# Committee of the Whole - February 24, 2009 > Auto-transcribed civic record · February 24, 2009 - **Permalink**: https://meetings.lexingtonky.news/meeting/789 - **Source video**: https://lfucg.granicus.com/player/clip/789?view_id=14&redirect=true - **Date**: 2009-02-24 - **Last revised**: July 17, 2026 - **Length**: 8,603 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Committee of the Whole of the Lexington-Fayette Urban County Council met on February 25, 2009, at 12:30 p.m. in the Government Center Council Chambers, 2nd Floor Conference Room, located at 200 E. Main St, Lexington, Kentucky. The Mayor presided over the meeting. The committee heard one informational agenda item regarding the State Auditor's Airport Audit Report. Nine members of the public provided comments during the meeting. No motions were voted on during this session. ## Attendance The following individuals were present at the meeting on February 24, 2009: * Rebecca P Langston * Crit Llewellyn * Brian Likens * Cindy James * Tiffany Welsh * Robert Owens * Tom Halbleib * Fred Testa * Eric Frankel * Council Member Martin * Council Member Ellinger * Council Member Beard * Council Member Feigl * Council Member Lawless * Council Member Stinnett * Council Member Myers No absences or late arrivals were recorded. ## Public Comment Council members raised multiple concerns regarding board oversight, audit scope, and accountability at the airport during this meeting. Council Member Martin [0:15:46] questioned who is responsible for advising airport board members that their internal procedures were inadequate, emphasizing the need for board training and stronger oversight mechanisms. He later returned to this theme [0:57:08], asking whether independent auditors should be required to review internal controls and whether boards should proactively request such reviews. Council Member Ellinger [0:19:31] inquired why the audit was limited to January 2006 to December 2008 and questioned whether prior records were lost or not reported to law enforcement. Council Member Beard [0:24:58] asked whether budget variances were reviewed by the board and whether specific changes were formally presented, noting that spending occurred without formal budget adjustments. Council Member James [0:27:43] sought clarity on board liability, asking whether board ignorance due to lack of information relieves members of legal responsibility and what civil or criminal accountability might apply. Council Member Feigl [0:32:52] expressed concern about whether the audit findings would affect the airport's ability to secure funding or complete projects in preparation for the 2010 World Games. Council Member Lawless [0:40:19] expressed concern about a culture of intimidation, citing an incident where a public safety chief was allegedly told not to report an accident, and questioned board awareness of such practices. Council Member Stinnett [0:52:48] asked who should have caught the misconduct at the airport and what responsibilities lie with boards, auditors, and oversight bodies. Council Member Myers [0:59:50] commented on receiving the report late and jokingly noted it would be good bedtime reading, indicating he had not yet reviewed it. ## Appointments The following appointments to Airport Management were made: * **Fred Testa** was appointed to Airport Management * **Eric Frankel** was appointed to Airport Management ## Contested Items The meeting featured two major areas of contention regarding financial management and governance failures at the airport. **Misuse of Airport Funds and Cover-ups** A heated discussion centered on findings from an audit that revealed systemic financial misconduct. The audit documented a culture of excessive spending, falsified records, and complicity among top management, including the former executive director and key staff. Multiple incidents were identified involving personal benefit to individuals, lack of proper documentation, and the suppression of reports—notably including the concealment of a vehicle accident. These findings raised serious concerns about accountability mechanisms and suggested that intimidation may have been used to prevent disclosure of misconduct. **Board Oversight Failure** The second major point of contention involved criticism of the board's governance role. The board faced scrutiny for maintaining inadequate policies, failing to provide necessary training to members, and not detecting or responding to red flags that should have prompted investigation. Despite the board's formal approval of budgets and salaries, members were found to be unaware of the widespread financial misconduct occurring within the organization. This gap between formal approval authority and actual knowledge raised questions about the board's legal and ethical responsibilities for oversight and fiduciary duty. ## State Auditor's Airport Audit Report State Auditor Crit Llewellyn presented a special audit of Lexington Bluegrass Airport covering the period from January 2006 through December 2008. [timestamp: 0:02:03] **Audit Findings** The audit revealed significant financial irregularities totaling over $500,000 in questionable expenditures. The report documented: * Lavish personal spending * Falsified records * Excessive salary increases **Recommendations** The audit included 22 findings and over 100 recommendations for improving airport operations and governance, focusing on: * Strengthened oversight mechanisms * Establishment of internal audit functions * Implementation of whistleblower policies * Rotating external auditors **Airport Board Response** The airport board's response was presented during the meeting, demonstrating commitment to implementing the recommended changes and addressing the audit's findings. **Key Participants** In addition to State Auditor Crit Llewellyn, the discussion involved Brian Likens, Cindy James, Tiffany Welsh, Robert Owens, Tom Halbleib, Fred Testa, and Eric Frankel. **Outcome** The presentation was informational in nature, providing the board and public with details of the audit results and the airport's planned response to the identified issues. --- ## Full transcript Thank you. Thank you. Thank you. We have an MPO meeting scheduled in here at 1.30 today, so it would be good for us to go ahead and get started. And let me welcome our State Auditor, Crit Llewellyn, who is here. and you're the first item of business, Madam Auditor, so we'll turn the podium over to you. Great. And for that matter, you're the only item of business today, so we're glad to have you. Thank you very much, Mayor and members of the Council. I appreciate the opportunity to be here today. I want to introduce a couple of the folks with me who are also resources on this issue because we want to be sure that not only we give you an opportunity today to have an overview of this work, but also make ourselves available to you going forward. Our staff have learned a great deal about the airport and its operations, and we want to be a resource to the council as you move forward. And these folks have great expertise. Brian Likens is the director of special examinations for our office, and he headed up the audit of the airport. Cindy James, to his right, is the assistant state auditor, the number two in my shop. And a CPA with years of government accounting experience, and Tiffany Welsh was Brian's right hand on the team that worked on the airport. So these three folks are a very valuable resource. Before I refer to the specifics of the report and how it's organized, I'd like to summarize our results with just some general comments to put it in context. The report that we are releasing today is a special audit of Lexington Bluegrass Airport that covers a three-year period, and that's from January 2006 to December 2008. The Council asked that we conduct this audit on December 4, 2008, and we have worked aggressively to complete our work as quickly as possible to address the questions that were asked. We gave about 12 auditors total to the project. We worked on site at the airport starting January 8th, and we were committed to doing this as quickly as possible because there were so many questions that have been raised publicly. We thought it was important to get those questions answered and to also begin to focus on the recommendations going forward to help the airport board and the council with future oversight issues. The audit found a pattern of shameful and excessive spending by management staff at the airport. that resulted in our auditors identifying more than half a million dollars in questionable expenditures over that three-year period. The audit documents how the former executive director established a culture of wasteful spending that provided personal benefits for him and others through inappropriate expenditures and arbitrary personnel actions. Led by that former executive director, that culture flourished as management circumvented airport policies, falsified spending records, received dramatic salary increases, and rang up tens of thousands of dollars on agency credit cards. In the audit, we make 22 findings, which are the conclusions our auditors reach, summarizing the most important points that they have found, 22 findings, and we offer over 100 recommendations to improve management of the financial activities and oversight by the Bluegrass Airport Board. My office has referred the audit to the Kentucky Attorney General's Office, the FBI, and the U.S. Attorney's Office for the Eastern District of Kentucky. Those law enforcement agencies will determine what further action is warranted. In finding the more than $500,000 in questionable costs, our team of auditors reviewed the financial activities of former executive director and his key management team, finding expenditures that were either excessive, had inadequate or no supporting documentation, or having no documented business purpose. We examined more than $766,000 in management spending by that group of individuals over the three-year period. We found $246,000 of that having inadequate documentation or no business purpose, and another $256,000 having no documentation, in other words, no receipts at all backing up the expenditure. The total amount we questioned was more than $500,000, or nearly 66% of the total expenditures that we reviewed. Questionable spending included lavish gifts, cigars, excessive travel, limousine service, expensive toys, personal clothing, concerts, sporting or special events, and numerous meals in the Lexington area for employees. Specific examples included more than $14,000 for holiday hams, more than $2,300 for four shotguns, a rifle, and accessories, over $1,900 for one limousine ride in New York City, $7,400 for a NASCAR Richard Petty driving experience for the staff, more than $4,000 at Hobby Town USA, and more than $4,700 for one overnight trip to Atlanta. The audit also uncovered a $168 charge to Club Venus, a Northern Kentucky Gentleman's Club, and a $700 purchase for champagne at Pure Las Vegas and Nevada Bar. The audit also notes a 2004 purchase totaling $4,400 at a Dallas strip club, which has already been reported in the media. When reviewing the former executive director specifically and his credit card expenditures, auditors found that 92 percent had no receipts whatsoever or supporting documentation that would detail the business purpose. Additionally, we found that management did not reimburse the airport for personal expenses. They claimed duplicate reimbursement payments. They received generous benefits for memberships, and they were given substantial salary increases. The former executive director, directors, and the manager of administration experienced substantial increases in their annual salaries over an eight-year period. And the executive director was responsible for approving all of the other directors' expenditures as well as their salary increases. The former executive director's salary increased 108 percent from 2000 to 2008, and others in that select group of employees who were involved in all of this enjoyed increases in their salaries ranging from 42 percent to 92 percent. And just as a point of reference, the CPI during that same time frame, the cost of living index was 29 percent. Auditors found that a number of expenses were labeled marketing or special events, but the airport had no documented or approved marketing plan to confirm that those expenses were legitimately tied to marketing goals and objectives. Also the airport's administration travel and training budget, which is where most of these expenditures were made from in the budget, significantly exceeded budgeted amounts for all three years. Even though the budget actually was increased each year, their expenses were significantly beyond what was the budgeted amount. The audit makes strong recommendations to the Board to improve oversight of credit card purchases and other expenditures, to review all airport salaries, benefits and related policies, and establish guidelines and criteria for those areas. The report also details several ways to increase reporting to the Board, including the addition of an internal audit function. Also, we recommend rotating outside auditors, which has been mentioned here. We recommend that that outside auditor also add additional steps to sample and test internal controls. That has not been done in the past. We recommend a strong whistleblower policy so that employees feel free to come forward and know exactly what that avenue is for them to come forward with information or concerns about abuse. The Airport Board had established certain policies to govern the financial activities of its employees. In many instances, these policies were circumvented, and in other cases, the policies were inadequate and not strong enough. The Board had not established an adequate reporting process to receive sufficient information, to be fully aware of these issues, and to provide proper oversight of management's financial activities. With the release of this audit, we are confirming and quantifying in detail early reports of excessive spending by the airport's former executive director and his management team that did not properly serve the mission of the airport. And with our recommendations, we are giving the airport board the necessary tools to strengthen its oversight and restore accountability. I want to acknowledge the cooperation of the airport board during this audit process, both the former chairman, Bernie Lovely, and the current chairman, Robert Owens. I also want to acknowledge their response, which is included in the audit as part of the audit in the back. We have statutory language, just as for your background, that requires us to allow the audited agency to see a draft audit in advance and to prepare a response to that audit, which is included in the final document. So the Airport Board's response is part of the final official audit. This response from the Airport Board is a serious and thoughtful response to every recommendation that we've made, and it makes clear the Board's commitment to move forward with the recommended improvements. We are confident from the Auditor's Office that if our recommendations are implemented, the Airport will be headed in the right direction of restoring trust and accountability to this important community resource. Before I open for questions, I'll just briefly talk about how this report is organized, because it is a very detailed, long, and technical report. I don't know that our staff has ever put together quite such a complex report in such a short period of time, but they have done an outstanding job, I think, of organizing this information in a way that can give you the best context as you review it as public officials. If you look inside the report four pages, there is an executive summary that is five pages long and gives you a good overview of the entire report and helps to bring to the forefront all of the findings of the report as well as the primary recommendations. Chapter one of the report is background primarily about the airport, its structure, its organization, its funding. Chapter 2, which begins on page 11, is where we actually begin the analysis of credit card and direct payment transactions of the individual members of the management team. And that's where we go through individual by individual and begin with a summary analysis of those transactions and how many of them were lacking adequate documentation, how many of them had no documentation. and then we show a table that gives more examples of the types of questionable spending for that individual. Later in the appendix of the report, we have all of the questionable expenditures for each individual. These are just highlighted in Chapter 2 to give you a quick overview of the types of expenditures that we were questioning throughout these individual reports. Chapter 3 focuses on an airport survey that we did of other airports, asking questions about issues ranging from salaries to vehicle policies to internal audit function. And we give you some context there to look at how some of those compare with the Bluegrass Airport. Chapter 4 begins on page 39, and that's where we begin to go into detail of all of the findings and all of the recommendations. So this is really the core of the audit that gives you exactly the summary of not only what happened, but what we recommend can be done going forward to strengthen the controls, strengthen the oversight to prevent this situation from occurring again. As I mentioned, there is an appendix behind that of all of our detailed data that backs up the summaries in the front, and then the airport's response follows that, and then some appendices that the airport response exhibits that they included following their response. Another just general comment I'd like to make, and we're glad to take any questions. This has been an experience, I think, that should serve as a learning tool for any public board. I hope this controversy does not have a chilling effect on individuals' willingness to serve on public boards, because I know people are concerned when they see a controversy of this magnitude, is the board I'm serving on taking the right steps? Do we have the proper controls? And I've heard that from a lot of people just in the community as we've worked on this. And it's our hope that the good work that has gone into the recommendations here can be used as a tool for any public board or anyone who's considering serving on a public board to check against their current policies and be sure they have the right kinds of controls in place. So I hope this can be seen as a positive case study that can be used in the public arena as people are considering serving on boards or boards are reviewing their own internal structures and controls as they hear about these concerns. So with that, Mayor, I'd be glad to open it up for any questions or discussion. Sure, and I want to express welcome to the members of your staff who are here with you today as well. We thank you for your efforts. Any questions for Ms. Llewellyn? Council Member Martin. Thank you, Mayor. One thing I'm wondering is that who is responsible for advising the airport board that their internal procedures were inadequate? We've got lots of agencies who don't have the benefit of the State Auditor's Office coming in and reviewing things and giving recommendations. What do these other agencies do to bring themselves into compliance, and who is advising them about whether or not their procedures are in compliance? Well, one of our recommendations is that in the case of this particular board, They need board training for every new member who's appointed to that board. It was clear to us in going back and staff conducting interviews with prior chairs of the board, we interviewed every chair since Mike Gobb has been at the airport, to get some sense of how they had dealt with these issues and whether they had had concerns. And what we found was there was a broad disparity between what people really understood their role to be as board chair. So one of our strong recommendations is that there be board training and orientation, that it be conducted by counsel to the board so that they're getting the legal perspective of what the board's authority is, what the expectations are of that board, and what its responsibilities are. I think one of the key questions that grows out of this kind of controversy is what is the board's role and what culpability is there in this kind of situation on the part of the board. You know, in this particular situation, it's clear there should have been more adequate oversight, But there was also a situation where we had more than one person who was working purposefully to take advantage of the trust that had been placed in him. So there was complicity among the top management staff. And once you have more than one person who's trying to cover something up and you have cooperation in that, then it's very difficult, even under the best of controls, for oversight to be conducted meaningfully. So this was a situation where there was not only one person, there were a total of five people who were involved in receiving the benefits from this culture of excessive spending and receiving the benefits from these arbitrary payments, salary increases as well as payouts for vacation and bonuses. Once all of that began to develop as a culture, even the best of oversight policies would have been difficult to break that up because they were basically supporting each other's position and controlling the information that went to the board. Having said that, we find that the board needs stronger training and orientation when they begin, and they need to have the strongest possible policies and controls in place to be sure that someone is watching every step of this. There was no clear policy, for example, in writing about how the executive director's expenses were supposed to be approved. As a matter of practice, the chairman approved them, but he only did that sporadically because the executive director only presented them sporadically. And he presented them for approval even without the chair's signature, and he told his CFO to approve them. So it was a situation where without stronger controls in place and a group of people who were all complicit in the excessive spending patterns, It was very hard to, the board wasn't getting the information to understand and know that this was happening. Mayor. Council Member Ellinger. Thank you Mayor. Thank you Mayor. Thank you Ms. Llewellyn for coming here. I've got a few questions. Initially I can't remember what we asked you to do but we only went back to, or you only went back to January of 06. Can you explain why that was? I think you couldn't quite find all the records before that, but I don't know if we set a time, or is that just where you could get the actual information? We actually established that time frame, and it's a three-year time frame. It's from December of 2006 to January of 2008 because we were trying to define a scope that we could get done quickly and efficiently, and it seemed to us most of the questions that had been raised had been raised about this last two or three years. As we got into the process, we also agreed going in that if there were other allegations brought up that needed pursuing prior to that, we would also try to track those down. When we got into this process and began to look for some records from previous years, one of our findings points out that there are records missing from the years 2002 through 2005, and that the airport finance office staff actually identified those missing records in 05 and inventoried what was missing, but it was never reported to law enforcement. And that's one of our findings is that there has to be a very strong policy on that when records are gone. So we were not able. We had questions that had been raised about those prior years, specific expenditures, and we were not able to find those records or to pursue those questions. Another issue, and you kind of touched on it, there's an annual audit that's done, and I think they've paid quite a bit of money to do that. Should these findings been found in that review, or is this something that would have been outside their scope? It's surprising to our auditors that the outside audit firm did not see red flags. It's my understanding that they were focused on the overview of the financial statements of the airport. That's why we recommend in our audit recommendations that they not only rotate auditors, but they add a sample of internal controls, that that auditor be asked each year to look at some of these controls in place, which would lead them to testing some of these credit card expenditures and finding that the receipts were missing. Apparently that was not being done as part of the normal audit process. And then I'll ask this, and I'm sure there will be other questions that I might come back after this, but a final one. You talked about the board. Do you have confidence in the board out there now? And was there lack of paying attention, or was it because it was more of a commission or omission that happened because they weren't getting the right information? Or, I guess, do you feel confident that the board can go forward and do their job now that this is done? Well, in a situation of this magnitude, there's plenty of blame to go around. all the way up and down. But as I mentioned, when you have individuals who don't have the ethical standards guiding their decision making, who are trying to take advantage of a situation and they're working together, it is very difficult for oversight to capture exactly what's going on because it's being covered up. But so I believe you had a situation with a problem with staff who created the problem. I believe the board did not have strong enough controls in place, nor did they have an adequate enough reporting process to really get the right information to see the red flags coming to them independently. Going forward, I believe their response and the tone of their response and the fact that they have reached to an outside consulting firm and have specific recommendations from them in addition to our recommendations and their response in this audit commits to going forward with the implementation of these recommendations, I think they are committed, based on everything they have communicated with us, to straightening this out going forward. Because I think it's important that we get the trust back with the public, and you think that we will be able to garner that trust back as we go forward here? I think if these recommendations are implemented aggressively and completely, that can be the case. I have offered the support of our staff as resources as the board moves forward. We've gained a lot of insight about the weaknesses in the structure there and the operations, and I think we can be a good resource to them as they make these final decisions about how to implement the recommendations. You asked, and you kind of raised another question. What then, as we go forward, will be your all's input that goes into this to make sure that the recommendations are moved forward and that we do get the trust back with the public in this situation? Well, specifically, we have requested a report from the board within 60 days to give us an update on the implementation of the recommendations. We have also offered that we will sit down with their new audit firm when that is selected for the next annual audit and share our insights with that auditing firm about exactly what they need to add to the audit process based on our experience. And we'll be following up and monitoring this situation because of the time and resources we have spent on this and our desire to see the recommendations enacted. We'll be monitoring it going forward after that. Thank you for your help and for the staff's help, too. Thank you. Other questions? Mr. Beard, Council Member Beard. Again, thank you for you and your staff for doing this and doing it so promptly. Obviously, we've been on tender hooks waiting for the results. There were some budget variances that were astronomical, in my opinion. Were those reviewed by the board, to your knowledge? Dr. Karen W. Brian, were the specific changes to the budget presented to the Board? What Brian is saying is he believes it was more of an overview to the Board on a monthly basis. There were updates on the budget presented, but I don't think it was presented as a specific change to the budget. They were spending it as they went. In other words, it was monthly reporting rather than trying to adjust the budget formally. In a quasi-governmental entity like they are, are there not statutes that require records retention as opposed to a board policy? Is there not something that the legislature has put in place? Yes, there are standards for records retention. As you know, both state and federal dollars involved at the airport. So there are standards at the federal level as well. And my last question involved engagement letters with the accounting firm. Who were they directed to and who signed off on the engagements? Is that the directors? I'm not sure we know the answer to that. Maybe someone here from the airport board We're not sure I reviewed the reports and they're three or four pages long and not a lot of detail as you pointed out and that's probably the way it was presented in the engagement letter to begin with and that in and of itself depending upon who was in charge of doing that is my guess would be I guess that the executive director was who was dealing with that we can certainly check on that and get back to you thank you very much council member James thank you mayor thank you Crip for coming today I have more of a question with the actual board. How much responsibility legally does a board have when an employee, when we get a report like this, the fact that the board was ignorant to some of the things because they didn't have the processes in place, I guess I'm trying to figure out if is ignorance or lack of information, does that relieve you of any responsibility of the things that occur under your purview as a board? You mean of any civil responsibility or criminal? Yes. I think that legally what will happen here is that the individuals who law enforcement will focus on are those individuals who benefited and profited personally through fraudulent means or misrepresenting the purpose for expenditures. It's not my understanding that there's any interest in pursuing any legal action against the board at this point. Okay. And the response from the board, I noticed the date on it is the 23rd. When did they actually receive the recommendations? We gave them a draft copy on Friday morning, and we asked for their response back by Monday, close of business. Okay. And that was a negotiated time frame. we can give agencies up to 15 days to respond under our statute. And in this case, we thought it was vital to keep it as tight as possible so that we could get it finished, get it out, and get it public. So we initially offered to just give them really 24 hours right before the response, and they asked for a little time over the weekend to study it more carefully. Okay. So do you know their process as a board of how they – It's signed by the chair of the board, but I'm just curious as to whether there were really in-depth conversations with board members that they understood the responsibilities attached to the response to the recommendation and that it wasn't just, you know, one person responding. I'm not sure of their process. Is there someone here that could speak to that? The chair of the board who signed the letter, Bobby Owens, is here. Bobby, do you care to respond? Can you come to the mic if you don't mind? Thank you. Yes, hello. I'm Bobby Owens. I'm chairman of the board. And I will let our legal counsel, Tom Halbleib, with Stites and Harvison answer that for you. Thank you. Do you understand the question? Absolutely. Thank you. We received a copy of the draft report Friday morning, I guess at about 9 a.m. from Mr. Likens, and I then spent the entire day, Friday, meeting with four of the board members. We sent out copies to all of the board members, but spent the whole day going over it with four of the board members. And if you've read the response, you'll notice that there are certain things where the response says that the chairman anticipates the board will do certain things. And that's because the board didn't really have an opportunity over the weekend to act on these things. And many of those things, I'm pleased to report, the board did act upon today. There were other actions where the response indicated that the board had already acted. For example, four of the employees are no longer employed by the airport board. Over the weekend, we worked on drafting the response, and I coordinated what feedback I had, not only from the four board members with whom I met on Friday, but also others to whom we had sent copies of it and worked their input into the letter for Chairman Owens, which he signed on Monday and then we returned to the auditor's office that afternoon. And the follow-up work, as I indicated earlier, has continued today. The policies, there were three separate sets of policies attached to our response and all three of those policies were adopted in the form they were presented by the board this morning. Are there board members that you haven't heard from at all? No, all the board members were there today. Okay. All right. Thank you. Thank you, Mayor. Council Member Feigl. I, too, would like to express my appreciation for this very, very thorough analysis and your very quick response. I'm not sure that you would have this information, but as the World Games are approaching, I know that there are several projects pending at the airport in preparation for the World Games that probably have to do with federal funding. And I wondered if you might comment or if anyone else might be able to comment on whether or not this entire situation is going to affect our ability to complete those projects or get the funding that's necessary. I'll ask the airport to respond to that, but I would also say, as a former secretary of the state's finance cabinet, where we dealt with all of the state's capital construction and all the borrowing and debt and bonding and organization of that planning, whenever you have a problem in a public agency that is involved in a lot of construction and expenditures and borrowing, what's important to all of the parties involved in that is that if there is a problem, there is quick action to resolve it going forward. So I think that will be a very important signal to send in terms of the folks who are involved as financial partners with the airport and construction partners and so forth. But I don't have information about the specific construction schedule. Do you want to ask one of them to come back? Well, not unless they really have a comment about it. That was one of the big concerns that we have back when we decided that we were going to ask the staff to leave or they resigned. And we, in preparation of that, we identified one of the best consulting firms for airports, Jacobs Consultancy. They're a former arm of the Arthur Anderson Company. And they indicated to us that they could provide management assistance through a transition period. And they brought in a gentleman named Fred Testa, who's a retired airport executive director. He's also an attorney by background. And Fred at one time headed up the, if I can get this right, the Philadelphia airport, the Harrisburg airport, and one or two airports in New Hampshire. and his background is what attracted us because he individually has had more construction projects as an executive director than anybody within the country. And the reason that we chose him was to continue on schedule all of the improvements that we're making at the airport for the 2010 games. We have $66 million of projects that had just begun. And we are literally, in fact, I've been looking at your clock, 576 days now. We cannot miss a day. We are so tight. And we didn't want all of these problems to short-circuit our time frame. And, you know, when you eliminate all of your management at once, it's hard to pick up the pieces. And so we had a transition period. We also put in place Eric Frankel, who is with us today, that I would like to introduce. Many of you all haven't had the chance to meet him yet. He's started with us a little over a week and a half ago. But our number one goal in this has been to keep those construction projects on target because the Bluegrass Airport is the gateway to the Bluegrass, and we want to ensure that we have a fabulous facility that can handle the traffic that we're going to experience during the games. Thank you. One other quick question. Thank you. I just wondered if there are additional grants or fund requests out there that may not be looked on as considerably as they had been before. Do we have any in jeopardy, any grants or any funds that might be in jeopardy? Well, we did a $77 million bond offering back in December. and that gives us most of the money that we need to complete these projects. We do have the second installment of state money coming for our new runway, which is about $4.5 million. And, you know, everybody knows the budget issues in Frankfurt, so we're still working that hard. We feel as though that money is secure, but we don't have it in our pocket yet. So we have everything funded. A lot of these projects will be funded or will use federal grant monies coming back to us in future years to help pay off the bonds. And the biggest issue that we face going forward, and that's one of the reasons why we want to get this process behind us, is that all of the airline partners that we have, they don't like to have airport issues. You know, they want to fly into and deal with management that is stable. and I know that we had one of the airlines in this week that raised some big concerns. We get about 38% of our revenue from the airlines. And so if they see a troubled airport, if you will, if they're going to make cuts in their system going forward, they're probably going to look at those places first. So we have to shore up our relationship with the airlines. that have been damaged in this process. We have to continue our construction. And also with the FAA, we have some fence mending to perform there as well. They rank airports as the best well run and managed to the least. And we've moved up to the middle notch in that, which could jeopardize funding for us going forward. So the quicker that we can get beyond these problems, I think the better off we're going to be. Thank you. Thank you. Council Member Lawless. First of all, I would like to thank you for this incredible report and obviously a lot of work. I also echo the fear that people will be reluctant to serve on volunteer boards and commissions for nonprofits and quasi-governmental agencies. And I think that it's important to know that this is an extraordinary situation. And that being, I mean, I don't know how it could be more extraordinary, really. I'd also like to thank the newspaper and Jennifer Hewlett and the reporters that worked on this because, but for that, I don't think things would keep on keeping on. So thank you to the newspaper and the media. My question is, I can't help but, you know, and I just got this this morning and pouring over it, and I see, just for an example, a vehicle accident that occurred on July 17th, where proper with the director of the airport, the executive director, and policies and procedures about that were not followed, including urine sample and blood alcohol tests and making a report of the accident. Do you know who told the chief of public safety he could not make the report? and it seems to me there had to have been a culture of some kind of threat or intimidation of employees to follow along. It was our understanding that that came from another director-level employee. There was clearly a culture of complicity in taking advantage of the situation they were in, of abuse of the trust that had been placed in them by the board, an arrogance as it related to following the rules and procedures and spending and benefiting personally. That particular situation was covered up by the Senate. So do you know if the board was aware of this wreck or who knew what when? And I noticed that that's about the same time there was a $10,000 loan or to the executive director. And we have no evidence that the board was aware of the REC at the time. Of course, it came to their attention as we did our audit work because we were asking questions about it. The board was also conducting an internal review at the same time we were doing our audit work. So I think you all became aware of it at some point during that period of time. Do you want to hear from them? Thank you Madam Councilman. The incident about which you speak predated an approximately six week leave of absence by our Executive Director by a short period of time. I think it was a matter of less than a week. And it would not be appropriate for me to comment beyond the fact that there was a leave of absence following that. The incident itself did come to the attention, it came to my attention and it came to the the attention of at least one board member either during August, this is an incident that occurred during July, I believe around 10th, 12th, 15th. July 17th, yes. 17th, okay. And by the time it came to our attention, the executive director was on a leave of absence, And that's essentially what I have. Do you have more questions about that incident? Well, what that says to me, I guess, is that in August of 2008, at least one board member and you knew of a mandate to the chief of public safety. Let me be clear. I'm sorry. I did not speak clearly. We did not know of the mandate to the Chief of Public Safety. What we knew of was that there had been some kind of an accident involving a mailbox, and that's what we knew. We did not know that the Chief of Public Safety had been directed not to report it. That knowledge, I learned that through the course of the auditor's work. Were you all aware that there was a policy that accidents had to be reported? Yes. And was there a request to look at the report? I mean, I understand that there was a conspiracy of lies, but that's pretty disconcerting, I guess. Right. I'm not aware of a request to look at the report. And the other thing that troubles me is that while the board didn't, you know, get proper receipts, et cetera, and things were covered up by the staff, that they did approve, I assume, expanding the budget for travel and training, and they approved the director's increase in salary. Is that – Yes. Maybe if you can ask your question again, too. I'm sorry. Okay, that the board did approve the increases in salary and the increases, huge increases in travel and training over the years. Right, yes. The first question about the salary, the board did approve the salary increases for the executive director, yes. And it was our thinking that we had to keep him competitive with the people in Cincinnati and Louisville to keep him here as opposed to letting him go to one of our sister airports, who are a competitor of ours. The second question, I'm sorry, I'm sorry, I can't remember this. huge increases. It states in here that they went over budget year after year and then the budget would be increased, I'm assuming by approval of the board. Right. Our budgeting process was woefully inadequate. And I'm a CPA by background. When I joined the board three years ago after, and we have very complicated accounting with all the monies that we receive from various governmental entities and airlines. But when I got comfortable with things in the middle of the summer in 2006, I went and made a request in one of our meetings to the finance CFO to make changes in the reporting because the way that the report was presented, it mixed accounting or accrual accounting as well as cash accounting together. Plus, the budgeting was meaningless because they basically straight-lined the budget for the whole year. So if you had monies that you spent in the first month for the whole year, your budget showed over budget all year long until the end of the year. Conversely, if you had monies you spent in the last month of the year, but you accrued your budget straight line, then you're going to show you're under budget until the last month. And in my mind, that's not good policy. Right. And so I think the word arrogance was used earlier. And I'll just relay a story, an incident that happened to me in that meeting. I was told by the CFO that, look, you know, I'm a career guy here, and you're a four-year board member. And if I had to change for every board member that comes along, I'd have to change this every year, and I'm not going to change it. you're going to have to adapt to the way that I do business. And I tell you what, when I was told that, I knew that this guy had to go. And right after that is when we had our 51-91 crash. And, you know, for everybody that was a witness to that terrible tragedy, it had a profound effect on everybody. and our board had been consumed by that tragedy literally up to this summer. So we have not really had the opportunity until recent months to look at making those changes. But, you know, we're happy that we did now. Well, I want to... It's a long-winded explanation. No, that's great. And I know that you're a relatively new board member and commend you for asking the hard questions early on and for stepping up as chair during this tumultuous time. I don't envy any of your all's position. And for those that didn't, you know, weren't privy to information, et cetera, my heart goes out to you and appreciate your service. And as I look through this and digest it more, I'm sure I'll have more questions. But I have a discomfort with who knew what when, and when the story broke, that was clearly after that, that there was still everything's fine, we'll do an internal audit, we'll look into these things. And that concerns me as far as going forward with are we going to be able to regain that trust and that if the public safety officials out there could be intimidated or mandated or not to report things. And certainly I know that's going to change, but is it going, you know, how do we get back on track and restore public safety and faith in the safety and operations of the board and of the airport? So that's more of a comment than a question. Is that all you have, Council Member Lawless? Okay, I know Councilmember Stennett and Councilmember Martin both have questions. Let me suggest, in light of our constraint with the MPO meeting that's coming up, if you have questions for Ms. Llewellyn or her staff, let's focus on those first, and then to the extent you have questions for the airport board or their staff, we can come back around, either have them come back another time or something like that. Councilmember Stennett. Thank you, Mayor. I do have a quick question. I think some colleagues have asked this question in different forms, but I just want to ask you one more time so we're all clear. And also, as we look to other boards and commissions that this body appoints, that are also public agencies out there, who should have caught this in this situation, whether it be with the airport or any of our other boards? Who is the responsible authority or entity that should have caught these type of actions? I know we've talked about there should have been policies in place or there should have been board oversight on certain issues, but ultimately who should have caught this in the airport situation? Well, of course, the board has the ultimate authority to oversee the airport operations. The auditor has a responsibility to monitor the finances for the board. An auditor, you mean the one they hire? The annual auditor. You know, so both inadequate reporting and oversight at the board level caused a problem in terms of their not understanding or knowing exactly what was going on soon enough. The outside auditor should have been helpful. The culture of not only wasteful spending that went on among that staff also created a culture where employees were unwilling to come forward. So that was another problem here that there was, you know, the reason this was in the newspaper first is because clearly someone inside the airport didn't feel comfortable going through the proper channels to report this up through the chain of command. That's why we make strong recommendations about an internal auditor function, a whistleblower policy so that employees clearly understand what their rights are to bring information forward and how they can do that. Those kinds of things are vital. As I mentioned earlier, there's plenty of blame to go around in a situation like this, but clearly there should have been stronger oversight on the part of the board. There's no question about that. But I also want to emphasize again that when you have more than one person and there is complicity to defraud or to conceal information or to limit the amount of information that is flowing to the oversight authority, it makes it very difficult. So, you know, there was fault at every level in this situation. It is very hard to capture criminal activity, but eventually we do through either an absence a day at work or a missed number on a forming. It's always caught. So I guess following that question, we have other boards, other commissions here in our community. What advice would you give this body as we look at those? I mean, we have some very big boards here that control a lot of money, a lot of public accounts that we may or may not also have these issues with. What do you recommend going forward? How do we begin to address those besides the training aspect you talked about for board members? Well, I think if you look at the over 100 recommendations in this report, they apply to almost any public board. And this report is on our website. We are also available to come and talk to any board about our advice as it relates to what we have learned from this controversy. As I mentioned earlier, I don't want this to have a chilling effect on people serving on public boards. We need those volunteers to step up and do that. So I think there's good, solid information here that every board should review and look at. And I've already had several people come forward and say to me, I serve on a public board, and we've already made some changes just based on what we're hearing about this. So I think this is a learning experience. This can be a real case study going forward. And I would recommend every public board take a look at this and read the findings and recommendations. Because even if you don't suspect in an organization that you have anyone you can't trust, And most of us like to believe that. We like to believe that there's a trust factor among those folks who we work with. But even if you believe that, you have to have the proper controls in place. That's what financial controls are about, is to ensure that you can't have people who come in and are able to successfully get around the rules and the procedures and abuse the trust that's been placed in them. So this is a good set of standards that any board could look at and learn from. Very good. Thank you. Thank you, Mayor. Council Member Martin. Thank you, Mayor. And thank you, State Auditor Lowell. And I guess I'm following up again about my previous questions and a little bit about Council Member Stinnett. You know, in my experience, boards don't know what they don't know. And so that's sort of the same thing that we're talking about is, so I understand that we should expect our independent auditors to bring these financial controls to our boards Is that an accurate statement or the legal counsel to tell the auditors that the board members need to do X, Y, Z? Well, typically an outside auditor is not going to bring your internal controls to you, but I think they can certainly be engaged to review your internal controls and test them and see if they're strong enough and accurate enough. You need to be sure if you're entering into an engagement with an audit firm, a CPA firm, that you're very clear if boards want to have that kind of guidance, they can get it. They will do the level of work that they're asked to do. In this case, we suggested that the council provide board training simply because, you know, in this particular case especially, council has played a key role at trying to help work through this review and advise the board going forward about implementing the recommendations, and I think we'll have a strong familiarity with what it is this board's responsibilities are going forward. That might not be the case at other boards, but I think between council and financial advisors, boards ought to be able to get the guidance they need about whether they have the proper controls in place. I just feel like it's a little bit kind of squishy, though. I'm not, you know, I hear a combination of things, So our independent agencies can talk to their auditors and say, we want you to review our internal controls. Yes. So that's what we need to put in place because they may not know that they need to do that or they may not know that they have to comply with Sarbanes-Oxley or something like that. Well, I think that's an important step to take in this community after this controversy is every public board ought to really ask for that kind of guidance and advice and do an internal review. Some of them are going to find that they already have stronger controls in place than we've even recommended here. Others may not even recognize that. But the other piece of it is board training so that they really understand, and most boards I've served on do provide strong orientation at the beginning of the process. But if you have board members who don't know what they're supposed to be looking for and don't understand what level of responsibility they have as it relates to budget approvals or salary approvals or any of those issues, they need to know and understand on the front in so they know to be prepared for helping to make those decisions. Thank you very much. Thank you. Council Member Myers. Thank you, Mayor. Thank you again for all the work that you've done. Most of us have regular daytime jobs, and so we got the report this morning. I have not had a chance to read the report, and we'll do so. It's great bedtime reading time. I'll take it.