 35 days, resigning on July 24 at Lamont’s request after the port authority’s purchase of sound-engineered photo panels from her daughter was reported in the press.
Lemar steered his questions to what lessons the port authority and the state could learn about quasi-public startups.
“When we launch quasi-publics, what is the structure we should provide them or the advice we should give them or the procedures we should require of them to ensure success?” he said. “Could you give me a sense of what would have been an ideal structure for you to fully succeed with, how could we have better positioned the port authority both at the outset and moving forward to ensure the success the type of success that we envisioned? Where were we deficient? This is your opportunity to say how this could have gone better.”
Having a chief financial officer or a state fiscal manager accountable to the port authority team, better staffing and a checklist of what to do would have helped, said Bates.
A template for policies and setting up a chart of accounts, said Reemsnyder.
Compared to the audit’s recommendations, counsel provided conflicting advice about what policies and procedures needed to put into place, Matthews said. “Moving forward, you should be very specific about the policies you want quasi-publics to adopt.”
Sen. Henri Martin questioned Bates about his August 8 resignation from port authority board.
Bates said he was appointed to the authority by Senate Majority Leader, Bob Duff, and was elected as chair during the first meeting and later re-elected but decided not to run for a third term.
“I remember having a conversation with my colleague Ms. Reemsnyder and I said I feel like I’ve finished what I wanted to do here. I have a teenager. I have a wife who has a demanding schedule and there are good people coming up behind, so I’d be happy to finish my service now, but I wanted to stay on during transition to her as chair,” he said. “Intervening events led to her not being chair, but there was new management and I thought they should have the opportunity to move forward with new people if they saw the need to do that.”
Martin asked if anyone asked Bates to resign from the board.
“They did not, it was a personal decision,” Bates said. “I could see around me that it was time for new leadership. I could see that my ability that I used to have may not be there and I didn’t want to be a distraction.”
Later in the hearing, when interviewing the members of the Lamont administration, Martin asked Paul Mounds, Chief Operating Officer of the Office of the Governor, whether anyone from the governor’s office had asked Bates to resign from the port authority.
Mounds said, “Short answer, yes.”
Martin asked when was that request made and Mounds answered, “August 7.” Martin asked who delivered that message and Mounds said, “Both the chief of staff of the office, Ryan Drajewicz, as well the governor spoke to Mr. Bates.”
Mounds said the conversation was about an article “that came out on August 6 from a publication and it dealt with the pictures and Mrs. Reemsnyder and conversations with her that led to August 8 when Mr. Bates submitted his letter to Senator Duff in which he resigned.”
Martin said, “So when Mr. Bates said earlier that no one asked him to resign, that wasn’t really a true statement.”
Mounds repeated that the Governor and chief of staff had had conversations with Bates about his standing at the Connecticut Port Authority.
In a 7 p.m. phone conversation with CT Examiner after the hearing, Bates said he told Duff of his decision to resign prior to any conversation with the Governor and his staff.
“[Duff] was my appointing authority, so he’s the only one who could appoint me and the only person that could actually remove me. I had a conversation with him where I said I intended to resign so that’s how that worked. The majority leader knew of my decision to resign,” Bates said. “I’m not contradicting or confirming anything else, I’m just saying that was the sequencing.”
Auditors of Public Accounts
Testifying after the former port authority members were state auditors Robert Kane and John Geragosian, along with staff auditor Tatsiana Sidarau and administrative auditor Vincent Filippa.
Rep. Laura Devlin asked the auditors whether the port authority’s deficiencies, outlined in the two audits, were typical of quasi-public agencies.
“You highlight, in terms of findings, a lack of statutorily-required policies and procedures, accounting system deficiencies, personnel policy deficiencies, poor records management, lack of policies and poor documentation for travel, meals and entertainment expenses, excessive legal costs, the selection of consultants, ethics policy conflict of interest provisions, lack of policies for credit card use, employees misclassified as consultants, and noncompliance with recording requirements,” she said. “My question to you… there are 14 other quasis, I believe the port authority is the newest, making it 15 — is this just a total outlier? Have you ever found anything like this in the other 14?”
Geragosian said it was an “unusual situation” as it related to fundamental controls in accounting and having policies in place to document transactions.
“The positive news, of course, all solvable. But, no, it wasn’t usual,” he said.
Sen. Henri Martin questioned a payment of $220,000 from Ørsted/Eversource to the port authority.
Sidarau said the amount was Ørsted/Eversource’s contribution toward the maintenance of State Pier, related to the future wind deal, and was agreed to in the Memo of Understanding (MOU) signed in May.
Lamont Administration’s plan
As of the end of July, the Office of Policy and Management has taken a “direct and active role” in the financial decisions and direction of the port authority, as directed by Gov. Lamont, said Melissa McCaw, secretary of the Office of Policy and Management, who testified with Paul Mounds, Chief Operating Officer of the Office of the Governor, and David Kooris, Acting Chair of the port authority.
In a PowerPoint presentation, McCaw laid out OPM’s plan, encapsulated in an MOU between the port authority and OPM, aimed at “targeting both immediate issues at the CPA while also pursuing longer term structural improvements.”
According to the presentation, in conjunction with Kooris, OPM has instituted fiscal monitoring, reviewing all payments and key contracts while ensuring proper documentation. OPM has also established interim policies on procurement, travel, entertainment, mileage and the use of legal services. The agency has worked to correct transparency issues and developed a corrective action plan related to the audit’s findings.
The presentation also addressed the port authority’s lack of policies and procedures required by the legislature regarding ethics, surplus funds, affirmative action and SHIPP (Small Harbor Improvements Projects Program) grants. According to the presentation, OPM was also focusing on correcting deficiencies in accounting systems, personnel policies and records management. All credit and debit cards have been cancelled and none will be issued until credit card use policies are adopted by the port authority board.
The port authority will also undergo an independent evaluation by Whittlesey, an accounting firm in Hartford, that will look at governance, organization, policies and procedures and technology, as well as management of outside legal services, procurement and grants.
McCaw said that OPM’s actions are intended to rebuild the port authority’s administrative structures so that it can survive, thrive and return taxpayer confidence in the agency.
Mounds said that the administration’s response is part of a broader effort to rethink all of the state’s quasi-public agencies.
“This is not just about looking at one quasi-public. What has come out of this, is all of the quasi-public entities meet with the governor on a monthly basis,” he said. “They’d never met in a room together at once to talk about best practices, to talk about these issues they’re working on.”
Mounds said the port authority’s issues put the spotlight on the problems of quasi-public agencies, spurring the state to look for solutions.
“As crazy as it sounds, some good has come out of this in terms of getting all our quasi-public entities together to work together and to provide resources,” he said.
The Connecticut Port Authority’s next meeting will be held at 10 a.m. on Dec. 6 at Fort Trumbull.