PROVIDENCE, R.I. (AP) — A renewable energy program run by Rhode Island's troubled Economic Development Corp. mismanaged grant money, failed to adequately monitor or report grants, and in some cases overpaid grant recipients, according to a state audit commissioned by Gov. Lincoln Chafee.
The report, released this month, concluded that the EDC's Renewable Energy Development Fund suffered from sloppy bookkeeping and an "informal management style" that created widespread accounting problems at the program between 2008 and 2012, the years reviewed in the audit.
The Renewable Energy Development Fund uses money paid by electricity customers to offer grants, loans and other incentives to companies and municipalities looking to boost renewable energy in Rhode Island. Most of the officials who oversaw the program between 2008 and 2012 have been replaced. Current EDC officials said that while the audit's findings are troubling, new rules for the program adopted in the past year should prevent such problems from recurring.
"I feel confident that we've made a good set of changes," said Marcel Valois, who took over as EDC director this year. "It's disappointing to see the shortfall in the procedures. But on the other hand it was very enlightening."
The EDC is the agency responsible for a $75 million loan guarantee given in 2010 to former Red Sox pitcher Curt Schilling's now-bankrupt video game company 38 Studios. Chafee has since replaced most of its board and appointed Valois to lead the agency. The energy program also has a new leader, Hannah Morini.
The audit found:
—The program routinely awarded more in grant money than its own rules allowed. Program rules allowed for $200,000 in annual grants for groups looking to hire consultants or conduct feasibility studies. Yet the grants for such work exceeded the cap in each of the four years reviewed in the audit. In total, the program awarded $1.5 million in these grants over the four years — nearly double the $800,000 maximum.
—A $60,000 grant — to the Conservation Law Foundation — was approved by the program's director but not the EDC Board, even though all grants larger than $50,000 require board approval.
—Three groups received overpayments totaling $11,000. One group's consultant was paid three times for the same service.
—Program officials made no effort to collect $1 million owed to the program by eight groups who received loans or agreed to repay grants.
The audit concluded that many of the problems were caused by a failure to record and track the grants and loans given out to various groups. Because the program did not keep adequate records, the EDC Board was often given inaccurate or incomplete reports about grants and loans. In a 2012 report to the board, program officials failed to mention four grant recipients and gave incorrect numbers for three other grants.
"There was no process or system to account for (grant) awards, nor was there a process to track payment activity," the audit concludes.
Julian Dash, the energy program's manager from 2008 to 2012, said he hadn't read the audit, but he said many of its findings come down to how one interprets EDC and program rules.
"I would say that it is a difference in policy, rather than accounting," said Dash, who now works as a renewable energy consultant.
In the past year, the state and the EDC have changed the energy program, moving it under the EDC's financial services office and increasing the oversight by the EDC board. New accounting rules have been implemented, and other changes in grant rules have been adopted.
Chafee, a Democrat, asked state auditors to review the program after his administration began investigating the EDC in the wake of 38 Studios. His spokeswoman, Christine Hunsinger, said the governor is confident the new rules will improve the program.