Though the Metropolitan Sewer District’s internal audit investigating possible contractor abuse of their supplier diversity program was due to be completed by now, MSD officials at their board’s audit committee meeting on Friday indicated the official report might not be finished until September.
While MSD executive director Greg Heitzman and legal counsel Paula Purifoy said that three general contractors have been fully cooperative with their investigation, the two contractors most involved in the allegations — Bancroft Group and Advance Ready Mix — have chosen to have MSD go through their attorneys and requested delays in turning over documents.
MSD announced the internal audit of Bancroft’s subcontract work and the agency’s supplier diversity program in April, responding to a report by Insider Louisville. The audit is being conducted by their supplier diversity program manager Joy Walker, with oversight provided by audit and accounting firm Crowe Horwath for $50,000.
That IL investigation cited documents from MSD and the transportation departments of Kentucky and Indiana that showed the local minority-owned concrete supplier Bancroft may have served as a pass through for businesses on several MSD contracts worth up to $100 million. MSD requires that contractors on major projects must use a minimum percentage of minority-owned subcontractors in order to be eligible, but documents suggest all of the trucks, labor, storage and supplies used by Bancroft on these projects was actually provided by Advance, a large concrete supplier that is not minority-owned.
Purifoy told MSD’s audit committee on Friday that they have a four-phase plan for their investigation: collecting internal documents on the projects in question, collecting documents from the contractors involved, conducting interviews with the contractors, and then reviewing that information to produce a preliminary report. Purifoy said they are currently in phase two, and three general contractors on the projects in question — Whittenberg Construction, Smith Contractors and MAC Construction — have fully cooperated and let MSD officials inspect their requested documents in person.
However, Purifoy added that “there’s a delay in getting to phase three,” as Bancroft and Advance have chosen to communicate through their attorneys and asked for an extension in turning over documents until the end of June or July. While MSD initially said the audit would be complete in five to eight weeks when it was announced on April 13, Purifoy now said it would be complete “hopefully by the end of August or early September.”
Before the meeting, Heitzman told IL that the audit was taking longer than expected because they were having trouble getting some documents from contractors. During the meeting, Heitzman told the committee “we had some of the contractors being responsive and submitting information, and with others there have been delays.”
Chris Egan, the attorney for Bancroft, told IL that the company is not in any way responsible in for a delay in the audit, and they are fully prepared to cooperate with MSD’s investigation.
“(MSD) asked for (documents) last week, and I said we needed additional time to be able to get the long list of documents,” said Egan. “We’re not in the business of providing documents, we’re in the business of doing what we do… I mean, he’s got a business to run, so we just asked for additional time.”
When asked what construction job Bancroft is currently working on, Egan declined to answer.
In a follow-up email, Egan wrote that he first received the request for documents from MSD on June 4, and that he told MSD Bancroft would turn over those documents by June 22. MSD spokesman Steve Tedder told IL that Purifoy sent Bancroft their initial request on March 28.
Asked if Bancroft has ever been used as a pass through by non-minority contractors on MSD projects, Egan strongly denied the allegation.
“It’s an inaccurate accusation, completely,” said Egan. “So if there’s a concern as to why there are lawyers involved, it’s because inaccurate allegations are being made. And from our perspective, the presumption, obviously, is competitors are making these types of allegations to gain an advantage.”
Egan declined to speculate as to who those competitors are.
Michael Shull, the attorney for Advance Ready Mix at Frost Brown Todd, did not return a call and email seeking comment.