Ex-officials: EOB rife with infighting

Two top officials who no longer work for the Las Vegas Valley's largest nonprofit agency say fundamental flaws in the organization caused the financial and administrative troubles that have recently surfaced.

"It started out as a grass-roots agency to help the poor 40 years ago ... but now it's staffed by people who are not equipped to run an agency that's got (a) $60 million (budget)," said Debra Santos, who was chief financial officer of the Economic Opportunity Board until she was fired Jan. 30, after a year on the job.

Executive Director Marcia Rose Walker resigned soon after, and there have been several other changes at the agency recently.

"There's a skill set missing ... and the fight for power seems more important than delivering services," Santos said.

Santos and former Human Resources Director George Cotton, who resigned April 1, spoke in an exclusive interview to the Sun. So did Diba Hadi, who oversees the agency's two largest programs -- child care, which is facing an inquiry into $2.1 million in unaccounted-for funds, and Head Start, which is under a federal inquiry.

Hadi was also named in recent weeks to lead a "crisis team" responding to the federal scrutiny, a $1 million cut in the agency's line of credit and the loss of nearly a dozen top staff and board members. Most of those staff members -- including Walker and Assistant Director Michael Husted -- declined to comment to the Sun.

Santos and Cotton described an agency plagued by backstabbing, an unusually high number of internal discrimination complaints, people without degrees or experience getting hired and promoted, and administrative staff and board members unwilling to face financial difficulties.

The agency is rife with "favoritism, infighting, sweetheart deals and a blatant disregard for rules," Cotton said.

Hadi, on the other hand, says it was EOB's upper management -- including Santos and Cotton -- that brought the agency to its knees.

Cotton says Hadi's criticism of Santos, a certified public accountant, doesn't jibe with the glowing annual review and $15,000 raise that Walker gave Santos in the fall of 2003.

Santos was fired after it was revealed that the agency could not account for $2.1 million in government funding. She and Cotton said they were not given a reason for the firing. Santos has hired a lawyer.

Santos said she was fired for trying to fix some of the agency's long-standing financial problems, which had the agency depending increasingly on its bank line of credit in recent years, and considers herself a whistleblower who stepped into a minefield in an office turf war.

Fiscal control

The day after Santos was fired, she wrote to Hannah Brown, who then led the board of directors' personnel committee: "I believe I was terminated as a result of efforts made by me to make improvements in the agencies (sic) long-standing troubled financial condition. "Changes recommended would drastically change operations."

Over several months prior to her dismissal, Santos had recommended centralizing the agency's fiscal operations and purchasing.

She said it was a mistake to let EOB programs such as child care and Head Start, which together receive more than $30 million in mostly federal funds, handle parts of their own accounting. She also said the agency needed an electronic system to better track hours kept by the agency's 700 employees.

Santos said she presented her ideas to a board that "would ask questions about small items like the purchases of vans but let $1.5 million in purchases go by, and vote them in because they didn't understand them."

Board member Chester Richardson said his experience was similar to Santos'.

"For the most part, her assertion is correct -- I felt that the board needed to take its fiscal responsibility more seriously, Richardson said.

The Sun's review of a year's worth of board minutes found Richardson repeatedly tried to call attention to the agency's financial problems during those meetings.

The board is supposed to have 15 members -- five elected officials, five who represent low-income residents of the Las Vegas Valley and five from the private sector. Henderson City Councilwoman Amanda Cyphers resigned from the board on March 30, after complaining about the infighting she witnessed at meetings. Hannah Brown also stepped down in order to take on the role as interim executive director. A spot for a Clark County commissioner has been vacant for months.

One of Santos' plans -- centralization of all EOB purchasing -- was actually voted in by the board in its Jan. 28 meeting. Santos was fired two days later, and the centralized purchasing plan remains in limbo.

In fact, to date, none of the "drastic" changes she recommended have been enacted.

Santos had been hired in January 2003 and had begun moving fiscal duties under her supervision after a May review of the Head Start program by the federal Health and Human Services Department said that program's money should be more tightly supervised.

Those reviews occur every three years.

"I wanted to see fiscal personnel combined under one roof from Head Start, but then I looked at the whole agency, including the child care assistance division," Santos told the Sun.

The state welfare division pays out more than $20 million in state and federal funds to the child care program, most of which the EOB then pays to about 800 child care centers.

Hadi said she felt Santos' decision to more directly supervise child care employees "was not an accurate move because the accounting people (in child care) did not have accounting functions. They were simply data-entry people."

Last summer Cotton did a human resources audit, in which staff members of human resources followed child care employees during a day's work, and determined that some of those employees were performing financial duties.

"They were handling billing and payments," he said.

Documents show arguments ensued for several months between Santos and Hadi, including locks being changed on the area of the child care program's office that had been set aside for employees reporting to the chief financial officer.

Santos said Hadi and her staff had to be locked out of the area in order not to "circumvent internal controls and destroy our system of checks and balances."

Hadi said her staff lost access to their own files and couldn't do their work.

"Nothing would stop her from doing what she wanted to do," Hadi said of her former superior.

In late December, Santos hired an outside accountant to look into the books agency-wide, including the child care division. Santos hired Darnell Bennett from Accountants Inc., a personnel agency.

Bennett, a self-described semi-retired accountant who worked for Revlon 17 years, was the right person for the job because as an outside consultant he had "no ties to anybody," Santos said.

Santos "really wanted me to dig into things," Bennett said.

Bennett began looking at the agency's properties and equipment while waiting for a work area to be set up at the child care offices.

He said he never got to the child care part of the project; he was let go five weeks after he started -- a week after Santos was fired.

Bennett said what he saw during his time at the agency was unique in his 32 years of accounting.

"Somebody could receive cash, but you wouldn't know who," he said. "It would be very easy to divert funds in that kind of situation."

Personnel mess

Meanwhile, Cotton sorted through what he said was an unusually high number of apparently legitimate discrimination complaints from employees throughout the agency.

Before going to work at the EOB in June 2002, Cotton worked for 16 years handling discrimination complaints as the Clark County equal opportunity division director. During his time with the county, which has thousands of employees, he saw less than a half dozen complaints with probable cause, he said.

But at the nonprofit agency, which has about 700 employees, 16 out of about 20 such complaints had to be settled, he said. Those settlements included payments of up to $15,000 and rehiring, he said.

Cotton saw the pattern of discontent among employees within EOB as linked to another key flaw he and Santos cited -- hiring and promoting of personnel without qualifications.

"When you have unqualified, untrained people, there is a greater tendency to find people engaging in inappropriate behavior in the workplace," Cotton said. "You would see people who got supervisory positions because they had been there, not because they had any particular skill sets."

He points to Hadi as an example, who ascended to a position overseeing two programs, millions of dollars, and more than 100 employees after being hired to a lower-level position at the agency. Hadi had no previous management experience.

She holds bachelor's and master's degrees in English and was an adjunct professor at the Community College of Southern Nevada when she was hired to help write grants in 1994.

By 1997, she had been put in charge of the child care program, which then had $6 million in funds and 34 employees. When asked how the agency placed her in that position with no administrative experience, Hadi said, "teaching a class of 30 requires some administrative skills."

She said the position was "advertised internally" at the time and then-executive director James Tyree appointed her.

Hadi said she is pursuing a graduate degree at Nova University in organizational leadership, with an emphasis in conflict resolution. The EOB is covering the cost under an employee-education program, Hadi said.

Cotton also said the agency's internal auditor Thom Sloan -- a key figure in any agency facing financial troubles -- is neither a certified public accountant nor a certified internal auditor.

Sloan could not be reached for comment.

Hadi, meanwhile, traces the troubles being uncovered of late as linked to upper managers that came to the agency since Executive Director Marcia Rose Walker was hired in 2000.

Walker has declined to comment on EOB matters since her resignation.

Hadi says the executive staff "spent money like water" and didn't involve program administrators like herself in decision-making processes.

Both sides say they have stacks of memos, e-mails and other documents that they say support their sides of the dispute. The documents often contradict each other and further push the arguments that have yet to be settled and may wind up in court, both sides say.

But one thing they all agree upon is that, as Hadi puts it, the EOB "has gone down the tubes.

"And I don't know if it can be saved."