ALBUQUERQUE (KRQE) - One state senator blames the governor and her appointees on the New Mexico Finance Authority board for not catching the scandal that has rocked the agency.
In the last month, the NMFA saw a forged audit , two top executives arrested and its chief suspended.
Investigators said former controller Greg Campbell cooked the books to make it look like the NMFA was better off than it actually was. Officials said the legislature took back $40 million in revenue from the NMFA to help balance the state's budget in 2010 and 2011. But instead of reflecting the change in its books, investigators said the money was reported on a fake audit as a grant handed out.
The misinformation could have allowed the NMFA to get a better credit rating than it might ordinarily to attract investors, according to investigators. The NMFA depends on its good reputation with investors to make sure it can provide low cost loans to New Mexico cities and counties for expensive construction projects.
Democratic State Sen. Tim Keller of Albuquerque said the scandal will definitely hurt that reputation.
"It's going to cost us tens of millions of dollars more each time we want to build any kind of facility," said Keller.
The state securities division, the state auditor's office and the NMFA have all launched investigations to get to the bottom of what happened. So far, there is no proof actual money is missing, according to investigators.
Along with Campbell, Chief Operating Officer John Duff was arrested and charged with securities fraud and racketeering for signing off on the fraudulent audit. Duff has been placed on leave without pay. The board also placed Chief Executive Officer Richard May on leave with pay as part of getting the agency back on track. May has not been accused of any criminal activity.
In the meantime, the NMFA can't sell bonds to fund hundreds of millions of dollars worth of public loans for projects around New Mexico until a valid audit is in place. One project on hold is $27 million that developers wanted to build at least 300 new homes on Albuquerque's west mesa.
While the investigation into how it happened continues, Keller is now turning his attention into why the problem went undetected for months. Keller said he blames the 11-member NMFA board, nine of whom were appointed by Gov. Susana Martinez.
"Folks either don't have the expertise required to ask the right questions to look into the numbers or they're too busy doing their day jobs they were hired to do," said Keller.
Keller points out four members on the board are also the governor's cabinet secretaries, who head up major state agencies, including Jon Barela with Economic Development, Tom Clifford with Finance and Administration, David Martin with Environment, and John Bemis with New Mexico Energy, Minerals and Natural Resources.
Brett Woods, the deputy cabinet secretary for the New Mexico Energy, Minerals and Natural Resources Department, is serving as the interim NMFA CEO.
"It does (make sense) from the standpoint that the projects often involve, for example, water and the environment, but it does not from an oversight persecptive. I do believe it's the wrong way to set up a board," said Keller.
Secretary Barela, who said he sits on about 30 other boards and committees, admits it's a balancing act.
"Probably everyone who is involved with the NMFA shares a little responsibility," said Barela. "We know that things happened in the past, and now we just have to focus on fixing the issue."
Keller said he will introduce a bill that removes governor appointees and that requires members to have a financial background.
A spokesperson for Gov. Susana Martinez said she is open to proposals that fix problems at the NMFA.
"The Governor is hopeful that the investigation and audit into NMFA will help to identify the key deficiencies in the structure, organization and operations at NMFA - wherever they may be," said spokesman Scott Darnell. "She would certainly be amenable to proposals designed to increase the day-to-day oversight and accountability of the finances at NMFA, which could include proposals like moving its functions into existing state agencies."
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