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Financial review questions some spending at Carmel arts center

January 17, 2012

The Center for the Performing Arts in Carmel expects to lose about $400,000 from hosting a taping of the PBS program “The Sinatra Legacy.”

The television show was recorded last March. It's one of the activities the board of directors reviewed after former CEO Steven Libman resigned last summer.

The review—which was made available to the public, along with an annual audit, on Tuesday morning—appears to confirm the allegation that an employee Libman was dating went with him on business trips at the center’s expense.

Libman cited personal reasons when he resigned after signing a five-year contract extension. It was later revealed that a private investigator, hired by Mayor Jim Brainard, had uncovered Libman’s interoffice relationship.

The review has been complete for several months, but interim CEO Frank Basile held off on its release pending an annual audit. The hang-up on the audit was a disagreement with accountants Blue & Co. over the valuation of the center’s 50-year, rent-free lease from the Carmel Redevelopment Authority. The accountants believed that should be listed as an asset, but Basile said the board of directors thinks otherwise.

Since Libman’s resignation, the center has set up a number of controls on spending and approving contracts. The review also said there’s a new personnel policy that deals with employees’ romantic relationships.

The review found that the center committed to spending about $700,000 on the PBS special without seeking board approval. “It now appears this project will result in a net loss to the center of about $400,000,” according to the review, signed by board Chairman Rollin Dick.

The center now requires employees to submit expenses for reimbursement, and the CEO’s expenses must be approved by the board treasurer.

The review found that one employee “did not routinely prepare her own expense report to support her own airfare or hotel charges that were billed on her Center-sponsored credit card.”

The review found that the unnamed employee accompanied the CEO on trips to New York in October and December of 2010 and January and March of 2011, spending $1,193.60 on airfare.

Basile said he could not name the employee because of confidentiality agreements signed with Libman and others.

The review also found that contracts with performers were negotiated by one person and did not come with any documentation to justify the expense, or forecast revenue. Basile has since set up a new process for negotiating and finalizing artist contracts.

The audit shows that when not counting donations that will be paid at a future date, the center ended the 2011 fiscal year about $437,000 in the red.

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