Audit: Development Corporation of Mercedes awarded $58,000 no-bid contract

The Development Corporation of Mercedes paid $58,000 to Guerra Construction — a company connected to former board President Joel Quintanilla’s brother, according to a forensic audit conducted by Brownsville-based Burton, McCumber & Cortez, LLP.

The audit released this month, though, claimed the “Corporation was unable to provide evidence that the board of directors considered and approved” the no-bid contract to Guerra Construction for debris removal.

Contrary to the findings in the audit, records from a February 2015 meeting show the Development Corporation of Mercedes board did approve the contract to Guerra Construction — the company in which Joel Quintanilla’s sister-in-law serves as a director.

“When you make a suggestion like that, you better have done your due diligence,” Quintanilla said of the audit, which he had not seen as of Friday.

Quintanilla, a former Hidalgo County Pct. 1 Commissioner who previously served as the board president of the Development Corporation of Mercedes, abstained from voting on the awarding of the contract to Guerra Construction, according to records from the February 2015 meeting.

During the meeting, board member Rolando Arriola motioned to approve the contract which was seconded by Richard Galvan and also approved by Jaime Gonzales, Rafael Lorenzana and Oscar Montoyo.

“Never would I compromise my integrity or the integrity of my family or my city,” Quintanilla said.

The findings in the forensic audit were turned over to the Hidalgo County Sheriff’s Office Public Integrity Unit, which found “no violation of law” occurred, according to a letter sent by a Hidalgo County Sheriff’s Office sergeant to the city.

Quintanilla’s brother, Martin Quintanilla, is married to Nora Elia Quintanilla — a director of Guerra Construction.

Mercedes City Attorney Juan Molina who also works with the development corporation said affidavits must be signed if a member has a business interest in a company. One was not needed by law in the case involving Guerra Construction though because the relationship is not a conflict of interest.

Joel Quintanilla said he abstained from voting on the contract to Guerra Construction while on the board because he “did not want to go down that road” again.

In 2013, a Hidalgo County grand jury declined to indict Joel Quintanilla on unsubstantiated charges involving $2 million worth of guardrails installed by Guerra Construction throughout his precinct, The Monitor previously reported.

The Mercedes City Commission earlier this year approved the forensic audit that reviewed the last three years of the city’s economic development arm.

The audit also suggested that the Development Corporation update its procurement policy, segregation of duties, travel reimbursement policy, grant program and control of wire transfers.

Mercedes Development Corporation spending

The Development Corporation’s written policy gave the executive director the power to spend $7,500 without board approval, according to the audit. Auditors suggested that the written procurement policy be updated.

Interim Director Melissa Ramirez — who has headed the corporation since August after former Executive Director Hernan Gonzalez resigned — said Gonzalez would sign checks issued to him for travel reimbursement.

“I put it within the procurement policy that no one is allowed to sign their own checks, not even board members,” Ramirez said of recent changes made within the Development Corporation of Mercedes.

The audit also found that the Development Corporation “was unable to provide any documentation that requests for bids or quotations were solicited for expenses greater than $1,000.”

Auditors also suggested the Development Corporation update its travel reimbursement policy to be more consistent in its spending.

The Development Corporation regularly transfers money electronically and the audit noted that the contractor accountant “should not have authority to execute wire transfers on behalf of the corporation.” Instead, the audit suggests, at least one board member should review and approve the wire transfers, in addition to a Development Corporation staff member.

Grant program

Most economic development corporations provide grants or incentives to businesses for economic development.

In Mercedes, however, there is no clear “basis of edibility of grant recipients,” according to the audit. Those requesting grants typically submitted a letter to the board asking for the funds.

Auditors also suggested those receiving grants should submit receipts for projects to the Development Corporation as proof of the actual cost of completion.

The Development Corporation ended the grant program due to financial restraints and did not renew it this fiscal year because “our priorities are elsewhere,” Ramirez said.

Ramirez will look to the audit should the Development Corporation once again offer the grants.

Changes made

The Development Corporation of Mercedes board voted Wednesday to adopt an updated procurement policy drafted by Ramirez.

“It was just antiquated,” Ramirez said of the previous procurement policy. Ramirez will now look at regularly reviewing the Development Corporation’s policies.

Meanwhile, Molina said auditors had “full-access” to transactions made by the Development Corporation of Mercedes over the last three years.

The Development Corporation ended its contract with Guerra Construction for debris removal that included mowing and litter pick from Business 83 to Alicia’s Restaurant in Mercedes.

“I think it was a developmental program that, in retrospect, it’s more of what is (typically) a city function through public works,” Molina said.