Anchorage city auditors say their initial review of actions made under disgraced former health director Joe Gerace raised some concerns, and they plan to dig further.
“Our review of invoices and interviews with health department staff suggested that Mr. Gerace had obligated the municipality prior to having the vendors’ work authorized through the proper contract processes,” said Michael Chadwick, director of Anchorage’s Internal Audit Department.
That essentially means Gerace had put the city’s money on the line before contracts were done properly, according to auditor interviews with staff.
The department’s further audit of grant and contract management compliance at the health department is among more than 20 audits approved by the Assembly Tuesday in a 2023 audit plan. The other topics range from the city’s Women, Infant & Children nutrition program, or WIC, to collections management at the library.
Chadwick said he’s received a lot more engagement from city officials this year.
“Compared to previous years, we had an overwhelming response,” he said. “A very good response from the departments, from the Assembly, from the administration on things that they thought would be good to look at.”
The Gerace-related audit is one of the most high-profile audits on the list.
Gerace was appointed by Mayor Dave Bronson and served in the role for just under a year before resigning in August 2022, shortly before an investigation from Alaska Public Media and American Public Media showed that he had fabricated many parts of his resume, including military service, medical credentials and education background.
In response, the Anchorage Assembly asked for an audit into everything Gerace had done as health director.
“That’s a pretty big request for a small office like ours,” Chadwick said. “And so I suggested at that time that we go out to the health department and do a very quick review and see which, if any, issues, rose to the surface of things we should look at.”
Last month, Chadwick’s department presented its preliminary review of Gerace’s tenure to the Municipal Audit Committee. He said one of the things that jumped out to auditors had to do with issuing grants and contracts.
“There could’ve been a contract in place, but it may have expired,” Chadwick said. “Or there could’ve been a contract in place, but there weren’t any funds.”
Other issues found by auditors were allegations of a hostile work environment and a “general demeanor of unprofessionalism.” However, Chadwick said those issues are difficult to conduct comprehensive audits of, and those were instead delegated to the city’s human resources department.
Around the time of Gerace’s departure, then-Municipal Manager Amy Demboski said that the city’s HR department would require new employees to give permission to contact former employers and colleges to verify credentials, as well as review the credentials of employees hired during Mayor Bronson’s tenure. Officials with the administration say that review has completed.
“The HR Department has vetted all the credentials of executive employees hired on or after July 1, 2021 and did not find anything of concern,” Bronson spokesman Hans Rodvik wrote in a statement Tuesday. “Additionally, the Administration has implemented a new executive hiring policy to further vet prospective candidates, to include verifying past employment, calling references and checking education history.”
Chadwick said another big audit will look into sole-source contracts from the city’s purchasing department. The department released the results of a previous sole-source contracts audit last February, and said this follow-up audit came at the request of the mayor’s office.
“I’m not sure exactly what their concerns are,” Chadwick said. “I just know that they wanted us to do a follow-up review of sole-source contracts, to make sure that they were being reported properly, and that contracts that were over $30,000 were being sent to the Assembly for approval.”
Scrutiny of sole-source contracts has intensified in recent months, with allegations coming to light this week from Demboski, who was fired by Bronson in December, that several sole-source contracts were granted without approval from either her or the Assembly. However, Demboski’s claims, presented in a letter from her attorney alleging she was fired in retaliation for bringing them to the mayor, came after the audit report was put together.
Chadwick said just because a department is being audited, that does not indicate shady practices or any guilt of a crime.
“In fact, a lot of the directors look at audits as an opportunity to improve,” Chadwick said. “Because sometimes they don’t know necessarily what may be happening and they want us to look at it, and say ‘take a look at this as an independent third party, and tell me how we can improve.’”
Chadwick said he doesn’t have a timeline on when any audits will be completed. Completed audits will be made available on the municipality’s website.