Kathleen A. Davies

Kathleen Davies’ Response to the News Journal Reporting


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Recently, the News Journal published an article regarding my six years in the Delaware Office of Auditor of Accounts. Unfortunately, the article was full of unsubstantiated allegations and accusations unsupported by even the most basic journalistic research, evidence, or facts. Therefore, I feel the need to respond to various points raised in the article.

The News Journal published their front-page article on August 14, 2018, based on an anonymous source that they claim provided a copy of a confidential report. The Auditor of Account’s (AOA) contract with Grant Thornton was for consulting work to be directed by State Auditor Tom Wagner and was not an investigation. Access to information and interviews were controlled by Mr. Wagner. The contract further stipulated that AOA could conclude the work if Grant Thornton did not complete the engagement by the deadline of December of 2016. Grant Thornton invoices were paid throughout 2017 which suggests Grant Thornton defaulted on the contract.

In May of 2018, Mr. Wagner would not permit Deputy Attorney General Slattery to provide his copy of the Grant Thornton report to the Unemployment Insurance (UI) Hearing Officer stating he couldn’t ensure it was “the correct version of the report.” Only days after the August 7th, on-line version of the News Journal article, Mr. Slattery produced a letter that he and Mr. Wagner would not be relying on Grant Thornton’s work. As a result, they would not be producing a certified copy of the Grant Thornton report in accordance with the subpoena from the Merit Employee Relations Board (MERB).

As quoted by Mr. Slattery in the August 10, 2018 letter to the MERB Chairman:

“What occurs internally at the AOA regarding the Grant-Thornton report has no impact on the proceedings before the MERB. As Ms. Allen [Davies’ Attorney] has indicated, neither party intends to utilize the report in evidence in this matter. As such, what occurs regarding the report is not a MERB issue: it is an internal human resources issue that will be addressed by the AOA. The MERB is fully capable of considering the matter before it on the basis of the evidence presented, and it can ignore whatever is being presented to the public by the press. The AOA respectfully disagrees with Ms. Allen’s characterization that the alleged release of the report is intended to defame and discredit Ms. Davies.”

While being held on administrative leave for 19 months, I was obligated to follow AOA’s policy regarding press inquiries. Mr. Wagner and Mr. Slattery have drawn this process out through delays, postponements, and consistent refusals to respond to the Department of Labor, Unemployment Insurance and Merit Employee Relations Board subpoenas.

Throughout this process, I have learned that a State merit employee must exhaust all administrative remedies, at their own expense, before filing a case with the courts. I am steadfast in my commitment to pursue all remedies. I also know I am not the first or the only State employee to go through this ordeal because of political pressure and undue influence.

On May 11th of 2016 at a public whistleblower training session, I watched Mr. Wagner walk up behind an entry level staff person while she was sitting in her chair and massage her with both hands on the inside of her shoulders. I was placed on paid administrative leave the day after the manager obtained an email confirmation on May 16th from the entry level staff that she had no concerns and did not find Mr. Wagner’s actions offensive. The steps I took to follow-up with the employee were entirely appropriate and I had a statutory duty to do so.

Being in the profession for so long, I was not unfamiliar with retaliation; but, I was shocked to realize that Mr. Wagner found my actions, in fulfilling my duty as second-in-command at AOA, a betrayal of trust. It is beyond my comprehension how he, or anyone, would attempt to shame me into believing that I should have chosen allegiance to him over my obligation to do what is right and legal.

Additionally, it was not a coincidence that the last performance audit issued by Mr. Wagner on May 4, 2016, the Unit-Count & ESchools Plus Performance Audit report, was removed from the public website shortly after I was placed on administrative leave, May 17th.

Page 19 of this report contained a recommendation to the Department of Education (DOE) to ensure accountability of public education funds. In the weeks prior to the issuance of the report, DOE staff strongly objected to AOA’s findings and recommendations and this was reflected in the report. Mr. Wagner confirmed he issued the May 4th report with full knowledge about DOE’s objections.

Further, various ongoing investigations, including a Charter School Petty Cash Inspection, which was nearing completion, were halted after May 17, 2016. Despite untold man-hours and definitive work that supported public reporting, Mr. Wagner has never publicly issued the results. And while it was determined that the letters to the Charter Schools and various State Agencies were released through a FIOA request, AOA never publicly issued the results. The reason Mr. Wagner decided not to make this inspection public and terminated other engagements is for him to explain. Nonetheless, for him to use the Charter School Petty Cash Inspection as grounds for dismissal is deplorable.

And what about this hostile work environment?

There is nothing hostile about expecting all AOA employees, merit or non-merit, to perform their state-related job duties while at work or take leave if they needed to attend to non-state business such as political campaigning.

After hours of testimony by the AOA’s representative, the Appeals Referee for my unemployment insurance hearing, which I initiated, concluded that “This tribunal cannot base its decision on hearsay, speculation and/or misleading testimony and therefore finds that much of the Employer Representative’s/Manager’s testimony lacks credibility.”

Mr. Wagner was forced to testify at the unemployment insurance hearing as my witness, despite Mr. Slattery’s persistent objections. Mr. Wagner “was unable to recall pertinent information regarding the events resulting in the Claimant’s discharge.”

The News Journal used a report that Tom Wagner refused to give even with a subpoena. It appears Tom Wagner’s vendor defaulted on the contract which could have easily given AOA the mechanism to finish the report themselves. I don’t know which version of this supposed report the News Journal used since testimony from AOA produced a cloud on which version of the report they would not submit. I asked for a certified copy and never received it.

Despite the employer’s inability to provide any evidence, Grant Thornton or otherwise, and a two-day unemployment hearing result that ruled in my favor, the News Journal, which may have based an article in 2016 with the same people from AOA that provided the supposed confidential personnel report, continued to press forward in another attempt to impugn my reputation.

In short, I stand by my 25 years of public service in the field of state government auditing and Investigating. I have never allowed personal considerations, political influence, or special interests to affect my work, and I never will. I have consistently stood strongly against fraud, waste, abuse, corruption, and fiscal mismanagement, regardless of who commits it. Unfortunately, that has sometimes resulted in malicious, but empty allegations and accusations against me that are purely politically and personally motivated.

Regardless, I have always fought to serve the public to the utmost, and I will continue to do so.


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