Audit says TVA executives violated federal travel rules
Inspectors question first-class travel, lavish meals and first-class foreign trips
Tennessee Valley Authority executives violated federal travel rules, failed to report some of their travel costs to the TVA board as required and billed the federal utility for lavish meals with $145 bottles of wine and thousands of dollars for chauffeured rides in private car services, according to a new audit of executive travel released Wednesday.
A review of 22 months of executive travel at the federal utility found that TVA’s top 67 leaders spent $1.8 million on airline trips, chauffeured trips, hotels and meals and about 7.5% of those expenses were regarded as excessive or not properly documented. TVA’s inspector general identified numerous violations of federal and board policies by TVA executives during the period when former TVA President Bill Johnson led the agency, including restaurant tabs of up to $1,157 at five-star restaurants and “lodging that was not always in compliance with federal travel rules.”
“In summary, the actions by some TVA executives indicate a ‘Tone at the Top’ that could send a message to TVA employees that management is not committed to the TVA Code of Conduct and compliance with the federal travel rules and TVA policies and procedures,” TVA’s inspector general concluded in a 34-page report prepared by Assistant Inspector General David P. Wheeler.
Jeff Lyash, who succeeded Johnson as TVA’s president in April, said Wednesday executives who violated proper policies have repaid TVA and he pledged to improve documentation, clarify policies and provide more training about travel expense allowances and reporting.
“There were some expenses where the individuals shouldn’t have claimed them,” Lyash said after the audit was released Wednesday. “The [Office of Inspector General] made 14 recommendations for change and I’ve accepted all 14 of those and I am going to work to make sure our travel is very business like and that ethics and cost effectiveness are at the heart of what we do.”
But Lyash said some of the questioned expenses involved hospitality events for TVA’s economic development and recruitment efforts to bring more businesses into the Valley and some of the costs involved the need for executives of the $11 billion-a-year utility to meet with bondholders, regulators, customers and suppliers from across the globe.
While Lyash said there were some performance failures, he said there were “no intentional misuse of resources” and no executives are being dismissed because of the audit.
“Executive travel is important and it does and ought to have a lot of scrutiny,” he said. “The inspector general did a good job of taking a look at this and identifying all of the weak spots for us. My approach is going to be to close up all of those gaps.”
The audit identified 62 instances totaling $17,262 in charges that were made by TVA police or administrative assistants for TVA top executives that were not reported to the TVA board.
In the fall of 2016, five TVA executives shared a lavish $1,157 restaurant tab at Del Fiscos in Washington, D.C., and last year, six TVA managers shared a $984 meal at the Gary Danko restaurant in San Francisco. Such meals were more than twice the daily meal expense allowed by TVA.
The audit also found $15,956 of expenses of over $75 each that were not properly itemized, including one hospitality event that included four bottles of wine costing $130 to $145 each.
Auditors also criticized former TVA CEO Bill Johnson’s use of a car service with a $935 bill to transport two TVA executives 13 miles back and forth from the Peachtree-DeKalb airport to a meeting site. The audit said far cheaper rental car services were available at the airport.
In another instance, TVA police assigned to executive protection, which is provided to TVA’s president, hired a car service at a cost of $1,039 for only 10 miles of travel in Washington, D.C. Although subway service was available for the same route, TVA police said the car service was used for the safety of TVA’s executives “especially in a city that has one of the highest crime rates in the U.S.”
TVA auditors reviewed domestic and foreign travel on commercial airlines and did not question the executives’ use of TVA jets and helicopters purchased in 2015 and 2017 for more than $28 million.
Consumer groups and an earlier inspector general’s report last year previously questioned the value of the TVA having executive jets and helicopters, but the new audit did not.
Lyash, who has traveled tens of thousand of miles during his first five months in office, has previously defended the use of corporate jets to help TVA executives travel across TVA’s seven-state region and to New York, Washington, D.C., and other sites for meetings with suppliers and prospective customers.
Johnson, who headed TVA for six years before leaving the federal utility in April to head Pacific Gas & Electric Co. in California, purchased two jets and an executive helicopter because he said such aircraft is safer and quicker for TVA executives and the prospects that TVA has tried to attract to the Tennessee Valley by showing sites on its helicopter.
Former TVA Chairman S. David Freeman, who has previously criticized TVA’s decision to buy jets and helicopters for executive travel and economic development, also questioned Wednesday why TVA executives are spending so much on travel and meals.
“In my day, the TVA used old helicopters acquired from the defense department and ate in the old S&W cafeteria on Gay Street (in downtown Knoxville),” said Freeman, a former TVA engineer and lawyer who was appointed by President Jimmy Carter to head TVA in 1977. “It was the custom to drive ourselves to the airport and fly economy. TVA today is behaving like just another monopoly utility in every way.”
The inspector general said TVA’s domestic flights under Johnson were generally in compliance with federal travel rules, but the audit questioned eight international flights Johnson took that cost a total of $64,653.
The audit said federal rules do not usually allow first-class travel like what the former TVA president made on trips to Japan, Sweden, France and England to meet with executives of TVA customers and to attend World Association of Nuclear Operators. Johnson claimed he needed the first-class tickets because of medical reasons. But that justification, which was supposed to be submitted in advance, was dated after the five foreign trips had occurred, auditors said.
The audit also said TVA executives billed $6,867 for 42 lodging stays within 50 miles of their official duty station, contrary to federal travel rules. Another 100 lodging stays totaling $54,979 were not properly approved in advance, including two stays that were triple the allowable daily rate.
The inspector general said Johnson gave “blanket” approval to his top executives to stay in hotels priced at up to 150% of the General Services Administration allowable rate.
Lyash declined to criticize his predecessor, but he promised to review executive travel more closely.
“Our executive travel should be justified and cost effective and we should be comfortable that what we’re spending gives clear value to our customer,” Lyash said.
In response to the auditors’ criticisms, TVA Controller Diane Wear said the utility will implement the recommended changes.
“We are committed to a culture of continuous improvement at TVA and this is another opportunity for us to improve,” she said.