Haworth: All spending with ESG under review

Rob Haworth

All work that Energy Systems Group has done for the Vigo County School Corp. is under review for possible overbilling, Superintendent Rob Haworth said this morning.

Those energy savings and related projects date back to the early 2000s and continued through 2016, he said.

Haworth met with reporters to discuss action taken by the School Board on Monday. The board approved a resolution authorizing its attorneys to either negotiate with or file legal action against ESG.

The board voted six in favor, with Mel Burks abstaining.

At this time, ESG is the only company with projects under review by the district and its attorneys, Haworth said. said.

Indianapolis-based ESG is a former school district vendor that has done tens of millions of dollars worth of energy savings projects and related projects for the school corporation.

"Our board is focused on looking at the cost of the projects only with ESG," Haworth told reporters this morning. Responding to questions, he said the amount being sought could be in the millions of dollars.

The board, its attorneys and ESG have been in negotiations for several months, Haworth said.

The school district is seeking to recoup "dollars we believe we've lost to ESG through a series of energy savings contracts over a long period of time," Haworth said. "When you think about what the cost of our projects were, and when you look at what dollar amount ESG admits to making on those projects, we struggle with what the industry standard is and what we paid for the cost of those projects."

Haworth did not identify any particular projects or disclose how much the district believes it was overbilled. Nor would he comment on how much the district hopes to recoup.

"I would say we're looking at all the projects that date back to the early 2000s through 2016 — looking at the percentage cost of each one of those projects, comparing those projects to one another, and seeing what the consistencies or inconsistencies are," he said.

"I think the dollar amount we were charged for the ... scope of work performed by ESG — I don't believe it's consistent with what you would see in industry standards."

Asked for specifics about how much the district would settle for, he responded, "Obviously, by employing our lawyers, we're making a statement this isn't a $100,000 issue. This is an issue that we take very seriously given that we're also taking our community through a referendum project.

"We think there are considerable dollars on the table."

Asked for a timeline as to when litigation might be filed, Haworth said, "I think it depends on where we see negotiations going. If progress is being made, we don't want to take that action. ... Right now, negotiations are still very much in progress."

He noted the school board has taken a number of steps in the past year to ensure such problems don't occur in the future.

Those steps include the formation of a bond steering committee that reviews how bond proceeds are spent,. as well as the school board finance committee that now meets monthly to review all claims. The board also is working with an organization to review and update all policies.

While it is challenging to go back several years to review contracts, "I believe that in the end, doing our due diligence for our community is important. I think that's what our school board is doing," he said.

Asked his overall reaction to potential overbilling by ESG, Haworth said, "I think our community is laser-focused on taxes, whether it be our projects or other projects in the community. Again I think our board is being being responsive by taking this action in relationship to that laser focus."

Representatives of ESG could not immediately be reached for comment Tuesday.

Jonathan Mayes, an attorney with Bose, McKinney and Evans representing the school district in the matter, had no additional comment.

Dating back to 2000, court documents say, ESG did $42 million worth of business with the Vigo County School Corp. and made a profit of $11 million. During that time, ESG donated or expensed $100,000 or more to former Vigo schools superintendent Danny Tanoos or to VCSC, according to those court records.

Tanoos faces felony bribery charges, filed in September 2018. The charges allege he solicited and accepted items of value, including concert tickets and dinners from ESG in exchange for recommendations that ESG be contracted to do work for the school system.

The criminal case against Tanoos in Marion County is on hold in the trial court while a mid-case appeal is before the Indiana Court of Appeals.

Tanoos' attorneys want the charges dismissed. They say the charges are faulty in that they rely on a generalized theory of bribery and do not actually establish a criminal offense under Indiana law.

The state, however, says its filings set forth sufficient facts to meet its burden to proceed with prosecution.

Sue Loughlin can be reached at 812-231-4235 or at sue.loughlin@tribstar.com Follow Sue on Twitter @TribStarSue.

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