The Knoxville News-Sentinel from Knoxville, Tennessee • 9

east tennc llllll Illll mMimwmJmt Wednesday August 6 1986 A9 4i TVA needs an at is tor change Zigrossi of potential concern about the of TVA managers over the audit process not a reflection of a problem just sound management Zigrossi said Tuesday change is not meant to challenge or in anyway reflect the quality or integrity of (Coopers and his memo said Zigrossi said his office has not evaluated the performance of Coopers and Lybrand When the board under pressure from Congress created the Office of Inspector General last October it placed audit function under the inspector Director John Waters Jr said Tuesday when asked about recommendation only got the memo this TVA Chairman Charles Dean Jr was unavailable for comment TVA Comptroller Bob Yates declined to comment saying he has not read recom mendations Bruce Cadotte spokesman for the inspector office said is to protect TVA from the possibility that management has become too comfortable in dealing with a single audit firm and to assure the public of the independence of the audit memo to the board said his office should take over the administration and oversight of contract with its audit firm This duty has been under the control of the Office of the Comptroller which essentially is the office that is audited by the outside firm only reason you have an outside auditor is to certify that you are using sound accounting TVA spokesman Craven Crowell said John Cooper managing partner of Coopers and Knoxville branch declined to comment given it much TVA Except for an audit opinion by the US comptroller general in 1959 Coopers and Lybrand has been the only external auditor to review financial statements officials said business practice includes a periodic rotation of external Zigrossi told the board in the Monday memo it is important to preserve and enhance the independence and the perception of independence of the external audit of published financial The inspector general said the change reassure the public about audit process and should remove a source by LAURA SIMMONS News-Sentinel staff writer TVA has been urged to hire a new audit Firm because the accounting managers may be getting too cozy with the auditors TVA has used for the past 26 years TVA Inspector General Norman Zigrossi has made that recommendation in a memorandum to the board Coopers and Lybrand one of the largest audit firms has audited the federal agency for 31 of the past 49 years The audit contract is worth $400000 annually TVA officials said SIBC loan records disappeared bookkeeper says by JIM BALLOCH News-Sentinel staff writer Sea: irifFr'iiiTrnTtrrtfir Dave CarterNews-Sentmel start Rick Jones left and David Woods of Lo Jac Construction Co work at smoothing out Interstate 640 were the loan files for several companies and the cards for SIBC loans to Butcher his accountant David Crabtree and company West Knoxville Investment Corp The trial is in its fourth week Baxter said he may be able to finish the case today If he does defense lawyers say Butcher could take the stand as early as Thursday afternoon In other developments in the trial Tuesday: The jury heard a tape recorded conversation between Steiner and former state Insurance Commissioner John Neff on Feb 9 1983 Neff informed Steiner the state had learned of massive insider loans and other problems in SIBC In a stern voice Neff told Steiner that SIBC must cease all public advertising until further notice After the tape was played Neff testified that shortly after the conversation with Steiner he learned that SIBC was still advertising and he issued a formal order to stop it Smithson also testified that twice in 1982 at instructions she removed millions of dollars in loans from books immediately prior to the preparation of an SIBC financial statement and days later put them back on the books She said Steiner told her that her set of loans $16 million worth was being sold to Jake United American Bank Then he told her the deal was off and to put the loans back on books she said The same thing occurred with the second loan package she said SIBC Executive Vice President James Travis said he witnessed Steiner reluctantly approve a $100000 loan to Gene Blanton brother of former Gov Ray Blanton on orders Travis said Butcher sent Gene Blanton to SIBC for the loan which was to finance a Fair-related project Travis said he felt it was not a good loan and that Steiner agreed with him and called Butcher to tell him so But Butcher apparently ordered Steiner to make the loan anyway Travis said because when Steiner hung up the phone was very irritated flung the (loan) papers back at me and said make the loan and do the best you can with Butcher wants seven charges consolidated into one page A10 CHATTANOOGA The records of all commercial loans issued by Southern Industrial Banking Corp disappeared from a file cabinet in early 1983 after SIBC President James Steiner ordered the cabinet left unlocked overnight bookkeeper testified Tuesday It was the third mysterious or unusual handling of commercial loan records at SIBC ordered by Steiner bookkeeper Pat Smithson told a US District Court jury Steiner and former SIBC Chairman CH Butcher Jr are accused of defrauding investors and depositors with commercial loans concealed from regulators and other SIBC employees Other witnesses Tuesday included a string of former SIBC officers and investment counselors who said they were unaware that SIBC had made millions of dollars in often unsecured commercial loans to Butcher associates until after SIBC went into bankruptcy in March 1983 Smithson said only she and Steiner had keys to the file cabinet where her records of these loans were kept She said Steiner called her in Feruary 1983 said he had lost his key and told her to make a duplicate for him When he called again she testified she had not made the duplicate key She said Steiner then told her to leave the cabinet unlocked when she went home that day next day' it was obvious someone had gone through my she said She said this upset her and she asked Steiner why her files had been searched said has nothing to do with Smithson said on that morning were all the comercial loan files asked Assistant US Attorney Jimmie Baxter Smithson answered The files taken from her cabinet were duplicates she said In January 1983 at instructions she had boxed up the originals and turned them over to someone sent to her office by Steiner she said Later she said Steiner called her and told her to send him the card files for all the commercial loans and she complied After SIBC went into bankruptcy she said the original files and the loan cards were returned to her But missing from those records woes being cured by Gap Road exit by ROGER HARRIS News-Sentinel staff writer there going to be a Gap Road Siler said taken us that long to go through all the government red tape to get things The portion of the project cost about $390000 The cost is about $900000 In the original design of 1-640 a Gap Road exit was included Bowers said the Federal Highway Administration eliminated the exit after deciding it did not meet minimum standards The Gap Road exit also will a great deal of at the Merchant Drive exit which is heavily used Bowers said The city is widening and straightening Wilson and Tillery roads which lead from the Gap Road exit to Clinton Highway and adding traffic signals at the intersection with Clinton Highway to facilitate left turns Corum said another project on I-640 the smoothing of the inter- Knoxville will be able to reach Clinton Highway by exiting at Gap Road Siler said going to help us tremendously For the last four or Five years been murder to get here from the Siler said he cannot say for certain how much the lack of a direct route from the West has affected business Before today interstate traffic from West Knoxville could reach Clinton Highway by heading north on 1-75 exiting at Merchant Drive and taking it to Clinton Highway or going south on 1-275 exiting at Heiskell Avenue getting back on I-275 northbound and exiting at Clinton Highway Clinton Highway business owners have battled state and federal government and a money -conscious City Council for seven years to get the Gap Road exit organized the thing back in December 1979 when we found out Today the long wait is over for Paul Siler president of Reeder Chevrolet Siler and dozens of other Clinton Highway businessmen have been waiting since 1979 for construction of the Gap Road exit from the east-bound lanes of Interstate 640 The new exit will be open to traffic shortly after a ribbon-cutting ceremony at 3 pm today The project was a joint effort of the city and state Department of Transportation DOT built the off ramp at Gap Road and the city widened and straightened the roads leading from the interstate to Clinton Highway DOT also has nearly completed smoothing 1-640 between Sharps Gap and 1-40 said Fred Corum DOT regional engineer With the opening of the new exit motorists coming from West Martin GehringNews-Sentinel staff state surface should be finished by the end of August State crews have been working for several weeks to smooth the roadway and cut grooves in the concrete to make it more skid resistant he said The project will cost about $13 million Donations help shrink Knoxville College debt McWherter says Eskind desperate by REBECCA FERRAR News-Sentinel staff writer by JAY D1SKEY News-Sentinel staff writer the endowment Peek said In 1983 the endowment totaled less than $20000 Because of alumni donations gifts and a US Department of Education grant the endowment now is nearly $600000 In June the college received a Department of Education challenge grant of $500000 If matched by alumni contributions the endowment would increase to about $16 million School officials hope to eventually have a $6 million endowment an amount equal to the annual operating budget Peek credits loyal alumni for the increases College has never had a large student population so able to develop a special family-type In many cases alumni giving at KC exceeds that at other schools According to statistics released at the college tesday: The average gift to Knoxville College is $414 about four times the national average of $104 Of the alumni who have donated $1000 annually for the past two years 25 percent are retired or semi-retired and living on fixed incomes 8 About 22 percent of the alumni have donated to the school in the past two years The national average for alumni giving to colleges and universities is 17 percent More than 90 percent of all gifts to the college are unrestricted and can be spent on general operat ing expenses Slowly but steadily Knoxville College alumni are starting to put a dent in the deFicit According to a report issued by the college Tuesday alumni have pledged more than $116000 to help reduce the $2 million deficit movement was not as fast as I wished it could have been but been very said Venice Peek KC director of development Last fall a KC alumni group pledged to reduce the deFicit at the financially troubled college by $13 million over a five-year period Overall alumni contributions to the predominantly black college are up 45 percent over last year Peek said Alumni contributions during the 1985-86 Fiscal year totaled more than $243000 Although alumni donations make up only about 5 percent of the annual budget KC ofFicials are placing emphasis on alumni efforts Peek said During the past several years alumni groups have contributed more than $200000 annually enough money to pay almost all the employees for two months Peek said can make a big she said may seem like drops in a bucket but there have been a lot of In addition to the'deficit-reduc-tion drive alumni are helping build Ned Ray McWherter says Jane Eskind is influenced by a group of slick media people who are taking her for a With just two days left before the election McWherter during a press conference at the Hyatt Regency Tuesday was referring to the $37 million Eskind has spent on her gubernatorial bid mostly on television advertising Knox County voters will go to the polls Thursday to elect Republican and Democratic candidates for governor and the Public Service Commission 33 county officeholders and eight legislative candidates Polls will be open from 8 am to 8 pm House Speaker McWherter Eskind Public Service Commission chairwoman and Nashville Mayor Richard Fulton are vying for the Democratic nomination for governor wrong the amount of money being said McWherter who expects his spending to reach $2 million by Thursday need to put a limit on the wild amounts of money being Although McWherter would not say what that limit should be he added put whatever kind of limits everyone would agree The three candidates were required to disclose their campaign that Eskind and Fulton both will trail him when the votes are counted Most observers believe McWherter and Eskind are neck and neck at this point got a hunch that Dick Fulton will be closer to Jane Eskind than Jane Eskind will be to Ned he said Even though Eskind and Fulton have been critical of McWherter in recent weeks McWherter said he expects the three candidates to unite after the primary think have unity because going to win the he said be able to unify the spending last weekSince then Eskind has reported spending almost $600000 on advertising The figure was released after McWherter and Fulton called on Eskind to reveal how much she has spent since the campaign disclosures were made McWherter has reported raising another $60000 and spending $25000 disclose every six hours between now and the election if you McWherter told reporters passed the disclosure law in Tennessee so I have no problem with He called TV ads and other campaign literature attempts to distort his record just shows desperation on he said been putting out distorted TV ads for two McWherter made a campaign swing in Knoxville Tuesday to attend a rally then headed for Chattanooga He told supporters he is the only candidate qualified to be a me in at 10 give me a cup of coffee and three or four vanilla wafers and be ready to be he said Exuding confidence he will win the primary McWherter predicted.