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Thursday, June 20, 2013 | 4:29 a.m.

Posted: 6:00 p.m. Monday, Dec. 10, 2012

Internal audits detail misuse of funds by Port of Oakland employees

Port of Oakland internal audits Dec 10
Port of Oakland internal audits Dec 10

KTVU.com

OAKLAND, Calif. —

The Port of Oakland on Monday released two internal audits that detailed the misuse of funds by officials, including some expenses that may have broken state and federal laws.

The release comes weeks after a KTVU investigative report first exposed the questionable expenses being claimed by port employees.

The two Port of Oakland internal audits have been complete since August, but were only made available to KTVU on Monday.

Port board members and staff met in special session earlier in the day to discuss how to provide about more effective leadership. At the end of the session, officials released the two internal reports.

When asked about the length of time between the completion of the audits and their release, the Port's acting Executive Director Deborah Ale Flint said "We don't typically release audit reports."

Flint told KTVU the reports were a reflection of port management's move to be more transparent. She said stricter internal controls are needed to prevent abuses.

"It is something that we take seriously and are not going to close our eyes to," said Flint. "We're going to look at it and make sure the mistakes of the past are not repeated."

The audits said some of the port's credit card holders skirted single transaction spending limits by splitting bills to avoid detection.

KTVU first reported port executives spent more than $67,000 in gifts that included purchases from Tiffany Jewelers. The audits stated those gifts may violate state and federal laws.

At least $50,000 in unsubstantiated expenses may expose the port to tax liabilities. The audits also details more than $194,000 in questionable port expenses that included a U2 concert.

The audits noted that more internal controls are needed, pointing out that that credit card spending limits were too high and some card holders were letting other staff members use their visas.

The port management's responded by saying they don't have enough resources in the finance department for stricter review of expense reports.

On Monday, the port also announced the retirement and termination of Maritime Director James Kwon.

KTVU also learned that Kwon and former Executive Director Omar Benjamin have reimbursed the port for $5,462 spent at two strip clubs.

The internal investigation mentioned one establishment in Houston that had previously reported by KTVU, but also revealed a second club for the first time Monday.

The second club, called Sheik's Palace Royale, is located in Minneapolis. A review website makes it clear it is a high-end strip club.

The report specifically did not address Cafe Juliet, an Oakland karaoke club that a port officials had receipts from and a KTVU investigation found was frequented by scantily clad women.

"So the clarification there is they did not look into the establishment of Cafe Juliet and its illegal activity," said Flint. "They looked at the role of port employee and whether port employees violated port policies and they determined that that did not take place."

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