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Questions abound about missing fuel report

By Staff | Nov 20, 2010

A fuel management investigation conducted by city consultant Bill Towler has raised more questions than answers in the days following his presentation to city council; neither the mayor, nor city staff, nor Towler himself has any clear idea how 360,000 gallons of fuel have seemingly gone missing over the last five years, or if that figure is accurate.
But as the investigation now prepares to enter into a full-on forensic audit, one thing has become apparent throughout the early stages of this process — no one quite knows where the fuel has gone to, or if it’s even missing.
The report filed by Towler and presented in part to city council on Monday cites several potential issues with the city’s fuel management practices.
Towler states that delivery of city fuel has “flaws in the process,” in that no bill of lading, or invoice, is obtained upon receipt of the fuel.
Towler also wrote that a review of the city’s fuel database found “numerous examples” of incorrect information. He reported to council on Monday that information was “being manipulated” within that system.
The result of Towler’s findings were that the city’s fuel consumption had increased nearly 100 percent since FY 2006, despite the reduction in staff size and fleet during that same period.
A visit to one of the city’s two main filling stations on Everest Parkway — the other station is across the street from city hall — found that fuel can only be obtained through use of two methods.
One, a “fuel ring” surrounding the gas cap reads a sensor within the fuel pump that allows the fuel to flow from tank to tank. Those two sensors must be within three inches of each other, or the fuel does not flow. A pin number and mileage input system is also in place with this particular method, in that the user must enter his or her pin number in order to turn the pump on. Mileage, while recorded, does not dictate whether or not the pump is turned on.
The second method is the use a “fuel key,” which bypasses the fuel ring sensor method and turns the pump on, following entry of a pin number.
Towler’s report states 70 keys are assigned to various employees and that the keys can be duplicated.
Mark Ridenour, acting general support services manager for the Public Works Department, said Friday that to his knowledge 53 keys are circulating among city employees, and a strict system is place to verify who does and does not have a key.
City Spokeswoman Connie Barron could not clarify whether 70 keys, or 53 keys, are currently in use.
Ridenour said he was “surprised” by Towler’s findings, but added that he’s waiting until an audit report from SCI Distribution — the company from which the city purchased the fuel management system equipment — becomes available to base the necessary corrections, if any, on.
Ridenour said fuel is delivered every Tuesday and Friday and that a staff member is always present when deliveries are made. The fuel tanks are also measured before and after each delivery, according to Ridenour.
Ridenour also said that when an employee is terminated or voluntarily quits, the Human Resources Department issues a “separation notice” to the necessary department to inform them the employee-issued PIN number has expired.
Ridenour also said the fuel management system does need some calibration, but he’s been tracking the fuel for over a year.
Ridenour did admit that system could be tweaked for tighter security.
“It truly caught me off guard,” Ridenour said of Towler’s report. “We have a security system in place, but there are definitely some areas open to improvement.”
The city receives its fuel in 8,000-gallon tanker trucks, and smaller tanker trucks carrying up to 4,000 gallons, according to Towler’s report.
The “corrupted and ineffective” management controls indicated in Towler’s report has caused the city to waste millions of dollars in fuel, he wrote. The report also states that if the city reverts to FY 2006 fuel levels, it can save over a million dollars annually.
Councilmember Marty McClain thinks Towler is sending a mixed message with the report.
Towler repeatedly said Monday during his presentation that he was not indicating that employees were stealing fuel. But McClain thinks Towler’s report lacks evidence to back up his figures, and that the employees will see the report as an allegation aimed straight at them.
McClain also thinks the audit report from SCI Distribution is but a veiled attempt to sell the city new equipment.
“SCI has been trying to sell equipment to this city for a long time. I feel at this point SCI is simply chasing a sale,” McClain said. “If we need to upgrade our equipment, I’d want to put out an RFQ (request for qualifications) for various vendors and research their actual bids.”
Message boards and blogs were buzzing after Monday’s presentation that the report is merely an effort for Towler to justify his re-hiring as a special consultant, which the city did on Nov. 17 for another four-month term at a cost of $28,392.
Mayor John Sullivan said that was not the case, and equated Towler’s new contract to keeping the quarterback in a game even though the team has a lead at half time.
Sullivan said neither the report nor Towler has indicated that employees are stealing fuel, and that no one should jump to that conclusion just yet.
“I don’t think there’s anything for them to worry about,” Sullivan said of employees. “This isn’t head hunting, it’s a matter of putting in proper security.”
The city auditor’s office is planning on conducting its own forensic audit into the matter.
Interim City Auditor Margaret Krym said Friday her office is planning on bringing on two auditors from the Lee County Clerk of Courts office, though not specifically for the purpose of the fuel audit.
She said Charlie Green’s office does have two certified fraud examiners, but there’s no guarantee those auditors will be assigned to her office. The auditors will be paid $56 an hour, she said.
“We’ve been working on this agreement for a couple of months now. This did not occur because of the current issue of fuel,” she said.
Marilyn Rawlings from Lee County’s fleet management said she believes that 360,000 gallons of fuel could go missing over five years.
She said the fuel key, a system the county also uses, could not be easily duplicated without use of the fuel system software. The county does not use SCI Distribution, however.
She said the only way to ensure that no theft is occurring would be to start from scratch.
“I think the system they (the city) have can work,” Rawlings said. “But, what I would do, is just disconnect everything. That way, if you have fuel keys you don’t know about, they will no longer work.”
The next phase for the city will be to see both of the completed audits from SCI Distribution and the city auditor’s office.
It’s unclear what will happen following the receipt of the audits. If theft is occurring, the matter would likely be turned over to law enforcement.
As of now, there is no criminal investigation into the matter, according to Barron.