Former Mayor Kasim Reed lacked the legal authority to dole out more than half a million in dollars in bonuses late last year, and the city’s former chief financial officer abused his position by authorizing a bonus for himself, according to a joint report released Wednesday by the city’s independent auditor and ethics office.
Jim Beard, who left the CFO position earlier this year, said in an email on Wednesday that he disagreed with the report and that he only acted on Reed’s orders in processing the bonuses.
The report also describes top city officials working together to bypass internal controls in manner that violated city code, and the state’s gratuities law.
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The report follows other investigative findings about the bonuses and contest winnings provided to the City Council earlier this month by Thompson Hine, an outside law firm hired by current Mayor Keisha Lance Bottoms’ administration at a cost of $151,272.86.
Reed did not respond to an AJC request for comment.
Atlanta Mayor Kasim Reed smiles as people gathered in the atrium of Atlanta City Hall in December 2017. ALYSSA POINTER/ALYSSA.POINTER@AJC.COM
Photo: The Atlanta Journal-Constitution
Both investigations concluded that the bonuses awarded to select employees during the waning days of Reed’s administration violated the state Constitution’s gratuities clause, which prohibits extra payments to public employees without a clear benefit to taxpayers.
The earlier report from the law firm emphasized that investigators found no evidence of improper motives or “any deliberate decision to act in an unlawful manner” and that the bonuses “appear to have been made to enhance the workplace morale and to reward employee performance.”
But Wednesday’s report from the independent auditor and ethics officer said that payments distributed by Reed and Former Human Resources Commissioner Yvonne Yancy to contest winners at a holiday party “raised ethical concerns.”
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The report also said that nothing in the city code allowed Reed to unilaterally raise employees pay, and that a memo from Yancy dated Jan. 7, 2018 erroneously argued that the “absence of legislation limiting bonuses means that bonuses are allowed.”
In a statement issued Wednesday, a spokesperson for Yancy also said that she had also acted at Reed’s direction. The statement also stated that the January memo bore Yancy’s name because she was the head of human resources at the time, but an employment attorney in the law department was the author of the document.
The spokesperson said that “over a course of multiple conversations and meetings, Mayor Reed noted that he wanted to reward the good work of his staff with bonuses.”
“Yancy’s role was to develop scenarios related to the bonus disbursement,” the statement said.
SEPTEMBER 26, 2013 ATLANTA Board member Yvonne Cowser Yancy, Department of Human Services commissioner, talks with the media following the meeting. Members of the Atlanta General Employees' pension board meet in a specially called meeting at City Hall Thursday, September 26, 2013. They discussed issues raised about their financial adviser, Larry Gray, in an AJC story that published two weeks ago, about the advisers lack of disclosure about federal tax liens and a legal settlement. The board voted to authorize an audit of their investments. KENT D. JOHNSON / KDJOHNSON@AJC.COM
Photo: KENT D. JOHNSON / AJC/KDJOHNSON@AJC.COM
‘Overrode all existing controls’
The joint investigation found that 146 supplemental payments totaling $869,291, “including $58,008 in duplicate bonuses paid in error to four executive level employees,” along with $87,000 in bonuses provided by City Council members to their staff members.
The report says that Reed himself “distributed” $573,121 in bonuses to 43 staff members, and that Yancy provided $83,967 in bonuses to her staff.
Roughly $67,000 in contest winnings were distributed at the holiday parties.
According to the report, Beard “abused his position to authorize a bonus payment to himself.”
Payroll adjustments usually require a signed document from the human resources department, department of finance payroll form, or an email from the department’s timekeeper or department head, according to the report.
Beard on two occasions hand delivered unsigned spreadsheets listing employees and their bonus amounts, according to the report. One of the spreadsheets included a $15,000 payment to Beard that had been “grossed up” to $21,261, the report says.
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The report also describes a senior accounting specialist in the finance department attempting to prepare the proper paperwork but unable to get a supervisor’s signature.
On Wednesday, City Auditor Amanda Noble told the City Council’s Finance Executive Committee that the report focused on Beard “because he directed the process.”
“The process used overrode all existing controls,” she said.
Beard in an email Wednesday disputed that he authorized his own bonus payment.
“As Chief Financial Officer, I took very seriously my fiduciary responsibilities and at no time abused the authority of my position,” he said.
Former Mayor Kasim Reed dolled out $350,000 in bonuses to selected City Hall staff as he left office in December. Five senior staff members received $15,000 each. They are clockwise from top left: Candace Byrd, Jeremy Berry, Yvonne Cowser Yancy, Daniel Gordon and Jim Beard. Other staff and some of Reed’s security detail also received bonuses. Credit: City of Atlanta/AJC File Photos
Photo: The Atlanta Journal-Constitution
Beard also noted that the Thompson Hine investigation commissioned by Mayor Bottoms said no provision of city codes or state laws “were intentionally violated.”
Noble in an interview said that her report does not demonstrate intent, but intent isn’t required to show that certain behaviors constitute abuse.
“Under government auditing standards abuse does not require intent but it is talking about behavior that is deficient compared to what a reasonable and prudent person would do under those same circumstances,” she said.
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