Reacting strongly to an internal audit report and an investigation by the state's Inspector General on GDOT's "deceptive" financial reporting, Ga. Gov. Sonny Perdue promised to take swift and decisive action.

"Today’s reports by the Department of Audits and the Inspector General are troubling in their conclusions of intentional acts to mislead and deceive the Board of Transportation, the Commissioner, the Governor, the Legislature and most importantly the public, regarding the year-end financial picture at the Department of Transportation. This type of Enron-like accounting cannot and will not be tolerated anywhere within state government," Perdue said in a statement.

Perdue emphasized the need for "fiduciary honesty and integrity at the state level."
"To think that officials charged with supplying these numbers would intentionally direct those under their command to withhold information is unconscionable at best and illegal at worst," Perdue concluded.

Bart Brantley, a spokesman for Perdue, said the audit showed evidence of fraud by former DOT Treasurer E. Mahfuz. The audit alleged that Mahfuz directed his staff to deliberately mislead the public –and the governor- by failing to book expenses being incurred by contractors for some DOT projects.

The personal motive that drove Mahfuz to cook the books is unclear; the professional motive was clearly to get more DOT projects moving than they had the money to pay for.

Perdue has called on Attorney General Thurbert Baker to conduct a formal probe, and criminal charges could be filed at that time.

OVERSPENT THEIR BUDGET, NOW DOT NEAR INSOLVENCY 

At issue is the fact that year-end financial statements for DOT showed more money than they actually had. The practice of not booking all contract expenses against revenues began in mid-2006 and continued right on through 2008..

"If you look at the graphs [on page 45-46 of the audit report] it is crystal clear that a decision was made by someone at DOT in mid-2006 to start to conceal a portion of some contractors expenses," said Brantley. The practice expense deception cotninued right through 2008, according to the audit.

Brantley added that the problem now is that DOT is essentially broke. "They used up all of their available cash, and depleted their reserve fund," Brantley said. "Had this practice gone on for a few more months the agency would now be totally [insolvent]."

Brantley indicated that due to DOT's slippery financial shenanigans, the only projects that can go forward are those that are "100 percent funded by Federal stimulus dollars. The Department has no available cash on hand for any project," he said.

Mahfuz was appointed Department Treasurer by the DOT board, and although he "reported" to former DOT Commissioner Gena Evans in theory and on paper, insiders say Mahfuz believed he was more responsive to the DOT board members who appointed him.

DOT board members, led by North Fulton representative Brandon Beach, fired Evans in Spring 2009 in the face of bitter objections by Perdue and Lt. Gov. Casey Cagle. Evans was appointed by Perdue in 2007. The Evans' sacking prompted the Ga. State Assembly to pass a "new governance" transportation bill in the 2009, stripping the DOT board of much of its authority.

Beach, traveling when reached for comment, had not yet read the report, but promised a detailed statement in the next several days. Beach joined the DOT board in 2008 to fill an unexpired term and was reappointed in April 2009. Beach is a Republican candidate for state Senate (D-56) in 2010.

The current DOT board chairman is Bill Kuhlke. Mike Evans, who resigned his post shortly after Gena Evans became DOT commissioner, preceded him. Mike and Gena Evans are now married. Evans is running for U.S. Congress in the 9th CD as a Republican in 2010.