Former Arkansas State University Chancellor Tim Hudson submitted reimbursements for travel expenses in Mexico even though the school's partners at its new campus in Queretaro had paid for them, according to an audit released Monday.
Hudson, 62, submitted $1,671.92 in reimbursements for travel related to Arkansas State University's Campus Queretaro and was granted that amount, but he has since paid back the university, documents show. The audit is the third one. He resigned from his $360,000-a-year post Aug. 2.
"As we indicated we would, following the initial audits, our staff has been conducting a thorough review of documents to ensure that any other potential irregularities are identified," ASU System President Chuck Welch said in an email Monday. "These have been the only additional findings."
ASU has forwarded the latest audit to the Arkansas Legislative Audit, the system office said, adding that it does not anticipate other audits related to Hudson.
Larry Hunter, deputy legislative auditor for educational institutions, said the state agency was working on its annual audit of the university, which may include portions of the ASU System's internal audits. The agency is hoping to present the annual audit to legislators next month, he said.
Hudson had worked for the university for about four years, starting May 1, 2012. Since his start, Hudson had worked to build a public-private partnership with officials in Mexico for an Arkansas State campus there.
The university partnered with ASU-Campus Queretaro, a private foundation in Mexico that acquired more than 2,000 acres for commercial, residential and recreational uses for some 70,000 residents, the university has said. The campus, an anchor of the commercial development, is now accepting applications and is scheduled to open in next fall.
The agreement between Jonesboro and Mexican officials didn't detail how travel expenses in Mexico would be paid, but officials there have "historically" footed the bills for hotels, ground transportation and meals for ASU travelers in Queretaro, according to the audit.
The irregularities came up in follow-ups of the initial audits released this summer. As a part of that, ASU System staff members reviewed Hudson's relationship with the Mexico project, Welch said.
The reimbursements were first reported to the the system's internal auditor on Aug. 19 by Len Frey, the university's vice chancellor for finance and administration. Frey had talked a day earlier with the university's Campus Queretaro general director, Edmundo Ortiz, who first brought up the personal reimbursement requests, according to the audit.
Auditors reviewed Hudson's trips to Mexico from May 1, 2012, to Aug. 2, 2016. In total, he traveled to the country nine times, and had $10,318.49 in expenses.
The auditors confirmed that Hudson requested reimbursements for $1,295.76 in three stays -- at the Hotel Mercury Inn from Nov. 12, 2015, to Nov. 15, 2015; and two at the Dona Urraca Queretaro Hotel from March 20, 2015, to March 27, 2015, and again from April 3 to April 6. Mexican partners paid for the expenses and had proof of payment, auditors said.
On two of those occasions, fellow ASU travelers did not request reimbursement, according to the audit.
Ortiz told ASU he couldn't provide payment receipts for three other trips -- all in 2013 -- because an investor no longer involved with the project had made them, the audit states.
From March 16, 2013, to March 22, 2013, Ortiz told auditors he didn't pay for days Hudson was there with his family, a total of two rooms for three nights, according to a hotel bill. Hudson had requested reimbursement for one room for three nights between March 18, 2013, and March 20, 2013, for $295.54. Another bill filed with the same hotel showed a single credit card paid for a total of eight rooms and other expenses for client Grupo Alfavos Sa De Cv.
The system's internal auditors could not determine whether Hudson received unnecessary reimbursements during that stay.
Some three months later, Hudson filed another reimbursement request for expenses in Mexico City. Ortiz told auditors he didn't pay for Mexico City expenses, and a hotel bill in that city backed up the statement. Another Jonesboro employee who accompanied Hudson did not ask for reimbursement, according to the audit.
From Oct. 2, 2013, to Oct. 5, 2013, Ortiz said he was sure he paid for an ASU hotel stay in Queretaro, but had no documentation to show it. Hudson claimed $376.16 for that stay, but two others who traveled with him did not file claims, the audit said.
Hudson did not ask for reimbursement on the remaining three trips.
Welch emailed Hudson on Oct. 24 with the internal audit memorandum.
" [It] has been determined that you were inappropriately reimbursed for $1,671.92 in travel expenses that were paid for by our ASUCQ Mexico partners and not by you," Welch wrote in the email. "As a result of these findings, I am writing to request that you immediately remedy this issue in one of two ways: 1. Provide Arkansas State University with official receipts and documentation proving that you were legally due these reimbursements; or 2. Make immediate payment of $1,671.92 to Arkansas State University."
Hudson wrote back the next day and included a check to the university in that amount.
"My understanding with ASUCQ starting in 2015 was that if accompanied by other A-State travelers then I would pay for my hotel," Hudson wrote. "I recall doing this in cash since I rarely use a credit card in Mexico due to security concerns. However, insomuch as I have no additional documentation to provide, I have remitted the amount you requested via the enclosed personal check."
Hudson did not respond to a call to his cellphone and did not return a message.
Auditors have recommended certifications on travel reimbursement forms stating the traveler paid that expense; proof of ownership of a listed credit card number on receipts with any exceptions documented and approved; and a review of the system policy on travel reimbursement and university travel guidelines.
"It appears that the most significant issues surrounded non-English receipt translation challenges and corresponding monetary exchange challenges," Welch said. "Additional steps will place greater responsibility on international travelers to confirm expenditures and verify appropriateness of reimbursement."
The audit is the third involving Hudson and his wife, Deidra.
The system released the first audit in July, detailing management concerns of the Jonesboro school's study-abroad program run by Deidra Hudson. Auditors were concerned that Deidra Hudson, a part-time employee, was managing the study-abroad trips, which they said were unorganized; student payments for a Nordic study-abroad trip went to a PayPal account; an instructor for the Nordic study-abroad trip had no contact with the university and was scheduled to teach at another ASU study-abroad session in Spain; and that a Spanish third-party vendor, Multisense, that had facilitated programs since 2013 had no written agreement with ASU.
Tim Hudson stepped down from the chancellor's post late Aug. 2, just days before the second audit was released.
The second audit looked deeper into the Hudson's personal relationship with the family who owns Grupo Sense, an information, publishing and education conglomerate that owns Multisense. Grupo is owned by Alfonso Rubio, and his wife, Adela Diez, is the company's vice president. The couple have two sons: Pablo Rubio and Carlos Rubio.
The August audit found that emails between the two families got personal, as they referred to one another affectionately. The university had selected Multisense as its third-party provider for the Spanish study-abroad trip without a competitive bidding process. ASU paid the vendor more than $250,000 over the last three fiscal years, with two invoices emailed straight to Deidra Hudson's private email account, according to auditors.
Internal auditors also found that Tim Hudson used his standing with the school more than once to secure special privileges, including attempts to obtain more financial assistance for his college-going daughter and having a company hire a family friend.
Documents related to the second audit also show that in 2015, Tim Hudson had hired Pablo Rubio as an executive assistant to the chancellor. Pablo Rubio, who was paid $70,000 annually, stayed in a fully furnished, on-campus apartment provided by the university. Pablo Rubio resigned about five months later.
Auditors have also cited nepotism and conflict of interest.
Doug Whitlock, a retired president of Eastern Kentucky University, has been serving as interim chancellor at Arkansas State. The system has yet to begin a search for a new permanent chancellor.
A Section on 11/08/2016