The Hernando County Fair Association needs to better manage its finances and it must end an obvious conflict of interest that has had the volunteer treasurer cutting checks to her husband who serves as fairgrounds manager, day laborer, contracted lawn mower and jack-of-all-trades construction contractor. Over a five-year period, the duties have earned him and his companies nearly $400,000.
The fair association doesn't see it that way and its board of directors actually changed its bylaws a few years ago, eliminating the nepotism rule that prohibited the relatives of its officers from serving as paid employees. Instead, the board annually turns a blind eye to the potential problems by simply voting that there is no conflict of interest. The lax oversight is irresponsible from an organization that seeks taxpayer resources via a county subsidy and in-kind services at fair time.
The common-sense nepotism provision needs to be reinstituted to rebuild public faith in a board entrusted with a community asset. More importantly, such a rule could have helped avoid the messy circumstances that brought a just-concluded criminal investigation into the fair's finances. Though a sheriff's detective uncovered no criminal activity, the 32-page report from the economic crimes unit documented sloppy record-keeping and haphazard finances. Among the problems:
• The association uses two invoice books and could not provide copies of all invoices to the investigator.
• The association doesn't follow its own safeguards. Checks are supposed to carry two signatures, one from treasurer Shari Klimas and one from a board member who reviews the check and accompanying invoice for payment. Except Sandra Nicholson, former association president and current volunteer, told a detective that to expedite transactions, some blank checks are presigned by board members who never see the check or invoice.
• The treasurer's husband, Richard Klimas, said his companies fairly won bids for construction work at the grounds because he solicits donated or reduced-price materials to minimize costs. It's a potential conflict because Klimas also has the title of fairgrounds manager. Were the goods donated to Klimas' company or to the fair association? If they were intended for the fair then all bidders should have had access to the materials and been allowed to account for the lower costs in their own bids.
According to records made available to police, the fair, beginning in 2008, paid: $48,482 to Klimas' business, Brooksville Pulling; nearly $98,000 to another company, Klimas Flooring, and $244,269 to Klimas personally. Klimas is paid $2,850 monthly to mow the lawn at the grounds and is paid $15 per hour as a day laborer to serve as fairgrounds manager.
It's an exorbitant amount that Nicholson justified as a bargain, but it's the kind of intertwined relationship that brought a rebuke from some fair board members. That three-person review committee said in February that a forensic audit should be expedited and the board needed to ensure "an arm's length distance on all financial transactions in which the executive committee conducts business. Special emphasis should be placed on avoiding conflicts of interest at all costs.''
It was sound advice then and it remains even more so now. The sheriff's probe, which did not include credit card records, did not uncover a crime, but the file is hardly a ringing endorsement of the status quo. If the board expects future financial assistance from the county, it must adhere to standard financial protocols to safeguard the public's investment. Business as usual must be a thing of the past at the Hernando County Fair.