News Column

New Greensboro rule: No cutting checks without signed contract

February 19, 2014

By Amanda Lehmert, News & Record, Greensboro, N.C.



Feb. 19--Updated 12:38 a.m.

GREENSBORO -- City Council members adopted a new rule Tuesday night: no more issuing checks without signed contracts.

Mayor Nancy Vaughan requested that rule following the revelation that the city staff gave the International Civil Rights Center & Museum$750,000 without a signed loan agreement for the money.

"I think this is the first time on City Council that I have voted to legislate common sense," Councilman Tony Wilkins said.

The city released documents Tuesday that revealed some internal staff debate about whether it was appropriate to provide the check.

Before Tuesday night's meeting, council members also met with museum officials to discuss the nonprofit organization's plans to become sustainable long term.

The city gave the museum the first of $1.5 million worth of forgivable loans last fall, to help the financially struggling organization stay afloat.

It recently came to light that the museum missed a deadline to provide an audit to the city in January, a stipulation of the council's agreement to give it money.

The city still doesn't have a loan agreement signed by both Greensboro and museum officials.

Emails released by the city on Tuesday show that City Attorney Mujeeb Shah-Khan told then-City Manager Denise Turner Roth that it would be all right to release the first $750,000 to the museum before it and the city had a signed contract.

City Finance Director Rick Lusk contradicted Shah-Khan's decision. He told Roth's assistant that the contract needed to be signed before a check was issued.

When he was told the attorney's conclusion, Lusk noted, "As long as everyone understands the risk of not having a signed agreement and circumventing the internal control system."

"We understand the risks," Shah-Khan responded.

The City Council's decision Tuesday night means that type of payment will not be made in the future, except in emergencies.

At a briefing Tuesday afternoon, former museum board Chairman George Clopton and attorney Doug Harris talked to council members about plans to improve the museum and attract more visitors.

They said the museum will soon offer self-guided tours. Now, visitors must take an official tour to go through the museum.

"People are turned away, which is truly insane," Harris said.

The museum board is working to hire a new executive director. Clopton said there are also plans to add three to five people to the board.

Asked by Council man Zack Matheny whether former museum board Chairman Melvin "Skip" Alston received any money from the operations, Harris said that no board members had ever been paid by the museum.

Matheny asked the council to consider freezing the money it gave to the museum until officials provide more documents to the city and the contract is signed.

Shah-Khan said it may not be possible to freeze the money. The museum has spent all but about $200,000 of it, according to city officials.

After the briefing session, Clopton told reporters that he never intended to be chairman long term and that city officials knew that. Monday was his last day as chairman, just a few months after taking over the position from Alston.

Asked whether it was a bait-and-switch to change the chairmanship so soon, Clopton said, "I find it insulting anyone would think that."

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Updated 8:22 p.m.

GREENSBORO -- City Council members adopted a new rule Tuesday night: no more cutting checks without signed contracts.

Mayor Nancy Vaughan requested that rule following the revelation that the city staff gave the International Civil Rights Center and Museum$750,000 without a signed loan agreement for the money.

"I think this is the first time on City Council that I have voted to legislated common sense," Councilman Tony Wilkins said about the vote.

The city gave the museum the first of $1.5 million worth of forgivable loans last fall. It recently came to light that the museum missed a deadline to provide an audit to the city in January, a stipulation of the council's agreement to give the nonprofit money.

The city still doesn't have a loan agreement signed by both Greensboro and museum officials.

On Tuesday, the city released staff emails that show the finance director raised concerns about cutting a check before the loan contract was signed.

Shah-Khan told former City Manager Denise Turner Roth there would be no issue to release the first $750,000 before the city had a signed contract with the museum.

The City Finance Director Rick Lusk contradicted Shah-Khan's decision. He told Roth's assistant that the contract needed to be signed before a check was cut.

When he was told the attorney's conclusion, Lusk noted, "As long as everyone understands the risk of not having a signed agreement and circumventing the internal control system."

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GREENSBORO -- Civil rights museum officials told Greensboro City Council members Tuesday afternoon that the nonprofit already has begun to make changes the city requested last year.

Council members asked questions about the museum's operations Tuesday afternoon at a special briefing session with former museum board Chairman George Clopton and attorney Doug Harris.

Councilman Zack Matheny asked the council to consider freezing the funds it gave to the museum while the nonprofit gets the city more information. The city attorney said it may not be possible to do that.

The council planned to continue the discussion about the museum later this evening, at the end of its regular meeting.

The city gave the museum the first of $1.5 million worth of forgivable loans last fall. In recent weeks, it has come to light that the museum had missed a deadline to provide an audit to the city and the city staff gave the nonprofit $750,000 before there was a signed contract for the loan.

Check back at news-record.com for updates.

Contact Amanda Lehmert at (336) 373-7075, and follow @alehmert on Twitter.

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