O.C. Fair Board moves to bar unapproved employee separation agreements following audit

Two months after the release of an audit showing that a former OC Fair & Event Center employee received about $74,000 in wages and benefits after she had stopped working, the organization’s board of directors moved to prevent such payments without its say-so.

Fair Board members voted unanimously Thursday to bar staff at the Costa Mesa fairgrounds from entering separation agreements with employees — such as the arrangement criticized in the audit from the California Department of Food and Agriculture — without both their approval and authorization from the California Department of Human Resources.

“I think we need to articulate that, on a go-forward basis, all settlement agreements relative to employee matters will be reviewed and approved by the board, and that’s our responsibility,” said board member Doug La Belle.

Earlier in the meeting, Chairman Robert Ruiz announced creation of an audit committee consisting of board members Andreas Meyer and Natalie Rubalcava-Garcia, and the board agreed to further review the Fair & Event Center’s contracting practices to see whether it should revise or expand its role in vetting those kinds of agreements.

The audit in question, which was publicly released in January, reported “internal control weaknesses in contracting policies and procedures.”

“This is a governmental entity and this is not our money and it’s not our land,” said board member Ashleigh Aitken. “And while I have complete faith in our staff and the job that our staff does … at the end of the day ... we’re going to take the hit. This is actually something that is in our best interest.”

Some members of the public, though, questioned whether the board’s actions were sufficient given the gravity of the issues outlined in the audit — particularly the separation agreement, which included, among other things, $44,468 in wages and $4,474 in accrued leave hours paid after the employee’s departure. The payments were made from July 2016 to February 2017.

The audit concluded that the Fair & Event Center “overpaid the employee for work that was not performed and therefore may be considered a gift of public funds” and cited an opinion from the Department of Human Resources’ legal division “that the settlement agreement is likely an illegal contract because it violates provisions of the state Government Code and Code of Regulations.

Fairgrounds officials said in January that the agreement was one of about a dozen similar arrangements the organization has entered with former employees since 2004 and that the practice has been discontinued.

“This is reprehensible what happened and unacceptable and we just can’t go through this anymore,” said fairgrounds activist Reggie Mundekis. “This is public money that [OC Fair & Event Center] CEO [Kathy] Kramer put at risk, public facilities. If the board wants to be really responsible, they’d … ask the district attorney to open an investigation to determine if CEO Kramer committed a felony … with this potential gift of public funds.”

Costa Mesa resident Anna Vrska told the board that she has “very little confidence” in Kramer because of “what I’ve seen happen over the last few years in terms of cutting corners, employing questionable practices — if not outright illegal practices — trying to bury things, trying to limit public participation.”

Adam Carleton, the Fair & Event Center’s vice president of finance and administration, has been on involuntary paid “administrative time off” since Dec. 11 and alleges Kramer did so wrongfully as part of an effort to conceal the payments detailed in the audit.

“Some of the things I’ve heard today are absolutely right,” he told the board. “I think all your suspicions are absolutely right and this audit is just the tip of the iceberg.”

Kramer has denied that Carleton’s leave is related to the audit and said Thursday that “no one takes this more serious than I do.”

“I welcome some of these policy changes because I really want to do the right thing,” she said.