Bayou la Batre councilwoman Annette Johnson says she’s turned over financial documents to the Mobile County District Attorney’s office related to an unauthorized loan in the city’s name approved by Mayor Brett Dungan and members of his staff without the City Council’s approval.
On Tuesday morning, Johnson said the disclosure of the documents was the first step in an investigation into the activities of certain city staff members that will involve “the DA, the Alabama Department of Examiners of Public Accounts and the Alabama Ethics Commission.”
Last week, Councilwoman Annette Johnson questioned a $50,000 loan Dungan allegedly set up in the city’s name through Region’s Bank without the council’s knowledge or consent. This week, Johnson claims the bank made the representation to her that “everything about the loan was in order,” including the council’s approval.“It was there very clearly, ‘the council met and approved on Dec. 18, 2014,’” Johnson said by phone after the meeting. “But, we met after business hours and the loan was never brought up on the agenda and never discussed by the council.”
Johnson said the document is one of several she “had no choice” but to turn over the Mobile County District Attorney’s office. She told Lagniappe Tuesday that “Everything is in the DA’s hands.” She also said City Attorney Bill Wasden was preparing a resolution to “affirm the council’s authority over the mayor relating to financial issues, signatures, contracts, etc.”
Though Dungan himself hasn’t responded to media inquires about the loan, Johnson said last week it was used to pay off debt owed by the city, though it was debt the council was apparently unaware of.
“I went through more than 1,000 emails this weekend and in none of those did (Dungan) let anybody know there were financial issues,” Johnson said. “I only heard through (an employee’s husband) that our insurance payments didn’t get made.”
City staff failed to make a monthly payment to Blue Cross and Blue Shield in December, an incident that led to more than a month of lapsed health insurance coverage for city employees. At the time, Dungan’s assistant Wanda Overstreet called it a “mistake,” and made no mention of any financial troubles.
On the contrary, Dungan has made multiple public statements about saving the city at least $600,000 since his staff took over in 2013. Yet, the $50,000 loan was taken out just a few days after the missed insurance payment was first reported to city officials by multiple municipal employees.
At the work session, councilors also “cut up” and destroyed several city credit cards they believed had been misused, and according to Johnson, “were all delinquent, some of them by three or four months.”
Johnson said the cards were assigned to department heads, Dungan and Overstreet. However, Johnson said a review of more than a year’s worth of credit card statements showed accounts designated for certain city employees had been used by other members of the staff without consent.
“The bank said those (delinquencies) will come against the actual person the card is assigned to,” she said.
A similar situation occurred during the administration of former Mayor Stan Wright, who was arrested and convicted on public corruption charges, leading to a vacancy in the office Dungan later filled after a runoff election.
Among the charges in question was the purchase of two $175 tickets to a gala event on Dauphin Island. According to Johnson, Dungan attended with his wife, but did not reimburse the city for the price of her ticket.
Johnson said there were also charges on city credit cards listed for Court Clerk Marsha Barnes and Assistant Fire Chief Jimmy Payne. Charges on Payne’s credit card were also the subject of a complaint against Dungan filed with the Alabama Ethics Commission last December.
According to copies of the complaint provided to Lagniappe, the charges arose from a dinner Dungan allegedly purchased his wife at a municipal event in November using Payne’s city-issued credit card. Payne later told Lagniappe he was unaware of the charges.
Also during the work session, Johnson said councilmembers openly discussed the sale of real estate owned by the city of Bayou la Batre in Montgomery, which Dungan allegedly agreed to sell for $10 without the council’s knowledge or consent.
Johnson said the Montgomery house was donated to the city years ago, but since, it was listed as surplus property. She said she personally asked Dungan to sell it to the highest bidder at or near its fair market value.
“I have an email showing that the transaction took place, but city staff couldn’t come up with the documentation or deed during the meeting,” Johnson said. “According to the mayor, it was costing us $20,000 to have the property, but it was actually only costing around $200 a month to cut the grass.”
Though she accused the mayor of “just giving the property away,” Johnson conceded the city of Montgomery was likely going to charge the city to demolish the property because it no longer complied with building codes.
Johnson called it “a beautiful lot in a very poor neighborhood,” but said she was certain it was worth much more than $10.
Last week city councilors went through $30,000 worth of recurring bills by hand because of growing concerns about the financial state of the city. Following Monday’s work session, Johnson told Lagniappe she’s been documenting all of her official interactions since October 2014, a time she claims the attitude of Dungan and his staff began to change.
“I think they’re anxious over the situation. These are some serious charges they’ll be having to look at,” she said. “At the end of the day, whatever comes of this whole thing I never meant for him to have any harm. I asked that he be respectful of municipal law and the statues we have to follow. Instead, he was arrogant and chose to run (the city) like a shipyard and do his own thing, and it’s caused quite a bit of grief for all of us.”
At the same time, Johnson said she and the council were not blameless in the situation, admitting she has “not been diligent enough” in city finances prior to the recent concerns.
“I hold myself accountable. I’m just glad we caught this in time to stop the freight train from running like it was,” she said. “We look forward to this coming to a resolution. It’s not that we don’t want the city to move forward, we just have to live within our means.”
Dungan was present during the meeting, but emails sent to him afterward have gone unanswered, as have multiple phone calls since last Thursday’s special-called meeting. As always, those comments will added if and when they are received.