Worrying similarities between KSU and GPC financial irregularities

There appears to be much  more to the story regarding the recent uproar at Kennesaw State University. President Dan Papp is resigning over widespread financial impropriety at the school and several other top administration officials have also resigned or have been fired. This was covered by both WSB TV station out of Atlanta as well as the Atlanta Journal & Constitution.

The headlines sounded awful for Papp, making it appear that he was deeply involved in graft and taking money to which he wasn’t entitled. Consider his list of reputed sins: Taking $577,000 in unauthorized deferred compensation, taking $40,000 more than he was permitted in his annual car allowance, and taking over $13,000 in pay for unused annual leave he was not entitled to.

These allegations have been used to portray Papp as a real crook in the media, just as happened with Georgia Perimeter College President Anthony Tricoli in 2012, when depletion of the college’s auxiliary reserves over three years and a $16 million deficit were laid at Tricoli’s doorstep. Remember that the GPC records showed that GPC budget officials were keeping two sets of books. They were also misrepresenting the false figures to Tricoli as the actual financials. University System of Georgia officials were aware of this fact but kept Tricoli in the dark till they could engineer his ouster and lay the blame squarely on him.

Papp’s ouster bears some similarities to Tricoli’s. At the same time Papp was depicted as a regular robber baron, stories appeared concerning graft by underlings in his administration, such as the director of dining operations working as a consultant for a vendor, while at the same time allowing $5 million in deficit spending from the school’s auxiliary reserves in a single year.

Let me state upfront that it is entirely possible that Dan Papp is the greedy huckster portrayed by the Fuchko report. It is hard to feel terribly sorry for a guy who received a $20,000 a year car allowance while most Georgians are driving cars valued at far less than that amount. All this additional compensation is outrageous in my opinion. But do we blame Papp for his greed in accepting all that extra cash he was offered or do we need to lay the blame at the USG who allowed  all this to take place under their nose for years?  The key point to remember is that even if Papp is a sleaze ball, how can the USG escape all blame since their sole job is to supervise and prevent these sorts of occurrences. 

We were among the first to condemn Papp as just another state official who engaged in graft, and would not receive so much as a slap on the hand for his misdeeds—similar to previous USG presidents who left in disgrace, but with fat perks and pensions.

Similarities between Papp’s ouster and Tricoli’s

On closer examination, however, it appears that Papp may be more of a fall guy—along the lines of former GPC President Anthony Tricoli. But unlike Papp who still made out like a bandit with a very generous golden parachute severance package, Tricoli got nothing in addition to being blacklisted from higher education. Could it be that, instead of skating free after his misdeeds, Papp is, like Tricoli, taking the rap for illicit machinations and incompetence within the USG? 

Papp was originally taken to task in a report prepared by USG Vice President of Financial Affairs John Fuchko.  This was leaked to the USG’s favorite pipeline WSB reporter Richard Belcher. The ouster of Tricoli was justified by a report also prepared by Fuchko, four months after the deficit crisis at GPC, a report that held Tricoli responsible even though admitting that chief budget officer Ron Carruth had consistently supplied Tricoli with false financials showing a healthy surplus even as emails were flying among GPC and USG budget officials about an imminent financial train wreck.

Both Papp and Tricoli were required to take the fall for the financial wrongdoing of others—instead of placing the blame on the financial oversight officials at the USG that are in a better position to uncover graft than any college president. Perhaps because Tricoli failed to go quietly in the night the USG decided to reward Papp with a more lucrative and dignified departure for fear he might reveal some dirty secrets he knew about incompetence at the USG.

Tricoli, like Papp, received his coup de grâce via a Richard Belcher story planted by the USG. Belcher reported that Tricoli had encouraged the hiring at GPC of a friend of his who was a felon. A story that turned out to have no truth to it,after the damage to Tricoli was already done.

Fuchko and Belcher’s Charges Against Papp

What about Belcher’s so-called investigative report echoing Fuchko’s report which effectively damned Papp? On closer examination, it appears to be more of a case of Belcher acting as the USG’s mouthpiece than doing a real investigative report. Few reporters have the time or patience to do true investigative reporting which can take months and be very tedious not to mention very expensive.

News is now about being first, not about being accurate. If it bleeds it leads and when you are competing with people on social media to get a scoop, reporters have been known to cut corners and issue corrections later or not at all. True investigative journalism is practically dead now because it takes too long, costs too much, and no one seems to care.  I imagine Belcher is under tremendous pressure by his editors to get new stories as fast as possible so I understand why he chose not to dig a bit deeper or question the motives behind John Fuchko.

Look at the charges from WSB’s “revelation” which actually came from the report prepared by John Fuchko. The very same USG budget official who wrote the report justifying blaming Tricoli for the auxiliary overspending covered up by falsified financials. I can’t find anything in his reporting that was new or discovered from any sort of in-depth investigation. Belcher’s report was instead little more than a summary of the John Fuchko report.

Wouldn’t you expect an investigative reporter to question why Hank Huckaby or others at the USG didn’t have measures in place to prevent this sort of financial irregularity or at least to raise alarm bells? Did Belcher ask Huckaby or Fuchko why they even have auditors and accountants in the USG if all these millions continue to disappear on their watch unnoticed until years later? Is that really investigative journalism, or just acting as the press secretary for the USG by taking all their reports on face value as they shift blame away from themselves to fall guys like Tricoli and Papp. Belcher may be under intense pressure to produce, but you still need to ask questions and understand the motives of the USG staff who always seem to escape any blame from reports they themselves prepare.

1) Deferred compensation plan

Papp took over half a million dollars from a deferred compensation plan, without USG authorization, prior to his departure, contrary to the terms of the USG deferred compensation plan.  But here’s the catch—Papp had a different plan, funded and run by the Kennesaw State University (KSU) Foundation

The USG knew about this all along, for over five years, and let it go. In fact, there is much USG correspondence about KSU Foundation’s (KSUF) contributions to the plan. So the USG knew about it all along, then bashed Papp as if he did this in secret.

As the Fuchko report itself concedes: “changes to the level of Dr. Papp’s deferred compensation and a salary supplement (both to be funded entirely or in part by KSUF) were approved by the BOR.” Funny how Fuchko’s reports have a way of coming to conclusions that contradict the factual foundation.

The charge was that Papp took the money from the plan without the USG’s authorization, and that Papp should have had a deferred compensation plan run by the USG.

What sounds in the news like obvious graft in the taking of over 577,000 actually hinges on the terms of the KSU Foundation plan—which the USG said five years later should not exist, though the USG knew about it all along. In short, Papp got Fuchkoed, then Belchered.

2) Auto allowance

Papp took $20,00 a year for his car allowance when he was only “entitled to” $10,000. The extra 10,000 again, came from the KSU Foundation, not taxpayer money.  I still have to scratch my head and ask why a highly paid university president should be entitled to any car allowance at all. No wonder tuition rates within the USG have skyrocketed.

The entire dispute resolves around an ambiguity as to whether the $10,000 Papp received from the Foundation was meant to be “in addition to” the $10,000 agreed to by the Board of Regents or “in addition to” the rest of Papp’s non-auto compensation package.

As the Fuchko report itself states: a June 2011 email from the former Chancellor to a former KSUF Chairman specified a $10,000 vehicle allowance…. Chancellor Davis added a note under the current compensation stating: “The Foundation also contributes $10,000 for a car allowance.”

The conclusion that Papp was only entitled to $10,000 total—as opposed to $10,000 from the USG and $10,000 from the KSU Foundation—was supported only by former Chancellor Erroll Davis’ statement, five years after the fact, that the email he wrote on the subject in 2011 meant that the KSUF $10,000 was in addition to the rest of Papp’s compensation package, not in addition to the $10,000 allowed by the USG.

A very slim reed on which to hang the condemnation. Papp got Fuchkoed. Upon reading the allegation, it’s not much of an investigative report either. Papp merely got Belchered on a finely parsed ambiguity.

3) Annual leave pay

While this issue has also been framed to make it sound like Papp blatantly stole money from the state, it also hinges on a technicality. The issue was whether Papp was entitled to payment for unused leave from his time at Georgia Tech when he left there to go to work at the USG, before moving on to KSU.

Papp could have transferred his unused leave to the USG at that time and been compensated for it when he left. However, he wanted to retain his status as a tenured faculty member at Georgia Tech.

Thus what is at issue is an arcane rule about transferring leave from one USG institution to another. It is undisputed that Papp could have transferred the leave time and been compensated for it when he left his next job. It was ruled improper, however, because he technically did not separate from Georgia Tech when he left for the USG

The Fuchko report said: It would have been possible for Dr. Papp to have received the $13,981.63 payout of annual leave when he originally transferred to the USG in 2000 had he actually resigned his tenured position at Ga. Tech instead of waiting to resign until 2011. Dr. Papp has subsequently reimbursed Ga. Tech for the improperly paid-out annual leave.

This is what caused Papp to be driven from office and derided in the press?

The greatest similarity between Papp at KSU and Tricoli at GPC is that the USG generated a report authored by Fuchko and in both cases it points the finger away from the obvious incompetence and bungling at best, at the USG central office.

The USG knew that Papp’s deferred compensation plan was set up by KSUF, contrary to USG policy, but they faulted Papp for that. The USG changed their entire system of budget oversight after the GPC budget fiasco, but Tricoli was blamed, even though GPC and USG budget officials actively misled him.

None of these problems  ever seem to stop at the desk of the Chancellor or the USG staff, even though they are should be in a much better position to detect fraud than a college president. But after the USG got through with them, it was all Tricoli and Papp’s fault. To coin a euphemism, they got Fuchkoed.

Whatever happened to the idea of “the buck stops here“? That sure doesn’t apply to the chancellor of the USG. Hank Huckaby may be an incompetent chancellor, but he has at least learned the three guiding principles of any top government bureaucrat who has been around the block and wants to hang around a while longer. 1) Plausible deniability 2) Always have a fall guy 3) Crap rolls downhill

Questions for further consideration

*Did Papp, like Tricoli, cross the wrong person to bring the house down on his head? Tricoli opposed the Chairman of the Board of Regents on a project that turned out to be a multi-million boondoggle for the state. But the project benefitted the Chairman’s home town in southeast Georgia. Did Papp make a similar faux pas in defense of the best interests of his school?

*Is the USG, and Chancellor Hank Huckaby in particular, making the buck stop short of the Chancellor’s office for widespread problems in the system. USG budget oversight is much better equipped to detect than presidents, who are not accountants and are ill-equipped to detect intentional fraud by their subordinates. In Tricoli’s case, however, Attorney General Sam Olens argues that Tricoli should have gone and looked at Chief Budget Officer Ron Carruth’s work papers to ascertain that Carruth was lying to him.

*Is all this USG positioning merely covering up incompetence under Hank Huckaby’s watch? Or is there something more sinister going on? It was never investigated, but Tricoli cancelled a $1.5 million contract—that was not disclosed in Carruth’s budget reports to Tricoli, with an outside contractor who had no work to show for all that money–right before Tricoli was axed. By the way, Fuchko, in his after the fact report, blamed Tricoli for wasting the $1.5 million on the contractor.

*Can we trust another Fuchko report? These after-the-fact evaluations appear more geared to divert blame from the USG than to account for reality or address fraud in the USG’s $10 billion budget.

*If there is no real evidence that either Papp or Tricoli did anything wrong, has the USG just become more sophisticated in covering itself and laying blame on others?  While the USG, via the Fuchko report, placed the full blame on Tricoli for the falsifications and misrepresentations of his subordinates, substantial blame has been laid on other officials at KSU besides Papp—with the effect of smearing Papp by association, as well as by exaggerating the charges against him. Nonetheless, Papp was allowed to retire and keep his pension. Tricoli was tricked into resigning as GPC president to take a position in the USG that Huckaby yanked away, like Lucy yanking  the football just as Charlie Brown is about to kick it. This bait-and-switch to induce Tricoli to resign deprived Tricoli of all his rights under USG policies. That includes, ironically, his eligibility for three year’s salary in deferred compensation upon separation after more than five years’ service.

*As with Tricoli at Georgia Perimeter College, there has been some barking about an Attorney General investigation of Papp at KSU. In Tricoli’s case, Sam Olens simply deferred to Fuchko’s machinations. In Papp’s case, if the Fuchko report is all they have on him, there is nothing for the AG to investigate except for Erroll Davis’ memory of what he meant by five-year-old emails.

*To what extent is the Atlanta media a player and not just a relayer of information? WSB and the AJC were used to roast Tricoli in 2012, just like Papp in 2016. But unlike Tricoli,  Dan Papp walked away with some sizeable some hush money to keep him compliant. He is also older than Tricoli and is already at the age of retirement and less prone to make a fuss.

Stephen Humphreys, the Athens attorney who now represents Tricoli, told me that when he first started looking into patterns of criminal conduct in the USG in 2010, he was referred to Belcher by Humphreys’ fellow Princeton grad, news anchor Sally Sears, who is married to Belcher. Humphreys said he was puzzled when Belcher came back with the response that the documented obstruction and evidence tampering by the Board of Regents and Attorney General was not a story. Now, as the pattern of reciprocal backscratching between the Atlanta media and the BOR emerges more clearly, maybe it is not so puzzling after all.

Conclusion

This state observes a strange version of the old adage of making people accept the consequences of their actions. After Huckaby tarred and feathered Tricoli with false charges and tricked him out of his job, to keep the buck from stopping at Huckaby’s desk, Georgia Trend Magazine named Huckaby Georgia’s Man of the Year.

After Attorney General Sam Olens looked the other way while Fuchko finessed the USG out of accountability for $1.5 million phantom contracts and overlooked the knowing falsification of GPC budget reports—which is a felony—the Atlanta media establishment got together and gave Olens the Georgia First Amendment Foundation award for open government.

It remains to be seen how similar the circumstances turn out to be between KSU and GPC. But it is clear that Papp and Tricoli both took a bullet for the USG.

In the end, as the taxpayers supporting this $10 billion a year enterprise, we all got Fuchkoed.