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Amy Dalrymple, Forum News Service, Published May 12 2010

FORUM EXCLUSIVE: Audit papers reveal Joseph Chapman's grip on North Dakota State

BISMARCK – Documents used to compile an audit provide further details about former North Dakota State University President Joseph Chapman’s role in controversial construction projects and shed light on what led up to two other resignations.

Key players interviewed by auditors about the NDSU projects said they either feared for their jobs or felt they couldn’t say no to requests from the president’s office.

The interviews are included in working papers auditors used to issue a report that was finalized last week, which found violations of state law and board policy within the North Dakota University System.

The Legislative Audit and Fiscal Review Committee will discuss the audit today.

Sen. Randy Christmann, chairman of the committee, said he is “extremely disappointed” with the findings in the audit.

“I am shocked at the trickery that they used,” said Christmann, R-Hazen.

The state Board of Higher Education also will further investigate following the audit, particularly into cases where policy was circumvented.

Although Chapman told auditors he distanced himself from the president’s house, others interviewed and e-mails included in the documents painted a different story.

An e-mail written by Frank Jennings, then-president of the NDSU Development Foundation board of trustees, referred to the house as “Joe’s current and newest ‘hot issue.’ ”

“Regardless of it being a hot issue, it is a commitment that we made, and I see it as responding not only to a promise to the Chapmans, but also responding to a university need for decades to come,” Jennings wrote in the 2007 e-mail to Jim Miller, foundation executive director.

Chapman had John Adams, former vice president for finance and administration, issue a request for architectural proposals on the house before the foundation was ready to proceed with the project, Miller told auditors.

Sherri Schmidt, associate executive director of the NDSU Alumni Association, who headed the house committee, told auditors that Chapman’s wife, Gale, was intimately involved in the house project.

In one instance, Schmidt said she sent a document to Gale that emphasized giving one direction to the architect. Chapman’s assistant, Cathy Backer, told Schmidt she shouldn’t have done that.

Afterward, Schmidt “felt she was told not to question the president’s office,” the auditors’ notes say.

The house’s outdoor restrooms and the automatic blinds in the bedrooms were directives from either Gale or the president’s office, inter-viewees said.

A conflict arose between Chapman and Facilities Director Bruce Frantz, who resigned last week, about the timing of installing a steam line that would provide heat to the president’s house.

Backer said Chapman called her and Broc Lietz, associate vice president for finance and administration, and told them to get it done or “all hell would be paid,” the auditors’ papers say.

Lietz then had a meeting with Frantz in which Frantz said he felt like his job was on the line.

Frantz and Adams, who was asked to resign this spring, both told auditors they feared for their jobs if they didn’t push forward with the remodeling of the president’s office. Chapman told them not to take the project to the board.

Ron Peterson, the foundation’s controller, told auditors that Richard H. Barry Hall got more expensive each time Chapman walked through it.

Adding the North Dakota Trade Office into the College of Business facility was “a Chapman thing,” Peterson said. Chapman also wanted the $78,000 stock ticker and the basement finished for $231,000, interviewees said.

Architect Terry Stroh said NDSU facilities staff didn’t argue with any of the additions for Barry Hall and saw the foundation as a “bottomless pit.”

An attorney general’s opinion is still pending on whether the payment arrangement for Barry Hall is legal.

During today’s legislative committee meeting, Christmann said he anticipates good discussion, but he’s not sure if committee members will take action right away or take some more time to digest the audit’s findings.

Christmann said he’s not sure how effective it will be to add safeguards in the university system because people can find a way around them.

“Really, this can mostly be solved in one word: honesty,” Christmann said.

Attempts to reach Chapman since the audit was released have been unsuccessful.

Readers can reach Forum reporter Amy Dalrymple at (701) 241-5590