4OYS: Millions of projects on hold because of fake audit scandal
Posted at: 08/20/2012 10:34 PM
| Updated at: 08/21/2012 8:32 AM
By: Gadi Schwartz, 4 On Your Side
For the first time since the scandal over a fraudulent audit surfaced, New Mexico Finance Authority managers faced state lawmakers who wanted answers during an NMFA oversight committee in Albuquerque.
So far, millions of dollars worth of projects around the state have been put on hold because of the fake audit that was provided to investors.
During Monday's meeting, lawmakers reviewed a plan by the NMFA to decide what projects local could be bonded and what projects would have to go else where for funding.
Under the plan, only projects under $5 million for government agencies and municipalities would be considered and preference would be given to projects involving safety and welfare.
The plan amounts to what could be considered financial triage, and has forced larger municipalities like Albuquerque to go directly to capital markets for bonding.
During the meeting, several lawmakers expressed concerns over not being able to provide bonding to projects that don't have access to capital.
One such project is the leaking Peterson dam in Las Vegas that currently threatens the cities drinkable water supply.
The NMFA's new CEO John Gasparich said before that type of bonding can take place the NMFA must complete the 2011 audit and the 2012 audit.
"Realistically we are looking at spring of next year. Possibly after the legislative session."
Gasparich was named CEO last week after the former CEO Rick May was placed on leave.
The former NMFA COO John Duff was also placed on leave after he and the NMFA's former controller were arrested by the state's securities division.
The former controller, Greg Campbell, has admitted to forging the 2011 audit but told KOB he did not steal and no money was missing.
Since the fraudulent audit was exposed credit rating agencies have listed New Mexico's bond rating as under review for a downgrade which could lead to higher project costs across the state.