Thursday, December 3, 2020 by Jo Clifton

Audit cites ethics violations by employee, supervisor

An investigation by the Office of the City Auditor has concluded that Alex Perez, a project coordinator at Austin Energy, violated city ethics regulations by making official decisions affecting a company owned by members of his family. In addition, auditors say his supervisor, Lora Teed, assigned Perez to a repair project where his family’s company was working in spite of receiving guidance from the city Law Department directing her to reassign him in such a case.

On Wednesday, auditors released a report that included lengthy denials of wrongful intent from both Perez and Teed. A response from Austin Energy General Manager Jackie Sargent acknowledged receipt of the report but does not indicate what, if any, actions the utility might take in response.

In October 2019, Austin Energy discovered water leaking from its chilled water lines in the Mueller neighborhood and determined that emergency repairs were needed. The utility offers heating and air conditioning to customers through a network of underground pipes that supply HVAC services to a variety of buildings in the area.

Auditors reported that the Perez family’s company was a subcontractor on the repair job. Alex Perez told investigators “his sister-in-law and father-in-law own the company, his wife is a full-time employee with the company and that two of his children work for the company.” Because of those familial ties, “any decisions he makes involving his family’s company would violate City Code,” they wrote.

Perez’s job included signing off on hourly logs that track personnel and equipment used for the job. Members of his family who worked for the Perez company were listed on those hourly logs. Perez was required to make site visits to make sure that the logs were accurate. Auditors wrote, “When we spoke to Perez, he confirmed that he made site visits and saw his children at the worksite, but he did not think this was an issue, because they worked for the subcontractor. The City Code’s conflict of interest rules do not, however, treat subcontractors differently from other contractors.”

However, auditors noted that they did not find any evidence that Perez had a role in selecting or approving contractors involved in the project.

After the leak was reported, AE’s contractor responded to a request for service with an email listing of people who would be working on the project, including four employees of the Perez family company. That list included Alex Perez’s son. The project manager at AE responded with an email that said, “Alex Perez will be your contact.”

Perez told auditors in his written response that he “made specific efforts from the beginning to make sure that I did not make any decisions on the project and deferred any request for decisions to the on-site Austin Energy representative (AE inspector) or the Austin Energy project manager.” Nevertheless, the fact that he was approving time sheets for a project on which his family’s company was a subcontractor led an anonymous person to complain that Perez was taking advantage of his position to help his relatives.

Alex Perez’s supervisor, Teed, received the emails assigning him to the project and told investigators that Perez made her aware his family’s company was involved with the project. But she told the audit team that she left Perez on the project “because she wanted Perez to train other employees in his work group on the proper way to fill out the paperwork.”

Auditors wrote, “According to Teed, she did not intend for Perez to complete the paperwork himself or to do other tasks related to his family’s company. She said her directions were made verbally, but she was ‘absolutely positive’ that she was clear about her intention to keep Perez away from his family’s company. However, when we spoke to Perez and another employee involved with the project, both of them said that Perez was responsible for completing hourly logs and performing other tasks.”

In early November, Teed removed Perez from the project. “Although this stopped Perez’ conflict of interest, it does not change the fact that Teed assigned Perez to a project where he made several decisions that the Law Department had specifically told her would violate City Code,” auditors concluded.

Corrie Stokes is the city auditor and Brian Molloy is chief of investigations.

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Key Players & Topics In This Article

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

Office of the City Auditor: This city department is created by the city's charter in order to establish and ensure "accountability transparency, and a culture of continuous improvement in city operations."

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