- The Washington Times - Wednesday, December 15, 2004

ANNAPOLIS — The Ehrlich administration yesterday promised to address a legislative audit that found excessive spending by some state agencies.

“Obviously, the governor will not tolerate procurement abuse, as one of the main goals of state governance is tightening our fiscal belt,” administration spokeswoman Shareese N. DeLeaver said.

House Speaker Michael E. Busch, Anne Arundel Democrat, agreed and said he wants to see a full report.

“Obviously, it’s out of control,” Mr. Busch said. “There has got to be some adjustments made.”

Legislative auditors told the General Assembly’s Joint Audit Committee on Tuesday they had found widespread abuse in the state’s procurement system.

For example, state workers purchased 97-cent cans of de-icer for $26.99 a can, paid $5.59 for 71-cent C batteries and bought tubs of paper towels worth $14.32 for $129.50.

A state hot line started two years ago to encourage workers to report instances of fraud by their fellow workers was credited with spurring investigations into state spending practices.

Brian S. Losover, an assistant director of the Office of Legislative Audits, said two-thirds of the more than 400 calls to his office have been investigated.

Some of the probes have been joined by the FBI and the state Attorney General’s Office.

Mr. Losover supplied lawmakers with credit-card receipts for 43 items purchased by the State Highway Administration, Springfield Highway Center and Morgan State University costing the state from two to 28 times the price paid by auditors who bought them off the shelves at retail stores.

At least one highway administration management worker improperly reviewed a contract to a firm that employed the managers’ spouses, according to the report.

The unidentified officials did not report the potential conflict as required by state law, auditors said.

Some managers in the agency, according to the report, also had not filed financial disclosure statements for the past five years.

Transportation Secretary Robert L. Flanagan told The Washington Times yesterday his office now knows that many of the credit-card charges resulted from “a national conspiracy” to defraud the state by Georgia-based Stone Cold Chemical.

“These were criminals who operated in secret and were very skilled,” said Mr. Flanagan, vowing to have a letter outlining what has occurred on Mr. Busch’s desk within 10 days.

Mr. Flanagan said nearly every state has been affected by the company, which provides janitorial and other supplies used by state highway maintenance shops. Maryland did $434,000 in sales with the company from 1997 to September 2003, he said.

Representatives for Stone Cold Chemical could not be contacted because lines at the company’s Georgia and Florida offices were either disconnected or out of service.

Since taking office in 2003, Gov. Robert L. Ehrlich Jr., a Republican, has had to deal with numerous problems left by his predecessor Gov. Parris N. Glendening, a Democrat.

Shortly after being sworn in, the Ehrlich administration uncovered nearly $10 million worth of state-owned cars, refrigerators, vacuum cleaners, computers and other items that have been lost or stolen.

Administration officials said no audits had been conducted during the previous administration.

• This article is based in part on wire service reports.

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