Holley-Navarre Water System to fund forensic audit in wake of CEO Dallas Peavey's firing
In the wake of the Holley-Navarre Water System firing its former CEO Dallas Peavey after past criminal charges in Texas came to light, the company is now planning to request bids on an organization-wide forensic audit for the time Peavey was in office.
The water utility company's board of directors decided Tuesday that the audit is not to exceed $50,000.
Board President Joe Campbell said HNWS will have a job description published for the CEO position in the coming weeks. He also made note that the organization is not using the same headhunters who helped bring on Peavey.
"The auditors that do your annual audit, they have no requirement to investigate fraud. They have no requirement to find fraud. What they do is they project an attitude of professional skepticism," said Bob Cluskey, a Navarre resident who has worked as a CPA and who the board invited to give advice and information about the potential of the forensic audit.
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Campbell said Peavey's role at HNWS did not include the same types of opportunities to take advantage of the company financially as he may have had in prior positions, but stated, "the things that he did there (in Texas), that wasn't happening. Now does that mean, something else didn't happen (here)?"
In August, the board terminated Peavey, who was hired in late 2020 after a 10-month search for a new CEO. The system has a seven-member board of directors, who are elected by the members of the system. The board hires and fires the CEO.
The water utility announced it was investigating Peavey in early August after residents in the Navarre community spent weeks raising alarms about Peavey's background, culminating in the Navarre citizens group, Preserve Navarre, publicly disseminated documents outlining criminal charges against Peavey.
A news release from HNWS stated at the time that an "independent, third-party investigator did confirm that criminal charges for theft in Texas were dismissed, but the report contradicted the explanation given by Dr. Peavey regarding the underlying facts that led to the three-count indictment in case number CR-36,616. Based on this information, the Board voted unanimously to terminate Dr. Peavey."
This forensic audit would be in addition to the standard annual audit the company already does.
"When we had our audit, (the auditor) actually came here in March this year, and actually gave us an unmodified opinion. And she actually gave us an 'atta boy' for our controls that have been instituted," Campbell said.
According to documents from the Midland County, Texas, court system independently verified by the News Journal, a judgment was filed in 2010 against Peavey. The indictment includes three felony theft charges. He pleaded guilty to all charges and was placed on a term of supervision for five years.
Midland County District Attorney Laura Nodolf, who was the attorney representing the state in the case, previously told the News Journal that the charges were related to Peavey's time working for a subdivision of the oil and energy company Ortloff Engineers.
Nodolf said Peavey falsified travel expenses and invoices. Peavey was made to pay $22,345 to Ortloff in restitution.
Though Peavey pleaded guilty, he received a deferred adjudication of guilt.
According to the Texas Office of Court Administration, deferred adjudication is a special form of judge-ordered community supervision that permits a defendant to accept responsibility for a crime without an actual conviction being placed on the record.
An order to dismiss the actions was filed in 2014 because Peavey had paid his restitution and probation fees in full.
On Tuesday evening, Navarre resident Debbie Gunnoe implored each board member to disclose when they first learned about Peavey's background, but they were advised not to answer by the board's attorney.
"I'm sure you can certainly understand we have absolutely no confidence in your ability to continue overseeing our company," Gunnoe said.
An earlier press release from HNWS states that, at the time of hire, a background check on Peavey did not reveal any convictions.
This article originally appeared on Pensacola News Journal: Holley-Navarre Water System to fund forensic audit after Peavey fired
