Audit: 5 indicted former Hardeeville officials accrued thousands in leave pay, bonuses

astice@islandpacket.comMarch 30, 2013 

As the S.C. Attorney General's Office moves forward with charges of misconduct against five former Hardeeville officials, current city officials and employees are refusing to say what led to the accusations.

However, the results of a four-year financial audit completed in 2008 outline some of the "irregularities" that caused Mayor Bronco Bostick to request an investigation by the S.C. Law Enforcement Division five years ago, shortly after he first took office.

The years-long SLED investigation led to the indictments March 21 of former city administrator R. Shayne Haynes; former Police Chief James Hubbard; former Fire Chief John Ekaitis; former treasurer Santesia Henderson; and former police Lt. Eric Washington for misconduct in office between 2005 and 2006.

The only specific abuse of power mentioned in the Jasper County grand jury's indictments concerns a "leave-cashing policy."

According to the financial audit by accounting firm Dixon Hughes, a draft of which was discussed at a Hardeeville City Council meeting in October 2008, the city once had a policy that allowed employees to cash in unused sick and vacation days.

A previous audit of the fiscal year ending in June 2004 indicated the city's accrued leave budget was overspent by $232,000 because of the policy. The city then adopted new limitations, to begin the next fiscal year, barring employees from cashing in their sick days or more than 80 hours of vacation leave per year.

However, "none of those policies appeared to be enforced" in the years that followed, according to the Dixon Hughes audit. Certain employees continued to cash in more sick and vacation leave than they were allowed, causing discrepancies between the pay they earned from the city and the wages they reported to the IRS, the audit said.

Henderson, Hubbard, Ekaitis and another employee who has not been indicted had their contracts modified to earn more sick and vacation leave than other city employees. The audit does not say who amended the contracts.

Haynes' contract was not amended, but he accrued the same amount as those whose contracts were changed, the audit said.

The audit includes memos from Haynes and Henderson that added yet more vacation days, and auditors could not find proof that the additions were authorized by City Council.

In one instance noted by the audit, Haynes was paid $7,923 in January 2006 for cashing in 80 hours of accrued vacation and 80 hours of sick leave, but the hours he traded for pay were not deducted from his leave balance.

UNAUTHORIZED BONUSES

Another discrepancy between employees' pay and the wages they reported to the IRS came in the form of unauthorized bonuses, the audit said.

In a memo, treasurer Henderson ordered a $5,000 bonus for herself, a $5,000 bonus for Ekaitis and a $10,000 bonus for Haynes that was never documented in City Council minutes.

Payroll analysis identified other bonuses for which auditors could find no supporting documentation or authorization.

Between 2004 and 2006, Ekaitis and Henderson each got $9,500 in such bonuses; Haynes received $23,000; Hubbard received $7,000; and Washington received $6,000. Four other employees who were not indicted also received similar unauthorized payouts, according to the audit.

LEAVING THE CITY

The indicted officials left the city between 2006 and the 2008 municipal elections, when Bostick became mayor and challengers ousted several incumbent council members.

According to news reports at the time, Henderson and husband Washington resigned in 2006 after being given the choice to do so or be fired. Hubbard was fired as police chief in 2007.

Haynes was the last to go, and the audit takes note of the severance pay he received -- a lump sum of $187,859. His annual salary was about $141,000 when he left office.

According to Haynes' contract, he was to receive severance pay equal to a year's salary and other accrued benefits only if the city terminated his five-year contract before June 2008. He resigned in May 2008.

Numerous documents in the audit indicate the outgoing council did not ask Haynes to resign; however, incoming Mayor Bostick and council members had campaigned on a pledge to remove him.

If his employment agreement had been allowed to expire just one month later, the city would not have been required to pay him severance, the audit said.

Former Councilman Bill Horton, who was defeated in 2010, said Haynes' "last official act" was to eliminate the positions of two assistant city administrators, who left at the same time he did.

Horton said Tuesday he could not provide further details about the audit. Hardeeville moved to a council-manager form of government during his time in office, giving elected members less oversight of daily city operations, he said.

Haynes went on to become the city manager of Statesboro, Ga., a position he held until 2010. He, Henderson and Washington currently live out of state, and the S.C. Attorney General's Office is preparing to extradite them so they can appear before a judge, according to office spokesman Mark Powell.

Arraignments for Ekaitis and Hubbard are scheduled for 11 a.m. April 15 before Judge Perry Buckner at the Jasper County Courthouse, Powell said. Ekaitis is arranging legal representation; Hubbard's attorney is Charles Macloskie of Beaufort. Attempts Thursday to reach Macloskie were unsuccessful.

Attempts to reach Bostick and current council members Mike Sweeney, Sherry Carroll and Scott Ready were unsuccessful. Councilman Sal Arzillo declined to comment.

SLED spokesman Thom Berry said the investigation is considered active until it goes to court and declined to provide further details.

Follow reporter Allison Stice at twitter.com/IPBG_Allison.

Related content:

5 former Hardeeville officials indicted on misconduct charges, March 21, 2013

SLED to investigate Hardeeville finances, Nov. 20, 2008

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