BRISTOL, Tenn. (WJHL) — The chairman of an embattled utility district’s board resigned the week of a state utility management board’s April 28 hearing, but the rest of the South Fork Utility District’s (SFUD) five-member board remains active.
John Dunn, a spokesman for the Tennessee Comptroller’s Office (TCO), said chairman James Graham resigned the last week of April. Neither Graham nor any of the board’s four other members appeared either in person or virtually for the April 28 hearing of the Utility Management Review Board (UMRB).
The UMRB made a slate of recommendations at that meeting related to a TCO investigation of the SFUD that uncovered what investigators said were more than $1.5 million in “questionable payments” to companies owned wholly or partly by the district’s manager, Garry Smith.
The UMRB recommended the resignation of all commissioners, with one board member calling their oversight “the worst case of abuse” in his nine years on the UMRB, which oversees the state’s water utilities.
The UMRB voted to pursue the removal of SFUD commissioners if they didn’t resign voluntarily and also recommended that SFUD merge with another area utility. That April 28 vote came two days after no SFUD commissioners showed up for a meeting they had called and at which Smith was supposedly planning to resign. The board had also said it would vote at that meeting to merge with the Bristol Bluff City Utility District.
Instead, the group apparently ditched its attorney and has been incommunicado with the state since April 26 with the exception of Graham.
“We are unaware of any meetings the district might have had since the UMRB met,” Dunn, TCO’s director of communications, told News Channel 11 via email.
Without having received any communication from the SFUD, Dunn said, “to our knowledge, Garry Smith is still the manager, they have four commissioners, and no attorney.”
Dunn said a required feasibility study of a potential merger between SFUD and any of three possible partners is likely going to be conducted by Jackson Thornton, a Nashville-headquartered CPA and consulting firm that handles audits for more than 100 utilities.
SFUD will also be receiving a “financial distress questionnaire” and will have to return it within 90 days.
Sullivan County District Attorney Barry Staubus also has weighed in on the case. Staubus wrote to a TCO investigator in late March that he was “considering taking civil action against Garry Smith to remove him from his position with the district and to recoup amounts paid on illegal contracts identified by your office.”
Staubus wrote that he was holding off but wanted the UMRB to formally request the removal of the SFUD’s board members.