Atlanta inspector general says ex-Mayor Kasim Reed may owe city $83,000

IG report also says city may owe Reed money for deferred salary

Credit: Jenni Girtman

Credit: Jenni Girtman

Former Atlanta Mayor Kasim Reed may owe the city nearly $83,000 for expenses paid on his behalf by city officials after he left office, according to Atlanta’s inspector general.

In a 14-page report released Friday, Atlanta IG Shannon Manigault said city tax dollars were used to pay more than $24,000 for COBRA health insurance after Reed left office; $40,000 as “reimbursement” to the city for a trip to South Africa Reed and his staff took in 2017; and an $18,500 donation made to Howard University.

The council never authorized the COBRA payment and was misled about the nature of the payments for the trip reimbursement and the Howard donation, according to the IG report.

In a statement Monday, Reed’s spokeswoman called attention to the IG report’s findings that also stated Reed may be owed “tens of thousands of dollars” by the city because he declined his pay raise for his second mayoral term.

“This report did not reference the more than $50,000 that was donated to the Mayor’s Youth Scholarship Program as a result of deferring his pay raise,” Reed’s spokeswoman said in a statement. “These funds were used for the purpose of advancing economic development and helping Atlanta students attend college. Anything to suggest otherwise, is simply incorrect.”

Reed previously said the money for all the expenses cited in the IG report came from an account that held deferred income from a raise he declined to accept in 2014. But the IG investigation found all the funds actually came from departmental accounts: The COBRA payments came from a mayor’s office account; the South Africa reimbursement and the Howard University donation came from an account in the Human Resources Department.

“Reed’s COBRA payments and the (city’s $18,500) donation to Howard University potentially run afoul of state and municipal laws,” the report says. The IG report added that the account purportedly holding the incremental raise in Reed’s salary was never actually created.

“The (city of Atlanta) effectively established a personal savings account for Reed…No salary had accumulated and no distribution account had ever been created.”

Former council member and president Felicia Moore, who often sparred with Reed’s administration during her time at City Hall, said the report isn’t surprising. She ran for mayor against Reed last year and lost in the runoff to current Mayor Andre Dickens.

Moore said the council at that time could only take the Reed administration at their word, because the council lacked leverage to find out anything different.

“That wasn’t the first time that things were not represented properly, or as they actually were, to the council,” said Moore, who agreed Reed should reimburse the city.

Credit: Jenni Girtman

Credit: Jenni Girtman

Atlanta Auditor Amanda Noble referred this matter to the IG in February, according to the report. The auditor reviewed Reed’s COBRA health insurance after The Atlanta Journal-Constitution revealed in 2019 that the city covered the COBRA payment for Reed and his family for a year after he left office.

The AJC also previously reported a nonprofit sent the city a $40,000 check to cover airfare for the Reed administration’s 2017 South Africa trip, after the money was transferred to it by former Atlanta Chief Financial Officer Jim Beard.

Manigault’s report makes several recommendations, including that the city’s Municipal Code be amended to clarify the nature of any funds donated into the Office of the Mayor distribution account.

Longtime Councilman Howard Shook, who served throughout Reed’s tenure, said the findings show the importance of the inspector general, an office created in early 2020 after much behind-the-scenes jockeying and debate at City Hall.

“This is exactly what we wanted to create, something with teeth,” Shook said. He agrees with the IG’s recommendation to tighten controls around donations the mayor can make, and said he plans to work with colleagues to introduce such legislation.

Shook said the report also opens up questions about whether the federal government knew about this as part the ongoing federal corruption investigation into City Hall. He also questions why the McFadden Davis law firm, which was hired by the Bottoms administration in 2018 to investigate the matter, did not discover the questionable nature of the payments.

Reed served as mayor from 2010 to 2018.

In 2012, the city council passed a salary increase ordinance for the office of mayor, city council, and other city officials. Reed’s pay would’ve increased from 147,500 to $184,300 from 2014 to 2016, but he declined the increase.

The administration convinced the council to pass two ordinances in 2016 to authorize the creation of a charity account within the mayor’s budget. The laws would let Reed put his declined funds into the account.

But the IG reported that itemized portions of Reed’s earning statements show no evidence of salary being transferred to a distribution account. Additionally, the IG found the alleged “charity” account was not an actual distribution account.

Manigault’s office reviewed several financial records and emails sent among Reed’s administration leaders over the years. The report found Reed’s administration retroactively calculated Reed’s forgone salary for four years of taxes and deductions to determine the funds available from the charity account.

That work wouldn’t be necessary if then-city chief financial officer Beard had actually transferred Reed’s declined salary into the account, according to the report.

“This decision to adjust the reported forgone salary balance…suggests an attempt to mislead (city council members) into believing that Reed had previously donated his salary into the distribution account, and that the distribution account was adequately funded for the requested disbursements,” the report says.

Our reporting:

In April 2018, the AJC reported on a $40,000 donation made by the city of Atlanta to a dormant nonprofit, and traced how the money came back to the city months later to cover business-class travel for city staff who accompanied former Mayor Kasim Reed on a controversial trip to South Africa. In October 2019, the AJC reported that members of Reed’s administration pushed through a $24,000 payment for COBRA health insurance for the former mayor and his family without council authorization.