State auditor candidate pushes back against allegations

Delaware State News | by Matt Bittle

DOVER — The former No. 2 employee of the Delaware Office of the Auditor of Accounts, who is now running for auditor, misused her position to hide details from her boss, transfer money without budget officials finding out and award contracts to friends, according to a report prepared by an outside firm.

Findings from accounting consultant Grant Thornton indicate Kathleen Davies assumed many of the duties normally held by the state auditor and created a hostile work environment before being suspended in mid-2016 and then terminated last year.

Ms. Davies, a Democrat, disputes the findings, claiming they are part of an effort to retaliate against her for reporting an act of alleged sexual harassment and for enforcing office policies. The report, she said Wednesday, contains myriad falsehoods that may have been inserted by members of the auditor’s office seeking to smear her reputation.

The saga involving Ms. Davies, who was hired by the auditor’s office in January 2010, dates back to May 2016, when she was placed on paid administrative leave from her position as chief administrative auditor. She remained on leave, which she characterized as being in limbo, until she was terminated in December 2017.

No longer employed by the office, she is now campaigning full-time ahead of Sept. 6’s primary election, in which she will take on two other Democrats.

In August 2016, according to a copy of the contract provided by Ms. Davies, the auditor’s office entered into an agreement with Grant Thornton to investigate Ms. Davies’ alleged abuse of power and other potential work-related issues. The report, a copy of which was obtained by the State News, is dated August 2017.

According to state data, the office paid about $121,000 for the work. It is the only time the state has engaged Grant Thornton over the past five years.

The 33-page report lays out numerous claims against Ms. Davies, whom it refers to by title as the CAA. The conclusions were drawn based on interviews with Ms. Davies, Auditor Tom Wagner and eight employees of the office and on analysis of documents and audio recordings.

A spokesman for Mr. Wagner declined comment Wednesday, citing policy for personnel matters. Mr. Wagner, a Republican, is not seeking reelection after 29 years in the post.

Criticism and judgment

Ms. Davies has been criticized by her Democratic primary opponents, Dennis E. Williams and Kathy McGuiness, over her suspension and termination. At a debate in July, Mr. Williams questioned why Ms. Davies has not made information relating to her case public, saying, “You’re asking all of us as voters to trust you but you’re not trusting us with the information.”

Ms. Davies responded that she was going through the process and could not legally release any documents.

After the News Journal published an article on the report earlier this month, two Democratic lawmakers supporting Ms. Davies asked the Delaware Department of Justice to thoroughly investigate the release of the report and potentially bring charges against those involved.

“The release of a confidential report by any government employee and/or agency is a startling and alarming incident of a breach of the public’s trust,” Rep. John Kowalko, a Newark Democrat who has advocated for open government, wrote in an email. “When the report is additionally bound by confidential guarantees pertaining to individual personnel rights it becomes even more onerous when that confidentially is breached.”

The validity of Ms. Davies’ grievance will be determined by the Merit Employee Relations Board. She has already won unemployment benefits, although she said she is no longer receiving benefits while she campaigns.

In June, Ms. Davies filed a motion with the Merit Employee Relations Board requesting from her former employer dozens of documents relating to her case. The auditor’s office responded by seeking to quash her motion for about half of the items.

After a hearing, the board granted some of the office’s requests and ordered it to turn over other information. A second hearing has been postponed multiple times.

The referee in the unemployment judgment wrote Mr. Wagner provided confusing and sometimes contradictory testimony and did not warn Ms. Davies “her performance was deficient in certain areas” before placing her on paid leave.

“This Tribunal finds that the Employer has not met its burden to provide willful and wanton misconduct on the part of Claimant in this case. Accordingly, Employer has not demonstrated that it had sufficient just cause to discharge the Claimant from her employment to disqualify her from unemployment benefits,” Kathryn M. Gantz wrote.

The Grant Thornton report was not entered as evidence in the unemployment hearing.

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