An audit of the travel expenses incurred by the Port of Long Beach’s Harbor Commissioners has been released, with City Auditor Laura Doud being forthright in her office’s assessment that changes must occur.
The Harbor Commission’s travel expenses have been of concern to city officials since last year when the Budget Oversight Committee investigated multiple overseas trips and found them questionable enough to launch an independent audit. Two months later, with his travel expenses still under scrutiny and the audit still in progress, Harbor Commission President Thomas Fields was removed from his position by a council vote.
Due to the fact that the validity of the trips, i.e. whether the trips were necessary or provided additional business to the Harbor, could not be verified since every transaction in every account could not be reviewed, Doud instead attempted to confirm whether some form of business was conducted on some level.
From October 1, 2011 through June 30, 2013, twelve international trips were taken by various Harbor Commissioners; of those twelve, five were sampled based on the highest cost incurred and that all Commissioners were involved on an equal level. Within those two years, the Harbor Department has logged some $600K in travel expenses.
“Our audit found that Harbor Department relies on a decentralized process that does not promote coordinated planning or effective review,” the audit stated. “Efforts to contain costs were not documented nor does it seem to be a priority. These factors contributed to ineligible expenses being reimbursed, inconsistent costs between travelers, and limited documentation detailing the business conducted.”
The lack of coordination led to overtly complex travel planning: according to Doud’s office, there is not a single administrative person who oversees the travel-planning process, ultimately leading to multiple parties making multiple arrangements with little to no correspondence. The audit calls the documentation of such arrangements “extremely limited,” contributing to “a lack of effort to contain cost” due to its complex arrangement.
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“Harbor’s decentralized process for overseeing travel and the lack of attention ensuring costs are reasonable resulted in a variety of issues related to high or inappropriate travel expenses,” the audit stated. “The issues were not isolated to any one particular trip; instead, these issues appear to be representative of normal spending behavior.”
Harbor Commissioners new President Doug Drummond says his staff has already reviewed the audit and submitted responses to Doud’s concerns.
“We appreciate the input and we take the matter very seriously,” Drummond said in a statement. “In the coming weeks, I will be meeting with the City Auditor to discuss her report. I will also schedule a workshop in the near future for the Board of Harbor Commissioners to discuss the recommendations.”
Seven main issues ultimately arose out of Doud’s audit:
- Travel costs of spouses subsidized by Harbor;
- Costs reimbursed for early arrivals or late departures;
- Trade representative expenses not questioned;
- High travel expenses;
- Documentation of actual business incurred is limited;
- Additional violations of administrative directives;
- Increased review of credit card statements needed
Firstly, spouses are permitted on trips should the Executive Director provide proof as why the spouse’s presence is “necessary and beneficial to Harbor [business].” Of the five trips reviews, three Commissioners had spouses attached, ultimately resulting in massive increases in cost compared to flying alone. All in all, the Harbor subsidized some $24K for the flights of spouses on these trips. Additionally, hotel costs were inconsistent also due to spousal attachments.
Early arrivals or late departures in flights resulted in multiple costs, including expenses for trips—specifically a trip to Xi’an by recently resigned Commissioner Nick Sramek—in which no business was scheduled.
Multiple trips resulted in the questioning of trade representatives and the “type and amount of services and entertainment they can charge on behalf of Harbor.” This included questions about meals, museum admissions, tour guides, and taxis/transportation. One trade representative invoiced the Harbor for $4,888 in “hired transportation charges” for four trips alone.
Other charges include: hotels at an excess of $500 per night; flights at a cost over $8,500 per person; and meals averaging in excess of $130 per person. Additionally, not all trips provided proof that business was even conducted, nor were entire credit card statements needed for those paying back Harbor-issued American Express cards.
“Documentation concerning planning, booking, business conducted, and expense reviews are extremely limited, providing little evidence of the department’s efforts to contain costs,” Doud said in her executive summary. “These factors contributed to ineligible expenses being reimbursed and large expenses rarely questioned.”
The Harbor Commission will meet soon to discuss recommendations to how to improve the issues brought forth in Doud’s audit.
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