Audit of ASU sent to prosecutor
Agency raises concerns over dealings of ex-chancellor, wife
Arkansas Legislative Audit turned over its findings related in part to former Arkansas State University Chancellor Tim Hudson and his wife to a prosecutor, the state said Thursday.
The agency’s annual audit of the Arkansas State University System mirrored many of the findings from the system’s Internal Audit Division.
Internal auditors reviewed the Jonesboro campus’ studyabroad program, which was run by the chancellor’s wife, Deidra Hudson; two studyabroad trips; and a third-party vendor. Internal auditors also looked at conflict-of-interest matters involving the couple, along with an instance when they said Tim Hudson used his standing to get financial assistance for his daughter to attend out-of-state universities.
The report is now in the hands of Scott Ellington of Jonesboro, the prosecuting attorney for the 2nd Judicial Circuit District of Arkansas.
“We will review Legislative Audit’s findings and make a decision thereafter,” Ellington said, adding he had not set a timeline.
Arkansas State University System’s internal auditors finished three reports — all this year — involving the Hudsons.
The first system report, released in July, detailed management concerns of the university’s study-abroad program.
Auditors were concerned that Deidra Hudson, a parttime employee, was managing the study-abroad trips, which they said were unorganized. They also found that student payments for a Nordic study-abroad trip went to a PayPal account; an instructor for the the Nordic study-abroad trip had no legal contract with the university and was scheduled to teach at another ASU study-abroad session in Spain; and that a Spanish third-party vendor, Multisense, had facilitated programs since 2013 but had no written agreement with ASU.
It also detailed the ex-chancellor’s attempt to bring the director of studyabroad position, held by his wife, to a full-time position at an annual salary of $50,000. Deidra Hudson applied for the position, but the Hudsons later learned she could not be a full-time employee because
Arkansas Code Annotated 25-16-1002. That law would have forbade her coming on full time because her husband is in charge of the agency to which she applied.
Upon learning about the law, Deidra Hudson withdrew her application, and Tim Hudson canceled the job posting, the audit states.
Tim Hudson stepped down from the chancellor’s post late Aug. 2, just days before the second system audit was released. He did not receive severance pay.
That audit delved deeper into the Hudson’s personal relationship with the family that owns Grupo Sense, an information, publishing and education conglomerate that owns Multisense. Grupo is owned by Alfonso Rubio, and his wife, Adela Diez, is the company’s vice president. The couple have two sons, Pablo Rubio and Carlos Rubio.
Internal auditors said emails between the two families got personal, as they referred to one another affectionately. ASU had selected Multisense as its third-party provider for the Spanish study-abroad trip without using a competitive bidding process. The university paid the vendor more than $250,000 over the last three fiscal years, and at one point, Tim Hudson had hired on Pablo Rubio as an executive assistant paid $70,000 annually, according to auditors.
Tim Hudson never disclosed his relationship with the family, even though he served on Grupo’s board in 2012 and had traveled to Spain twice with local transportation, workshops and conference fees waived, auditors said. The report also said Deidra Hudson had secured Alfonso Rubio’s apartment for personal use.
Internal auditors also found that Tim Hudson used his standing with the school more than once to secure special privileges, including attempts to obtain more financial assistance for his college-going daughter.
A third system audit released in November said Tim Hudson submitted reimbursements for travel expenses in Mexico, where the system was starting a campus at Queretaro. The reimbursements totaling $1,671.92 were actually paid for by the school’s partners at the Queretaro campus, auditors said, adding that Tim Hudson sent a check with the full amount to ASU.
All three were in the Legislative Audit’s report presented Thursday to the Committee on Educational Institutions of the Legislative Joint Auditing Committee.
Rep. Julie Mayberry, R-Hensley and vice chairman of the committee, asked ASU System President Charles Welch if he knew where Tim Hudson was now.
“It’s just in this committee sometimes we see that someone has left one school district and then suddenly appears in another school district,” she said, “and the same problem happens again and then it happens again.”
“I am relatively certain — I mean, 99.99 percent certain — he’s not in the state of Arkansas,” Welch said, adding he wasn’t sure if the ex-chancellor was employed elsewhere.
Rep. Mark Lowery, R-Maumelle, asked if the studyabroad findings were linked only to the past administration or if there were underlying issues in the program.
“I don’t believe I would classify it as a global studyabroad problem,” Welch said, adding that the system’s legal team is helping the university hire a permanent, full-time study-abroad director. “Now certainly we maybe had some administrative issues.”
The situation involving the PayPal account happened only once and had been reimbursed, he said. The payments to the third-party vendor were almost entirely travel-related costs, such as transportation and lodging, Welch said, adding the rest of the findings related to the Hudsons.
“The reason that it got through that process without being bid — actually it went through five different levels of individuals within the university who could have caught it and said, ‘oh, this should be bid,’ — but because it was so travel-heavy, it was misinterpreted as an entity, as a contract that didn’t require bidding as some of the travel processes don’t,” he said. “Obviously, now we think it should have been and have put measures into place to ensure that is in the future.”
Lowery said he was “somewhat concerned” how some of those things happened, including use of Alfonso Rubio’s apartment in Spain.
“I’m not going to say that the United States of America is the paragon of virtue on ethics,” he said. “However, I think we probably do have closer, more intense coverage to transparency than many of the other countries that we’re dealing with and the institutions there. I mean, there are other nations and other entities and other nations look at those kinds of things as not a violation of ethics. It’s just the cost of doing business.”
Welch said the families had “a long-standing, pre-existing relationship,” but the appropriateness of it should have come into question.
“We have policies in place,” he said. “I mean, obviously, you can’t enforce every time an employee is going to follow those or not, but as soon as we made that determination — and one of the things we talked about is additional training and education with our employees about what is appropriate and what’s not appropriate and making sure they don’t cross that ethical line — and we’re certainly sensitive to that.”
Tim Hudson, 62, did not return a voice mail left on his cellphone Thursday.
Legislative Audit also found that the Jonesboro campus paid for unallowable lodging, meal and airfare expenses related to athletics twice, including $4,807 for broadcasting employees and $3,604 for nonstate employees and a part-time university employee. The first was reimbursed by private sources, while the Red Wolves Foundation reimbursed the second.
A further review of the athletic department’s travel expenses for fiscal 2015 found that Arkansas State paid another $24,527 for unallowable travel expenses, which was reimbursed or credited by private sources and the foundation, according to the audit. In another review of the department’s travel expenses through March 16, 2016, auditors said the university paid $2,800 “in excess travel costs, unallowable travel expenses, and a duplicate reimbursement,” but it received $987 in account credits and reimbursement.