Audit questions tribe’s spending of $1.4M in grant money

PIERRE, S.D. (AP) – A tribe in South Dakota misspent or couldn’t account for roughly $1.4 million in federal funds for a rural water system, including thousands of dollars paid to officials for meetings they didn’t attend and money spent on a backhoe that couldn’t be found, according to a government audit report released Wednesday.

The Interior Department’s Office of Inspector General reviewed roughly $2.6 million worth of grant money, interviewing federal and tribal employees and reviewing tribal financial documents.

The audit, launched after human rights organization alleged financial mismanagement in the Lower Brule Sioux tribe’s government last year, found the tribe claimed $1.44 million in costs for the operation and maintenance of a water system between 2012 and 2015 that were unsupported, unallowable or unreasonable.

The resulting report calls for increased oversight by the U.S. Bureau of Reclamation, a water management agency in the Interior Department that the report said didn’t adequately review federal financial reports submitted by the tribe before approving them. The bureau has an agreement with the tribe for the operation, maintenance and administration of the Lower Brule Sioux Rural Water System, which includes a plant that treats water from the Missouri River for rural tribal consumers and several nontribal towns.

The tribe’s secretary and treasurer, Orville Langdeau, didn’t immediately respond to a telephone message requesting comment from The Associated Press.

According to the report, officials found about $315,000 in payments to vendors and others without adequate documentation. For example, a roughly $35,000 invoice from 2012 for painting a water tower reads “Bill for painting water tower,” and did not come with documentation such as timesheets or material and supply lists. The tribe also paid $7,000 for a Caterpillar backhoe that later couldn’t be located.

Auditors discovered about $204,000 in internal transactions in the tribe’s accounting system that didn’t have adequate documentation. The tribe paid employees over $103,000 for things like incentive bonuses without supporting records. Members of a steering committee over a 2 1/2 year period received overpayments for attending meetings or compensation for meetings they weren’t at totaling more than $24,000.

The audit also uncovered a more than $880,000 discrepancy between expenses on federal financial reports and the tribe’s general ledger, and nearly $40,000 in unallowable payments to vendors – including more than $2,000 spent on a 2013 Christmas party for 50 guests at a restaurant in Pierre.

The Inspector General’s office will refer its recommendations, which include developing better review procedures, to the Office of Policy, Management and Budget.

The Bureau of Reclamation intends to make contact with the tribal government by the end of the year to discuss resolving the financial issues highlighted in the audit, according to an agency response.

The Interior Department’s watchdog office is still investigating the circumstances surrounding the tribe’s purchase of a New York-based brokerage firm called Westrock Advisors Inc. that ultimately went bankrupt.