Drainage district gets good marks on audit

The drainage district in Morgan City had a nearly perfect annual audit because of new procedures the board chairman says the district implemented in the aftermath of an investigative audit that discovered over $2.5 million in improperly spent funds.
LaPorte CPAs & Business Advisors performed St. Mary Parish Consolidated Gravity Drainage District 2’s audit for the fiscal year ended Sept. 30, 2015.
Auditors issued unmodified opinions, the most favorable opinions possible, on the district’s financial statements, according to the report released Monday on the state legislative auditor’s website. The district is responsible for drainage in the Morgan City area and operates nine pumping stations.
No material weaknesses or significant deficiencies were found in the district’s financial statements, the report said.
A May 2015 investigative state auditor’s report said former district Maintenance Supervisor Peter Businelle used his position to improperly direct $2,582,115 of public funds to himself while doing business as PAB Welding Service from January 2009 through November 2013.
Businelle also was accused of making payments to former Board Chairman Carl Kraemer totaling at least $42,833 from 2009 through February 2013 “but could not provide a verifiable explanation for the payments.”
On Jan. 4, a 16th Judicial District grand jury indicted Businelle on the charges of prohibited splitting of profits, fees and commissions, public payroll fraud and public contract fraud. A grand jury also indicted Kraemer the same day on the charge of prohibited splitting of profits, fees and commissions.
None of the current drainage board members were on the board when the alleged criminal activity took place.
Current Board Chairman Lee Dragna said the district implemented a system of “checks and balances” to prevent any improper activity from happening. For example, once an office manager does something, a board member will check the work, he said.
“Nothing gets paid without us all knowing about it,” Dragna said.
After the state auditor released its May 2015 investigative audit of the drainage district, board members asked the state auditor what the “exact protocol” they should follow to ensure the district operates legally, Dragna said.
The state auditor gave the new board a checklist of guidelines to follow, including hiring an outside accounting service and general counsel attorney and creating an operations manual and employee manual. The board has followed all of those recommendations, Dragna said.
District officials just want to do their jobs to the best of their abilities and “make sure the water gets pumped,” Dragna said.
The district had one finding in its audit for the year ended Sept. 30, 2015, in regard to a rule requiring the district to maintain compliance with the continuing disclosure requirements of the district’s bonds.
Dragna said that every five years, the district is supposed to update information relating to its bonds. The bond attorney who handled the bonds quit his firm so the new attorney accidentally overlooked performing the update.
Upon learning of the finding, the new attorney immediately did the update confirming that the bond money was used for its intended purpose, Dragna said.
The drainage district is also getting ready to embark on a major flood protection project in Morgan City.
Officials planned to hold a pre-construction meeting today for the first section of its Morgan City Levee Improvements Project, Dragna said.
The contractor should start construction on the portion of the project from Lakeside Subdivision to Siracusaville within 30 days. Dragna expects construction on that portion of the project to take probably three to four months.
The flood protection project is designed to get the Morgan City area in compliance with the 2008 FEMA flood maps.
Morgan City has yet to adopt those maps for flood insurance purposes because the maps found some of the city’s levee system to be deficient for 100-year flood protection.
Other parts of the Morgan City Levee Improvements Project include doing levee work from Lake End Park to Justa Street, moving a pump station to near Lake End Park and raising part of La. 70 in Morgan City to incorporate the highway into the levee system.