Mayor's aide skirts ordinance: $18,000 equipment sale violated borough's purchasing law

Posted: Thursday, November 12, 2009

Following an $18,000 equipment purchase from Chumley's Inc. by the borough in August, the borough mayor's Chief of Staff, Hugh Chumley, violated borough ordinance when he failed to file a critical piece of paperwork noting his conflict of interest in the deal.

Borough officials, including the mayor, who reviewed the transaction, say they missed its absence.

The incident came to light Monday following inquiries made to the borough by the Peninsula Clarion about the purchase.

The corporation has since returned the full amount to the borough, according to officials.

Chumley had failed to file a two page "Notice of Intent to do Business" form.

The form is required by borough ordinance 2.58.050, "the ability to contract upon disclosure of interest."

The ordinance states that municipal officers, employees, assembly members, a service area board member, director or employee of the service area board may engage in business or contractual relationships with the borough so long as they file a Notice of Intent to do Business form with the borough clerk at least 10 days before the business relationship is entered.

The problem transaction got its start this summer.

Chumley said his business has a long history of working with the area fire departments, dating back over 25 years ago.

When Chumley's Inc. chose not to renew their contract with CES this summer, Chumley said CES approached the company about buying the equipment. Having no need for it, the company agreed to sell.

The equipment included a truck tire changing machine and a wheel balancer among other things, and was valued at $35,000.

The transaction immediately raised flags in the borough's purchasing and contracting office.

"When CES brought this to me, it raised a number of questions," said Purchasing and Contracting Officer Mark Fowler.

Fowler reported holding meetings both with officials from CES as well as Chumley to assess the machinery.

"We went through our due diligence regarding the valuing the equipment," he said.

On Aug. 6, Fowler issued a memo to Mayor David Carey, recommending the purchase of the equipment for $18,000 from Chumley's Inc.

According to Fowler's memo, CES hired a mechanic to do work on their vehicles based on information that Chumley's Inc. was going out of business. Fowler said on Wednesday, that information about Chumley's Inc. going out of business was an error.

"Where the process broke down was on the intent to do business. I'll certainly accept responsibility for that," Fowler said.

Chumley later confirmed that the corporation was not going out of business, but just getting out of the mechanic business with the borough.

Chumley said he has been divesting himself of his financial interests with the borough since taking his position with the mayor in October of 2008.

While he said he has brought in a manager to run the corporation, he remains a significant shareholder -- owning 50 percent of the company -- and continues to sit on its board of directors.

He said however, that the corporation has terminated a two and a half-decade old contract with the road department, and more recently the maintenance contract for the CES fleet this summer.

Fowler said the borough no longer has any contracts with Chumley's Inc.

Both Chumley and Carey also have been quick to take the fall for not filing the form, as well.

"To the best of my knowledge that's the first time I've ever heard of a (Notice) of Intent to do Business form," Carey said.

Chumley said he was also unaware the form existed, saying, "I had never heard of it until Monday afternoon. That's when I'd first heard of it. It was just out of ignorance, no one had ever told me."

Chumley and Carey said they were notified by the borough's legal department and quickly decided to have Chumley's Inc. return the money.

The Clarion was unable to verify this with a copy of the returned check on Wednesday as most borough offices were closed for the Veterans' Day holiday.

Chumley said he would give the machinery to CES saying, "I just told them I was going to donate the equipment to the fire department."

According to Carey, the equipment remains in CES' possession.

At least some borough assembly member felt Chumley's Inc. should not have returned the check, downplaying the lack of the intent notice.

"I've certainly had more than one assembly person tell me that they believe this is basically a form that wasn't filled out and felt this was unfair the way this occurred and that they did expect me to initiate a more correct process which would include this form," Carey said. "There has been no decision made."

Carey said the incident would also have long lasting impacts and would be more aware of these potential issues in the future.

"I have a much better understanding of this now than I did two days ago," Carey said. "This was something before I signed that I should have asked. I didn't know of this form."

Dante Petri can be reached at dante.petri@peninsulaclarion.com.



CONTACT US

  • Switchboard: 907-283-7551
  • Circulation and Delivery: 907-283-3584
  • Newsroom Fax: 907-283-3299
  • Business Fax: 907-283-3299
  • Accounts Receivable: 907-335-1257
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING

MORRIS ALASKA NEWS