Audit council won’t examine Hunley finances

Investigation would pose conflict of interest, panel says

By JOHN O’CONNOR

johnoconnor@thestate.com

A state financial watchdog has decided not to investigate how public money has been spent preserving the Hunley submarine.

The Legislative Audit Council voted Tuesday not to begin an audit, claiming a conflict of interest. Because the council and the Hunley Commission are both arms created by the Legislature, members said, an audit would violate accounting standards and could not be viewed as impartial.

“Whether we had done a good job or not, it wouldn’t matter,” said Legislative Audit Council director George Schroeder.

The council’s five members agreed, unanimously.

“You have to run from an independence issue,” said council member Philip Laughridge, a certified public accountant. “That’s a line that you cannot cross.”

Eight state representatives had requested an audit of the Hunley Commission and foundation following a series of articles in The State that said Hunley spending could approach $100 million — nine times original estimates. That total included a proposed museum and a Clemson University research facility; much of the funding has yet to be appropriated.

Sources in the stories also questioned the unusual structure of the Hunley Commission. The commission is responsible for preserving and allocating funding for the Confederate H.L. Hunley submarine, the first submarine to sink a warship during battle. The sub was raised off Sullivan’s Island in 2000.

The Hunley Commission, supporters said, has spent $4 million of state funds and an additional $5 million of federal money.

The audit council said the lawmakers could ask the Office of State Auditor to step in, or hire an outside auditor. Butaudit council members said recommending an alternative auditor also would violate ethics standards because they would be making a decision about the request. If they are going to recuse themselves, they said, they need to do so completely.

Rep. Nathan Ballentine, R-Richland, led the effort to request the audit. He accepted the council’s decision but said he would press for an audit.

“It kind of makes me question who is watching the hen house,” Ballentine said. “Who the heck watches us?”

It is unclear how lawmakers officially could request an audit, and Ballentine said he did not know where he would take his request.

Schroeder said this is an unusual situation because the Legislature does not usually spend money directly. Instead, it appropriates money to executive branch agencies, which the audit council can audit. Lawmakers might have to agree to spend money to hire an outside auditor, Schroeder said, or convince the State Budget and Control Board to vote for an audit.

Rich Gilbert, interim state auditor, said he could not remember a similar case in his 26 years at the agency. Typically, Gilbert said, his agency only begins an audit if the the governor, attorney general or other executive branch agency makes a request.

“I’m not sure if we have any legislative authority to do that,” Gilbert said.

Senate President Pro Tem Glenn McConnell, R-Charleston, chairs the Hunley Commission and has challenged claims about Hunley spending. McConnell said the commission’s books are open to scrutiny — they are checked annually by an accountant hired by the commission — and another audit is unnecessary.

“I’m not getting out there and opposing an audit. I just think it’s a terrible waste of money,” McConnell said. “I think that an audit will simply strengthen our case against The State newspaper.”

But Ballentine said he would not give up until he got answers for his constituents.

“I’ve got people asking about it. I’ve got people in Irmo, South Carolina,” he said. “This happened to get on the radar, and they want to know what’s the story?”

Reach O’Connor at (803) 771-8358.