The old Seaside Sanatorium was one of the locations where Bestech Inc. got state work to remove asbestos through an emergency contract. TOM CONDON / CTMIRROR>ORG

An audit of Connecticut’s hazardous materials cleanup program disclosed that more than a year’s worth of documentation was unavailable to auditors.

But the audit did not seek to explain why the documentation was missing — or to delve into why the abatement work was largely performed by a select group of state contractors.

The Department of Administrative Services hired Marcum LLP, an independent auditing firm, to sample more than five years of state hazmat projects in March 2022 after federal criminal investigators subpoenaed records related to several contractors that performed cleanup work for the state.

The audit was part of Gov. Ned Lamont’s response to news that a federal grand jury was probing the state’s hazmat contracts, Connecticut’s school construction program and several other state projects that were overseen by Konstantinos Diamantis, a deputy secretary at the state Office of Policy and Management.

The audit, which was commissioned by the state last year at a cost of over $100,000, suggested the months-long gap in oversight coincided with the Lamont administration’s transfer of hazmat program oversight from the Department of Administrative Services to the Office of Policy and Management.

[The Kosta Diamantis timeline]

The CT Mirror published a story in February 2022 that highlighted how two of the state’s hazmat contractors — AAIS Corp. and Bestech Inc. — netted nearly all of the $29.2 million that was spent from the state hazmat fund between 2017 and 2022.

DAS officials responded to that story by immediately canceling the state contract through which the companies were paid, and the state agency sought to expand the list of contractors who were eligible to perform hazmat cleanup work on state-owned buildings.

AAIS was removed as a state hazmat contractor earlier this year.

Despite those actions, officials at DAS did not ask Marcum to review why nearly all of the hazmat funding over the past five years went to those two companies, and the agency did not ask the auditors to review or confirm the work those companies performed.

Instead, Marcum was directed to look at only two things: whether there were “processes and procedures” in place for the hazmat program and whether past projects were exclusively performed on state-owned buildings.

“The scope of the audit was to review DAS’ process to administer the program to ensure that the funds were being used by state agencies,” DAS spokesman John McKay said. “It was more about the process of how we administer our side.”

Municipal hazmat projects, such as school renovations, were excluded from the scope of the audit.

McKay said projects such as the MLK Middle School in Hartford and the New London High School project, both done by AAIS, were not included because they were not state buildings. McKay said they don’t know how many municipal projects may have been done through the hazmat program.

DAS Commissioner Michelle Gilman, who declined through her staff to be interviewed for this story, announced in a press release this week that Marcum’s audit “validates the robust processes” that DAS now has in place to control the cleanup work at state-owned buildings and to manage the millions of dollars in funds that are paid out through the hazmat program every year.

“At DAS, we are committed to transparency and ensuring modernized procedures are in place and followed, to provide the best services to our partner state agencies and Connecticut residents,” said Gilman.

But the audit report makes it clear that the state was not always so diligent about tracking and reviewing the hazmat projects.

According to the auditors, state employees historically used a spreadsheet to record each hazmat project that was paid for by the state. And they recorded key information about each project, such as which state agency asked for the work, what contractor was hired, when the companies billed the state and how much each company was paid.

Marcum’s auditors said those spreadsheets were available for most of the projects undertaken between September 2017 and July 2019 and between January 2021 and May 2022.

But between August 2019 and December 2020, DAS could not locate any similar records tracking the hazmat projects and the approval process for those funds.

The only thing DAS could provide to auditors were records detailing how much money was paid from the hazmat fund during that time.

“DAS is not aware that such a spreadsheet exists for the period August 2019 to December 2020,” the auditors wrote in the report. “In lieu of a tracking spreadsheet, DAS provided a cash disbursement ledger to Marcum in order to facilitate assessment of transactions that occurred during this time period.”

To try to fill in the gaps, DAS also provided the auditors with records maintained by the state comptroller, which describe what projects and services were paid for, with only modest detail.

McKay said he was unsure what other types of documentation were collected for the various HazMat projects during that time frame because the program transferred from DAS to OPM.

Chris Collibee, a spokesman for OPM, told the CT Mirror that all of the relevant records from that time frame were returned to DAS in late 2021.

The auditors laid the blame for the lack of oversight between 2019 and 2020 at the feet of two former state employees: Diamantis, who resigned his government posts in October 2021, and Michael Sanders, who died in December 2021 of a reported drug overdose.

“In August 2019, the HazMat Program moved to the Office of Policy and Management under the direction of Michael Sanders, who reported to Kosta Diamantis,” the auditors wrote.

“The HazMat Program subsequently returned to DAS following Kosta Diamantis’s resignation from state service in October 2021, and continued to be managed by Michael Sanders until his untimely death in December 2021, when the Program was returned to the DAS Construction Services unit,” the auditors added.

Documentation included with the audit shows that Sanders verbally approved nearly 300 projects from 2017 through early 2022. That same documentation suggested he approved some projects even after his death.

“During the period that Mike Sanders was reporting to Kosta, it’s our understanding that projects were often authorized verbally,” McKay said. “So when the program did return to DAS, we verified in writing with each state agency that work had in fact been authorized.”

Dimantis, who has not been charged with any crime, said DAS was attempting to blame him for the gaps in oversight when he had no control over hazmat funds or the cleanup work at state properties.

Sanders did move offices with Diamantis when the state’s school construction program was officially transferred to OPM in late 2019. But he said Sanders continued to report to Noel Petra, a deputy commissioner at DAS, on the hazmat projects at state buildings.

A memorandum of understanding that was signed by Josh Geballe, the former DAS commissioner, and Melissa McCaw, the former OPM secretary, specifically says that “Mr. Sanders services and the hazardous material abatement funds shall remain readily available to DAS.”

Diamantis said that memo clearly shows that he played no role in the oversight of Sanders’ work related to state hazmat projects.

“They can jump up and down and stand on their heads,” Diamantis said. “I had no authority over Mike Sanders on state buildings. All of that came through DAS.”

“That’s as factual, black and white as it can be,” he added. “So they need to take ownership of whatever it is they are looking to throw at the wall.”

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Andrew BrownInvestigative Reporter

Andrew joined CT Mirror as an investigative reporter in July 2021. Prior to moving to Connecticut, Andrew was a reporter at newspapers in North Dakota, West Virginia and most recently South Carolina. He’s covered business, utilities, environmental issues, the opioid crisis, local government and two state legislatures. Do you have a story tip? Reach Andrew at 843-592-9958

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Dave AltimariInvestigative Reporter

Dave does in-depth investigative reporting for CT Mirror. His work focuses on government accountability including financial oversight, abuse of power, corruption, safety monitoring, and compliance with law. Before joining CT Mirror Altimari spent 23 years at the Hartford Courant breaking some of the state’s biggest, most impactful investigative stories.