Posted in:

Report: COG Director Had Conflict of Interest

RALEIGH — The former Albemarle Commission Region R Council of Government executive director violated the organization’s conflict of interest policy and possibly state law by hiring her husband’s company to oversee building a new facility for the organization, the Office of the State Auditor announced Wednesday.

Cathy Davison

Former executive director Cathy Davison recommended a few years ago that the commission, which serves 10 counties in northeast North Carolina, build a 16,600-square-foot facility. During an April 2017 meeting, she suggested the commission hire NENC Project Solutions to oversee the project. Minutes from the meeting reflect that Davison disclosed her husband worked for the company but did not say that he owned it, per a Daily Advance report.

The board gave the go-ahead for Davison to sign a contract with NENC Project Solutions, which was paid $11,000, half the $22,000 contract. The new building never came to fruition because the board of delegates canceled the project.

The Office of the State Auditor was notified through its hotline of the potential conflict of interest of Davison awarding the $22,000 contract to NENC Project Solutions, her husband’s company.

A report from State Auditor Beth Wood’s office explained that investigators found that Davison violated the Albemarle Commission’s conflict of interest policy by both failing to fully disclose that her husband owned the company and awarding him the contract.

The report also notes she may have violated General Statute §14-234, which states no public officer or employee “may derive a direct benefit” from a contract with a public agency. “The statute explicitly defines a direct benefit as applying to a contract with the person’s spouse, provided that spouse receives direct payments from the contract or owns more than 10 percent of the company involved,” according to the report.

The state auditor report details her involvement with the making and awarding of the $22,000 construction management contract to the company owned by her husband.

Created in 1970, the Albemarle Commission Region that serves Camden, Chowan, Currituck, Dare, Gates, Hyde, Pasquotank, Perquimans, Tyrrell and Washington counties focuses on economic and workforce development, rural planning including transportation and infrastructure, and services for the aging such as senior nutrition.

“Specifically, the Executive Director contacted her husband to seek his company’s services, established the criteria for selection of a contractor, recommended his company to the Board of Delegates for approval, signed the agreement between the Albemarle Commission and her husband’s company with her husband signing the agreement on behalf of his company and approved $11,000 in payments to her husband’s company.”

The state auditor’s report goes on to say that Davison claimed no other company in the area provided the necessary services. She claimed to have reached out to other contractors but did not document her alleged outreach.

The report also listed concerns about the legitimacy of NENC Project Solutions, including that the husband said the company had no clients before the contract with the Albemarle Commission and that the company registered with Elizabeth City’s planning department in April 2017, eight days before contract approval by the Albemarle Commission. The company’s registration license is listed an effective date of Oct.  1, 2016. The company’s business registration with the Elizabeth City planning department was expired Sept. 30, 2017.

Additionally, the address for the company was a post office box in a UPS store, which is contrary to what Davison told investigators July 13, 2018. She said that the address was the location of a business office then added later that her husband did some work from home. On Sept. 5, 2016, she claimed she learned of the post office box address over that summer.

The commission paid the $11,000 to her husband’s company before the board of delegates canceled the construction project, which resulted in Davison directly benefiting from being involved involvement in the contracting process.

Davison repaid the $11,000 to the commission during the July 2018 board meeting, claiming that she repaid the money because she did not originally know the payments may violate state law. She also said she used her private, personal account rather than a joint account she shares with her husband but a review of bank account information revealed her husband listed as “joint owner” of the account from which she made the $11,000 repayment.

The state auditor concludes that Davison “misled the Albemarle Commission’s Board of Delegates by not fully disclosing her husband’s ownership of the company. In addition, she withheld other facts about his company, other potential vendors, and the nature of the company’s experience.”

She admitted to knowing about the commission’s conflict of interest policy prohibiting benefiting from a contract but said she didn’t consider it conflict of interest because she didn’t know her husband owned the company until July 2017, when she informed the Albemarle Commission’s external auditor in the related parties disclosure.

“However, she repeatedly maintained in other statements that she did not learn of his ownership until ‘this summer (2018)’ after ‘the newspaper actually showed me the detail’,” according to the report.

But, Davison’s husband told investigators she approached him about doing business with the commission, signed the agreement as owner, and that he was the company’s only employee. “The Executive Director’s husband said, ‘She knew I ran it.’ When investigators asked him if she had always known he owned the company, he replied, ‘I would have thought so but there was the possibility for confusion.’”

The conflict of interest also rests on the board’s failure to conduct due diligence, according to the report.

The board did not conduct any other research about the company or verifying relevant information after the recommendation made by Davison. “All Board of Delegates members said they did not know he owned the company and admitted they should have asked more questions prior to awarding the contract,” per the report.

Davison submitted her resignation Oct. 2, 2018, that went into effect Nov. 2.  Melody Wilkins started this week as executive director.

Davison did not respond to Coastal Review Online’s request for comment. She now works as vice president of corporate services with Roanoke Electric Cooperative, according to her LinkedIn social media page.

Created in 1970, the Albemarle Commission Region that serves Camden, Chowan, Currituck, Dare, Gates, Hyde, Pasquotank, Perquimans, Tyrrell and Washington counties focuses on economic and workforce development, rural planning including transportation and infrastructure, and services for the aging such as senior nutrition. The 14-member board of delegates made up of representatives from the 10 counties plus four at-large members provides oversight for the commission and hires an executive director to oversee daily operations.

About the Author

Staff Report

The story was compiled by staff members of Coastal Review Online.