Sign In | Create an Account | Welcome, . My Account | Logout | Subscribe | Submit News | Facebook | Twitter | Home RSS
 
 
 

Investment board cancels FNCB contract

COLUMBIANA COUNTY

April 18, 2013
By TOM GIAMBRONI , Salem News

LISBON - The Columbiana County Investment Advisory Board has agreed to cancel a contract with the local bank it used to invest county funds because of problems with the company that managed the account.

The advisory board voted 3-0 on Wednesday to terminate its contract with First National Community Bank (FNCB), which announced last week it planned to do likewise because of problems with WesBanco Trust and Investment Services.

The contract dates back to March 2010, when the advisory board authorized former county Treasurer Nick Barborak to negotiate a contract with FNCB to invest $5 million in county funds, with the FNCB using WesBanco to manage the account.

Last month, new Treasurer Linda Bolon reported inheriting a bookkeeping problem with the WesBanco account that resulted in the county's investment income being overstated by $118,779. While trying to correct the problem, Bolon also discovered several investments were illegal because they exceeded the maturity time limit allowed by law.

Meanwhile, FNCB announced last week it was exercising its option to terminate the contract with the county, unless the advisory board had any objections, because the continuing controversy had become a distraction for the county. FNCB said it would waive its investment fees for the period and reimburse the county for any loss resulting from early liquidation of the investments with WesBanco.

Voting to terminate the contract were Bolon and county commissioners Mike Halleck and Tim Weigle. Commissioner Jim Hoppel abstained because he owns stock in FNCB, while county Clerk of Court Anthony Dattilio was absent from the advisory board meeting.

During the meeting, commissioners brought up the issue of the 2012 computer crash involving Barborak's computer, which came to light after county Republican Party Chairman David Johnson filed a public records request seeking any emails that may exist between Bolon and Barborak, both of whom are Democrats, and with the state auditor's office.

This newspaper reported Wednesday that after the county's IT person was unable to resurrect the hard drive, it was sent to a company named Phoenix, which was also unsuccessful. No one knows what became of the hard drive after that, and Commissioner Tim Weigle said they need to have a policy spelling out what computer information needs to be backed up on a server so something like this does not happen again.

Bolon agreed. "I think this has brought to light an internal control weakness that needs addressed," she said.

Bolon said the desktop computer that crashed last year dates back to at least 2000, when she was treasurer. Barborak served as treasurer from 2006 to 2012 before being elected state representative last year, with Bolon returning as treasurer in January.

"Computers do crash, and there should be some appropriate backup," she said.

Commissioners expressed surprise about the missing hard drive, and Bolon said that is why she is seeking guidance from the county prosecutor's office about how to proceed in responding to public records requests for the emails.

"I've heard of computers crashing all the time, but I've never heard of a hard drive disappearing," Halleck said.

Barborak told this reporter on Tuesday the computer crashed in mid 2012 and doubts there were any emails to Bolon in it anyway. Bolon said earlier that Barborak first advised her of the bookkeeping problem in late December, before she took office, and the state auditor's office was also aware.

Bolon told the board once the $5 million from the WesBanco account is received she intends to place it in the state-sanctioned STAR Plus program, where it will be federally insured, until the board decides what to do. One option would be to return the money to United American Capital, the other firm used by the treasurer's office to invest county money.

Bolon said she first contracted with United after becoming treasurer in 2000. There were only two investment firms in the state at that time specializing in handling public money, and Bolon interviewed both before deciding on United because the founder once worked for the state treasurer and the fact the company's depository was Huntington National Bank, which has branches in the county.

United Capital is currently investing $21 million in county funds, and its fee was a flat $2,500 per month, while WesBanco's fee was based on the success of investments, which came out to about $2,300 a month for investing $5 million.

Bolon said she believes a fraud probe is unwarranted at this time, although the state auditor's office is currently reviewing the situation as part of its routine audit of county books for 2012.

Having said that, Bolon indicated to commissioners she was troubled by the fact someone with questionable authorization had access to the investment records. She was referring to Gregory Ewing, a former investment banker who lives in the county and was hired by county Auditor Nancy Milliken for $20 an hour to help put together the bond package to finance construction of the new government services building in 2012.

After the investment bookkeeping problem became public last month, Bolon said Ewing approached her and told her he had looked into WesBanco's investments and obtained related information from FNCB after becoming concerned. Bolon said she had no idea who Ewing was before he explained his working relationship with Milliken and how he came to be involved.

Milliken said Ewing is employed on an as-needed basis and he also serves on her audit review committee, which consists of local citizens and officials who meet periodically to review county finances and provide advice.

It was in his capacity as an advisory board member that Milliken had Ewing attend last year's meeting with state examiners to review the results of the state's 2011 audit of the county's books. She said Ewing was concerned about some of the investment information that came up at the meeting and offered his services to Barborak to address the issues raised by the state examiners.

Barborak confirmed that Ewing did offer his services and was provided some investment information in order to perform his own review. Bolon indicated the information came from the bank, and she was concerned because there was no indication Ewing had received written authorization to access investment data.

tgiambroni@mojonews.com

 
 

 

I am looking for:
in:
News, Blogs & Events Web