Auditor challenges state’s handling of BP funds

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon in this April 2010 file photo. (AP Photo/US Coast Guard, File)
Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon in this April 2010 file photo. (AP Photo/US Coast Guard, File)

State officials were allowed to control — without legislative oversight — about $60 million in funds BP provided for tourism and seafood promotion, a situation legislators should correct, said the state legislative auditor and the state treasurer.

“This is the sort of thing that happens in Nicaragua,”said State Treasurer John N. Kennedy on Tuesday. “I don’t think its OK, and I don’t think it’s legal.”

Legislative Auditor Daryl Purpera said: “There are three branches of government for a reason. It’s called checks and balances.”

Officials with the state Department of Culture, Recreation and Tourism and with the state Department of Wildlife and Fisheries countered that they were following an opinion rendered by Attorney General Buddy Caldwell’s office. The opinion, they said, allowed them to set up nonprofit groups to handle money BP gave the state to help lessen the negative impact on the tourism and fishing industries caused by the April 2010 Deepwater Horizon explosion, which killed 11 people, and led to about 210 million gallons of crude oil leaking into the Gulf of Mexico.

Kennedy said Caldwell was wrong in his opinion that allowed state officials control over the money that they did not have to include on agency budgets and did not have to report to the Legislature how they spent it.

Article VII, Section 9 of the Louisiana Constitution requires all money received by the state or a state agency to be deposited in the state treasury. The article, however, makes an exception of grants or donations or agreements.

The Attorney General’s Office in a Jan. 9 opinion determined that most of the money received from BP was not public because of the memorandum of understanding.

The memorandum of understandings allowed BP to send the funds to two private, nonprofit organizations — the Community Foundation of Acadiana and the Louisiana Wildlife and Fisheries Foundation — to handle.

The lieutenant governor and BP agreed to spend $30 million given to the Community Foundation of Acadiana on a “tourism program” and that the funds “shall be distributed under the direction of the Office of the Lieutenant Governor.”

BP agreed to provide $30 million through the Louisiana Wildlife and Fisheries Foundation over a three-year period.

Both Charles R. Davis, deputy secretary with the Department of Culture, Recreation and Tourism, and Robert Barham, secretary for the Department of Wildlife and Fisheries, wrote Purpera, who prepared a report for legislative leaders, that they followed Caldwell’s “well-researched and compelling analysis and conclusions.”

Barham wrote Purpera in a Feb. 7 letter: “I have thoroughly reviewed your concerns and will certainly take those concerns into consideration when negotiating and drafting future agreements.”

Davis also wrote that “BP has been clear that the funding for the tourism and seafood promotion programs would never have been provided if the funding were subject to deposit in the state treasury and subject to appropriation.”

Purpera added that regardless of what the oil giant’s concerns for how the money was spent, the state should not change its money-handling policies.

“In its efforts to foster accountability and transparency in Louisiana government, the Louisiana Legislature may wish to consider legislation that clearly communicates the goal of ensuring transparency and accountability by prohibiting agencies from structuring agreements to control the expenditure of funds and conduct programs in a manner that bypasses the budget, appropriation and reporting processes of the State,” Purpera wrote.