AUGUSTA — The now-defunct Maine Green Energy Alliance had weak financial controls and informal practices that created a high risk for the misuse of federal funds, a government auditor has determined.

But a three-month probe by the auditor found no fraud or inappropriate use of federal money, only appearances of wrongdoing attributed in part to a startup organization that had poor oversight.

That’s the final conclusion of the state’s Office of Program Evaluation & Government Accountability, or OPEGA, which was asked by the Legislature to examine the spending, administration and accountability of the alliance. The office’s director, Beth Ashcroft, presented its report Monday to the Legislature’s Government Oversight Committee.

In the wake of the report, members of the oversight committee want to explore how state or quasi-state agencies that administer grants can do a better job of making sure future grant recipients have the capacity and controls to handle public money.

“In this case, we were fortunate,” Ashcroft told the committee, noting how poor oversight created the potential for fraud.

OPEGA also offered several recommendations to avoid similar problems going forward. The committee is expected to take them up at a public hearing and work session at 9 a.m. Sept. 6.

The committee also plans to look further into how a summary of OPEGA’s draft findings was published earlier this month in The Portland Press Herald. Some Republican members of the committee want the state attorney general to investigate the matter, but the panel agreed Monday to wait until after the upcoming hearing to make a final decision.

The nonpartisan accountability office looked into how the alliance spent roughly $500,000 of a $1.1 million federal grant meant to expand home energy audits and weatherization through community organizing and education.

The alliance was phased out last winter after falling far short of its goals. The remaining money was shifted to a successful rebate program that helped owners insulate their homes.

But questions raised in media reports about the origins of the alliance, its spending and hiring practices and its apparent links to the Maine Democratic Party led to legislative scrutiny and an investigation by OPEGA.

The office attributed some of the problems to the startup nature of the alliance. It was critical of the alliance’s board and of Efficiency Maine Trust, the quasi-state agency that oversees weatherization efforts and was administering the federal grant.

Efficiency Maine did not take sufficient steps to ensure the alliance had the capacity, controls and structure in place to properly administer and account for the grant funds early on, OPEGA determined, and should have made extra efforts to mitigate risks from the start-up’s operation. 

An accounting firm hired to review the alliance’s spending found more than $272,000 in questionable costs, which led OPEGA to look deeper into the matter. No instances of inappropriate uses or missing funds were found during a subsequent review.

Some Republicans on the committee said they remain frustrated with the lack of accountability and poor management of public funds. And they continue to harbor suspicions that some Democratic candidates employed by the alliance may have been conducting campaign business on the job, a charge that wasn’t substantiated by OPEGA’s review.

In her presentation, Ashcroft walked the committee through a tangled, confusing history of how the alliance was formed in 2009, and how its focus changed after Efficiency Maine Trust – itself a new agency – won a $3 million federal stimulus grant.

She also outlined the shifting role of former Gov. John Baldacci’s legal counsel, Thomas Federle, who helped start the alliance and later became a paid consultant and board member.

These and other factors led to questionable relationships, potential conflicts of interest and poorly documented spending decisions, she explained.

“During our review,” Ashcroft summarized from the report, “it was also clear that federal grant funds had been disbursed to an organization that was not yet ready to administer, account for and make decisions about how to use those funds in a manner expected of entities that spend public funds.”

Using receipts, emails, reports and other documents, OPEGA looked closely at $513,566 worth of labor, marketing, travel, services and other expenses run up by the alliance. In the background were accusations by Republican activists that a few employees – Democrats running for the Legislature – may have mixed business with campaigning.

OPEGA found no evidence of that, based on the records it was able to review and participants it questioned. Neither Ashcroft’s office nor the state’s ethics commission had received complaints, although the hiring practices and makeup of the alliance staff and management clearly fed suspicions.

“Just because there weren’t complaints doesn’t mean there weren’t problems,” said Sen. David Trahan, R-Lincoln.

Ashcroft said that to further pursue the issue, someone would have to interview residents who had interactions with the alliance staff, a process that would take time and resources.

Sen. Margaret Craven, D-Androscoggin, said she was frustrated by the repeated accusations about staff campaigning on the job, based on the lack of evidence.

“It’s just making up stories in your head and talking about it publicly,” she said.

In September, the committee will get a chance to directly question Efficiency Maine Trust and former alliance officials about OPEGA’s findings. The committee’s co-chair, Sen. Roger Katz, R-Kennebec, said he wants to know why Efficiency Maine Trust didn’t keep a closer eye on the alliance, and how communities targeted for weatherization outreach by the group were selected, among other things.

 

Staff Writer Tux Turkel can be contacted at 791-6462 or at: tturkel@pressherald.com