Auditor: Agency that oversees courts is ‘disorganized and unchecked’

by Tom Loftus, Louisville Courier Journal –

Jeffersonville Mayor Mike Moore ordered John Schnatter’s name removed from the Nachand Fieldhouse after he used a racial slur.Sam Upshaw Jr., Louisville Courier Journal

This story will be updated.

FRANKFORT, Ky. — A new state audit describes the administrative arm of Kentucky’s court system as an agency that run amok with questionable spending and administrative practices and a “pervasive lack of accountability.”

A first ever outside audit of the Administrative Office of the Courts made 20 findings of problems within the agency – everything from odd “insider sales” of surplus property to employees of the branch including to justices of the court, the purchase of $410 in mint julep cups, to what an inadequately documented and apparently overpriced lease of office space for Justice Sam Wright with a company owned by Wright’s two sons.

“In a number of areas, our auditors found disorganized and unchecked leadership in AOC operations,” State Auditor Mike Harmon said at a news conference releasing the audit. “Essentially, AOC failed to follow many of its own policies and often simply didn’t have sufficient policies in place to provide transparency and oversight,” Harmon said.

Kentucky Chief Justice John Minton said in a statement released Thursday that the AOC requested the audit a year ago. “While we are careful to safeguard the Judicial Branch as a separate and co-equal branch of government, we also want to advance our efforts to be transparent and accountable to Kentucky taxpayers,” he said.

AOC Director Laurie Dudgeon thanked Harmon for the “thorough examination.” Dudgeon said many reforms have been adopted during the year while the audit was underway.

But Harmon complained at his news conference that the Minton and Dudgeon have rejected many key recommendations of his audit to enhance transparency.

Harmon said the AOC has refused his recommendations that the AOC undergo an annual audit, that the agency create an independent body to address ethics issues of its employees, and that the Supreme Court meet in open session when it convenes to make policy decisions.

Harmon said he found it ironic that when the justices decided last year to make AOC records subject to the Kentucky Open Records Act they did so at a closed meeting.

“While I appreciate both that AOC invited us in and embraced some of what my office has recommended, their dismissive attitude towards key recommendations regarding ethics and accountability quite frankly saddens me,” Harmon said. “No matter what branch of government, we owe it to the taxpayers of Kentucky to strive toward openness and transparency.”

Dudgeon said Supreme Court rules say the justices sit in open session for oral arguments and on some other occasions. But in her response to the audit she said, “There is no decision-making body in the Commonwealth similar to the Supreme Court, which must have discretion to conference confidentially about pending matters, administrative or otherwise.”

Findings of the audit include:

* AOC often did not follow its own policies in leasing office space. Among other problems, the audit found the agency leased office space for Justice Wright from a company by Wright’s sons even though it had a different offer from a property owner that cost one-third as much.

• The agency held employee-only sales and engaged in individual sales transactions from 2012 to 2017 against the advice given by its general counsel in 2010.

•  A former executive officer of the agency who oversaw those insider sales bought property at the sales including two surplus vehicles.

•  Two Supreme Court justices bought surplus furniture and a vehicle in private transactions with the agency.

• The vast majority of credit card expenses of Chief Justice John D. Minton Jr. and Dudgeon that auditors examined lacked any supporting documentation. Also, there was no pre-approval or subsequent review of credit card activity by anyone other than the cardholder, and no cardholder agreements were required for key officials issued a credit card.

•  The agency failed to properly report taxable personal benefits from take-home vehicles assigned to justices and other personnel.

• The AOC director instructed staff to buy personalized mint julep cups for members of the State Justice Institute board at the request of the chief justice’s wife.

“AOC failed to follow many of its own policies and often simply didn’t have sufficient policies in place to provide transparency and oversight,” Harmon said. “This resulted in a weak internal control structure and overall lack of accountability.”