Port of Galveston Director Rodger Rees admitted Tuesday he used a port credit card for personal expenses, and used port funds to give dozens of employees untaxed Christmas bonuses without board approval.
The admissions came after Mayor Jim Yarbrough, also a port trustee, questioned Rees during a meeting of the Wharves Board of Trustees about entries in the port’s financial statements.
A port employee in December withdrew $8,400 from the port’s petty cash account and distributed $100 to each employee, Rees said.
“I was wanting to give a small Christmas bonus, although I hate to use the word bonus,” Rees said. “We did write the check so that everybody could get a $100 bill at Christmas.”
Rees said he had cleared the spending with wharves board Chairman Ted O’Rourke before approving the payout. O’Rourke denied that happened.
“I never told him that,” O’Rourke said after the meeting.
Regardless, the spending was not approved by the entire wharves board and was apparently not recorded as payments to employees in the port’s books. Asked whether the payments were recorded on employee tax forms, Rees said they weren’t.
The payments were noted in port financial documents as being for “employee relations.”
Rees actions were contrary to how public entities are expected to use public funds, Yarbrough said.
“This is a public entity,” Yarbrough said. “We don’t hand out $100 bills like you do at your business.”
All the trustees at the meeting agreed Rees should have sought the board’s permission before paying the bonuses.
“I don’t want to diminish the fact that you’re trying to motivate your staff at Christmas, that’s nice,” Trustee Todd Sullivan said. “I don’t think the board is saying that it’s a bad idea, but the fact is that these were public dollars.”
Yarbrough also questioned Rees about a credit card statement showing a $170 charge at Kroger on Dec. 22.
Rees told the board he had mistakenly used a port credit card at the grocery store and had already reimbursed the port for that expense.
Yarbrough and O’Rourke said they wanted to see documentation of the reimbursement, and raised other concerns about the incident.
O’Rourke, who found the expense by reading the port’s voluminous financial statements, said Rees should have alerted the board about the mistake.
Yarbrough said the port had a long-standing policy prohibiting its employees from having credit cards to use even for public business.
Rees said he was not aware of that policy, and Yarbrough said the port had apparently disregarded the prohibition for years before Rees was hired in 2018.
“It was an error, and I guess I should be slapped,” Rees said. “It was unintentional. It was a mistake, and I apologize for that.”
Port staff members presented the board with a draft policy that would dictate future credit card use.
The confrontation came a month after O’Rourke publicly criticized Rees over multiple issues, including his approval of a $64,000 consulting contract that was canceled because it violated port rules limiting the director’s spending to $50,000 without board consent.
Rees at the time said signing that contract had been an oversight.
Trustees Elizabeth Beeton and Richard DeVries questioned whether it was proper for Yarbrough and O’Rourke to review the minutiae of the port’s financial documents.
“There are going to be mistakes,” Beeton said about the credit card use.
The issues raised Tuesday proved that closely vetting the statements was necessary, Yarbrough said.
The port lacked internal controls to ensure such mistakes didn’t happen in the the first place, he said.
“I’m not comfortable that we have good internal controls,” Yarbrough said.
Trustees made no immediate proposals to discipline Rees or to attempt to recover the money paid out in bonuses.
Late Tuesday afternoon, Rees said he thought the matters were mostly settled during the meeting.
“We received some good feedback from the board that will enable staff to continue to improve our processes,” Rees said.
“I understood today’s agenda items to be in the spirit of improvement. I would like to thank the board for supporting our staff and myself through some obvious growing pains.”
O’Rourke said he thought more might need to be done to address legal and financial issues raised by Tuesday’s revelations.
“I believe something should be done about it,” O’Rourke said after the meeting. “I don’t know what.”