Pressure on HRT chief mounts over silence on missing money

Some Hampton Roads Transit board members' frustration over poor communication with agency leaders bubbled over Wednesday when they learned that a possible theft of about $80,000 had not been revealed to them.

There was no mention of the missing funds when the board was presented with an audit of HRT accounts in December. The suspected theft, and the fact that three employees were terminated but not prosecuted, was presented to the board's budget and audit committee before the full board meeting.

The chairman of the committee, Suffolk Vice Mayor Curtis Milteer Sr., said he was surprised when it was not reported to the full board.

"I'm not used to doing business like that," he said. "Any manager who does not fully give his board the proper information sooner or later will get a pink slip."

Milteer said he did not raise the issue at the board meeting. "It was not my responsibility to do it," he said. "It was the CEO's responsibility to do it."

HRT President and CEO Michael Townes sent a memo to board members about the "possibility of a theft of cash" late Wednesday afternoon after receiving a Freedom of Information Act request from The Virginian-Pilot.

The discovery of the missing funds added fuel to a raging dispute over HRT's management and credibility, sparked by the revelation last month that construction of Norfolk's light-rail project is 47 percent over budget and that many board members and city leaders were not clued in to the overruns.

Four board members have demanded that Townes resign or face possible dismissal. Three others have called a special meeting Monday to discuss his performance.

"I don't think it should have been concealed from the board the way it was," Jim Wood, HRT board chairman and a Virginia Beach councilman, said Wednesday. "It's indicative of poor leadership by the CEO that certain things are being kept from the board."

Several Beach leaders, including Wood and Mayor Will Sessoms, have said they won't support expanding light rail to their city as long as Townes is in charge.

Chesapeake Councilman C.E. "Cliff" Hayes said he's disappointed that he's "learning about a lot of things by reading about them in the newspaper" even though he serves on the governing board.

Hayes' criticism was directed not only at Townes but also at fellow board members.

"Just like on the cost overruns, there's plenty of blame to go around," he said. "We have a commission meeting with folks sitting around a table and they're not bringing forth issues for the full commission. I think that's insulting and appalling for a few folks to think they're going to run a commission that's represented by all the jurisdictions.

"Going forward, there really needs to be a change in the way HRT does business - I mean administratively as well as the policy making board."

Norfolk Councilman Paul Riddick said that later in December, the executive committee received an explanation about why everyone was not informed about the missing money and that committee members appeared satisfied. "It looks to me as if the people trying to remove Michael (Townes) are just grasping at straws now," he said.

Larry Davenport, HRT senior vice president for finance, said outside auditors found that the alleged theft did not result from faulty procedures or controls and therefore did not turn up as a problem in the formal audit report. A decision was made not to bring the issue to the full board unless asked by an audit committee member, which Davenport said did not happen.

"Thus far, our legal counsel advised us not to pursue legal action," he said.

Davenport said the money was taken from Virginia Beach bus-fare boxes, not from light-rail accounts.