Auditor-elect Beth Wood said she plans to keep on board Frank Perry, a former FBI man, who was investigations chief for departing auditor Les Merritt.

Perry, who previously led the FBI's Raleigh office, had a higher profile than most employees of the auditor's office. He was named in a lawsuit filed by the State Ethics Comimssion. The commission, which had a running jurisdictional feud with Merritt, claimed in its lawsuit that Merritt had a conflict of interest because Perry once worked for the ethics commission.

Merritt was investigating whether the commission gave preferential treatment to a staff member for then-Lt. Gov. Beverly Perdue.

Wood said in a recent interview that she met with several employees of the auditor's office and decided to give Perry a shot in her administration.

As an FBI agent for 22 years, Perry was involved in the public corruption investigations of former state Agriculture Commission Meg Scott Phipps and former U.S. Rep. Frank Ballance. He retired in 2004.

Beth Wood says she's ready to be state auditor.

A little more than a month after she won her first race for public office, the former longtime employee in the auditor's office says she has decided who will stay and who will go.

"I'm not sure there's ever been a team this talented, starting with the state auditor," she said.

A growing budget shortfall might mean Wood will have less money to hire auditors. She is a Democrat in a state now run almost entirely by Democrats.

To some, that means she will have to prove that she will zealously do her job regardless of party affiliation. Senate Republican leader Phil Berger said until she's published audit reports and developed a track record, he'll assume she's being aggressive.

"I guess it's not uncalled for for people to be somewhat skeptical," he said. (N&O)

Why does the U.S. attorney's post matter?

As we've written earlier, federal prosecutors in the Eastern District play a key role in corruption investigations because they have investigative powers that state prosecutors do not.

In addition, they are insulated from the local political forces that might hold back the state Attorney General's office or a locally elected prosecutor.

And after the Republican wipeout two weeks ago, the job will be even more important.

Other than prosecutors, the major checks on power in the state are legislators; the state auditor, governor, attorney general and other statewide elected officials; the state Supreme Court; the political parties; investigators for the State Board of Elections and the media.

Consider that Democrats now control both chambers of the legislature, hold eight out of 10 statewide offices including the governor, attorney general and the auditor, and an incoming U.S. senator in the majority party with ties to the state Senate leader.

Republicans have a 4-3 advantage on the state Supreme Court and one U.S. senator in the minority party. The state's party chairwoman is taking some criticism on blogs and may face a challenge next year. The only statewide officials are in labor and agriculture.

That leaves the board of elections, the U.S. attorney's office and the media as the major potential checks on corruption in the state.

State Auditor Les Merritt says an ethics probe is being blocked.

On Thursday, he released an "interim report" accusing the State Ethics Commission of unlawfully blocking his staff's investigation into possible preferential treatment of Lt. Gov. Beverly Perdue.

The report also backed findings by two other state agencies that found the commission lacked clear administrative policies and was strugling to perform its tasks.

Merritt, a Republican seeking re-election, said in a statement that his staff's report "paints a picture of potential destruction of evidence. I say 'potential' because the Commission is hiding facts from the public that may implicate or exonerate their past actions."

The investigation stems from a complaint from an office assistant who noted that a staffer for Perdue was allowed to review records alone in an office with the door closed. She was later fired after the N&O asked about the log. (N&O) 

The State Ethics Commission met for about three hours behind closed doors today to discuss personnel matters, but took no action and offered no comment afterward.

The regularly-scheduled meeting took place amid controversy within the commission. A report in June by a consultant to the Office of State Personnel found a work environment that was dysfunctional and distrustful, Dan Kane reports.

Last month the commission's executive director, Perry Newson, fired an office assistant who had raised questions about preferential treatment to an aide to Lt. Gov. Beverly Perdue. The aide had visited the commission to review Perdue's statements of financial interest.

The office assistant, Amanda Thaxton, had made a notation about the visit that was later erased from the log.

Thaxton was present at the opening of the meeting, but left after the commission went into a closed session. She has filed a grievance over her firing and said she wanted to be present in case the matter came up for public discussion.

Tim Hoegemeyer, general counsel for the State Auditor's Office, also attended the open session. The auditor is investigating how the aide's visit was handled, and its aftermath.

An office assistant at the State Ethics Commission has raised questions about its own ethics.

Ten months ago, Amanda Thaxton made a notation in a public records log when an aide to Lt. Gov. Beverly Perdue was allowed to review her financial disclosure forms alone.

The Perdue aide "reviewed files in ... office alone with door closed," she typed into an electronic log.

Six months later, Kathleen Edwards, the assistant director who let the Perdue aide review the records, found the notation and removed it. Last month, after an N&O reporter asked about the log, executive director Perry Newson fired Thaxton, giving no reason.

"I think it was probably more than coincidence," she said.

The state auditor's office is investigating the incident. (N&O) 

A UNC-Greensboro vice chancellor inappropriately hired a technology contractor who was paid $431,925 in state money over two years, including $65,000 in expenses for commuting to Greensboro from Los Angeles and Las Vegas, according to a state audit released today.

The payments included $212,000 in student fee revenue to the contractor, whose billing rate was raised from $150 to $200 an hour during the period, Jane Stancill reports. The contract was executed by the vice chancellor for information technology services without following university procedures, the audit said.

The job, which was to ensure that a new administrative computing system was implemented on time, was not posted nor competitively bid. The university's top legal and business officials did not review the contract in violation of university procedure.

The vice chancellor who approved the contract was not named in the audit, nor was the independent contractor.

More after the jump.

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State Auditor Les Merritt released a report Tuesday on state Sen. Martin Nesbitt.

The report, at the center of a dispute over whether the auditor should investigate violations of the state ethics law, became public after Nesbitt waived his right to confidentiality for the State Ethics Commission to give its side, Ben Niolet and Mark Johnson report.

In the report, Merritt says he believes the Asheville Democrat should have disclosed on ethics filings that he worked with his son's racing team. Nesbitt was an unpaid crew chief.

Merritt's report details how Nesbitt and his son own a business that owns a warehouse that Nesbitt's son used as collateral for a loan for the racing team.

"It's hard to get around the fact that Nesbitt Ventures' business plan is to 'own and lease real estate' but their sole property is being used to provide financial backing to Nesbitt Racing," Merritt said. "Therefore, if Nesbitt Racing fails, which could happen if a major financial sponsor backed out, Nesbitt Ventures and its owners are left holding the debt."

But the ethics commission does not see a conflict because Nesbitt's son doesn't live with his father, which means his financial dealings are irrelevant to Nesbitt's.

"When (Merritt) doesn't like (the ethics commission's) opinion, he says, 'I'm going to apply my own law,'" Nesbitt said.

A bill to prohibit the auditor from looking into ethics cases is moving forward in the legislature.

Questions about state Sen. Martin Nesbitt's son's stock-car racing team are at the heart of an ethics feud.

The Asheville Democrat volunteers as a crew chief for his son Mart's Nesbitt Racing Enterprises and co-owns a Swannanoa garage used as collateral for the company's line of credit. Until recently, the racing team was sponsored by Blue Cross Blue Shield, the Asheville Citizen-Times reports.

The State Ethics Commission advised Nesbitt in 2007 that he did not need to disclose the relationship as a potential conflict of interest on the statement of economic interest filed by legislators. After getting a tip on the matter, Republican state Auditor Les Merritt's office looked into the case.

A spokesman for Merritt would not confirm the legislator in question is Nesbitt but said the auditor is "proceeding with caution" and "not wanting to send something out that could be illegal."

The investigation led to a dispute between the Ethics Commission and the auditor's office over which agency has the responsibility to enforce the state's ethics law.

A bill to prohibit the auditor from looking into ethics cases is moving forward in the legislature.