Recent controversy over a new director for Charlotte’s public-private partnership on racial equity has left City Council members distanced, or distancing themselves, from a key step in a $250 million initiative that’s supposed to address historic discrimination.

Last week, the Charlotte Regional Business Alliance announced Kimberly Henderson as executive director of its Employer Office of Inclusion and Advancement, responsible for implementing the Mayor’s Racial Equity Initiative.

Soon after, WCNC and later the Observer reported that after Henderson left a high-level government job in Ohio last year, several audits found millions of dollars of fraudulent and overpaid unemployment claims paid out by her department.

Despite having the mayor’s title on the program, Charlotte Mayor Vi Lyles says she had no involvement in the hiring process. Other council members who the Observer talked to this week say they, too, had no input and one says the process of funding and launching the initiative has been marred by criticisms over lack of transparency. Several refused to comment or did not respond to questions.

“We’re standing on a foundation of deceit already on this topic,” says council member Tariq Bokhari.

He has previously criticized the mayor for not explaining to council members that COVID-19 relief funding they approved last year would be lumped into the city’s investment in the initiative. He said despite months of work to secure donations for the effort, council members learned about it when they were invited to the November ceremonial announcement just days before.

That pattern, he said, calls for significant consideration about how the initiative as a whole will run.

“Once we figure out who knew what and when, particularly the mayor, then we need to circle back and say, ‘Alright, what is the new approach?’” he said.

“Because the underlying topics here are so very important. And what many people in the private sector that have stepped up to do here is not just commendable, it’s exactly what we need,” he said. “I just fear that a couple individuals like the mayor had taken advantage of it for personal needs.”

Bokhari, a non-voting member of the Charlotte Regional Business Alliance’s board of trustees, says in that role he was not briefed or asked to weigh in on the recent hire of Henderson, or any other operational element.

The public-private partnership is the corporate community’s response to racial equity issues in the city. In 2020 Lyles renewed attention on longstanding systemic racism when she publicly apologized for things like urban renewal and other policies that enforced systemic racism. At that time she committed to increased investment to equity causes, though details were not yet public.

Although the Mayor’s Equity Initiative’s $250 million goal is expected to eventually include $100 million of public funds, the governance and oversight of the effort will be largely by the private sector.

Many of the area’s biggest names have announced multi-million dollar donations, including Bank of America, the Duke Endowment, Lowe’s, Truist and Atrium Health.

City Manager Marcus Jones has assured Charlotte City Council it will have oversight over taxpayer money allocated to the initiative. But the council is not an advisory or oversight body over private philanthropic funds, which represent more than half of the total goal amount.

The Charlotte Regional Business Alliance focuses on economic growth, such as attracting new employers, in a region covering 15 counties. It was formed in 2018 when the Charlotte Chamber of Commerce and the Charlotte Regional Partnership merged.

As an employee at the alliance, Henderson, an attorney and former community college administrator, will help guide the initiative’s four focus areas: investing in Johnson C. Smith University; increasing digital access; workforce development including boosting diverse hiring and promotion by Charlotte’s employers, and the city’s corridors of opportunity program to revitalize key areas of the city.

The mayor, through a spokesman, has repeatedly refused to answer questions about Henderson’s hire, stating the decision was the Alliance’s, a message she reiterated Monday night during a City Council meeting.

“I wanted to state clearly, that I nor the Charlotte City Council or any council member had any role in the hiring of the alliance staff,” she said. Lyles has declined an interview request by the Observer on the matter.

Janet LaBar, president and CEO of the Charlotte Business Alliance, has defended the hire, saying that the audits were discussed during Henderson’s hiring. After Henderson resigned in March, state officials issued several audits and ultimately determined the department made $475 million in fraudulent payments to people who did not qualify and an additional $3.3 billion in overpayments.

“I factored this into consideration, as well as her capabilities for the role of executive director of the Employer Office of Inclusion and Advancement, and I made the decision to hire her,” LaBar said in a statement Monday.

Council mostly mum

While Bokhari has been the most vocally critical, most on City Council did not respond or refused to comment on Henderson’s hiring or how much input city leaders should have in the initiative.

Council members Malcolm Graham and Matt Newton declined to comment and referred questions to the mayor’s office.

Mayor Pro Tem Julie Eiselt, and members Renee Perkins Johnson, Greg Phipps, Victoria Watlington and Braxton Winston did not respond to requests for comment.

Councilwoman Dimple Ajmera referred questions to Lyles and the Alliance, saying Lyles “made it very clear that (the hiring) had nothing to do with city council members.”

Council member Ed Driggs said he wanted to learn more about the outcome of the investigation in Ohio.

“Clearly if there’s an established finding wrongdoing, then you know that’s very serious,” he said.

Months after Henderson resigned, the Ohio attorney general asked two police agencies to investigate whether any laws were broken by Henderson or her staff concerning the handling of and disclosure to state auditors of the scale of fraudulent payments. Those police agencies have not provided to the Observer an update on the outcome of any investigation.

Attempts to reach Henderson through a phone number listed in her name or through the Charlotte Regional Business Alliance have been unsuccessful in recent days.

Councilmember Larken Egleston echoed the sentiment that he didn’t have details about the hiring process or Henderson’s background until reading local news media reports, given it was done through the Alliance without council input.

The city provides money to many nonprofits and other groups and doesn’t have hiring input in their leadership, he said, but added that doesn’t discount the gravity of the situation.

“I do think it’s serious and I do think it requires further explanation, but I don’t know if we have the explanation to give,” he said.

Transparency questions

Henderson’ background is the latest issue of transparency surrounding the mayor’s initiative.

A few weeks after it was announced, Lyles apologized to the City Council after several members expressed frustration that they weren’t notified before the announcement about how public funds would be used for the effort, including $10 million to increase digital access.

Some of those funds had been approved by council and were then wrapped into the equity announcement, such as funding for the city’s corridors of opportunity program that seeks to revitalize six historically underserved areas.

In an interview with WFAE’s Mike Collins on Wednesday, Lyles contended there was “no city money involved in this,” going on to explain that Henderson’s main responsibility would be leading the effort to increase diversity in hiring and promotion among Charlotte’s employers.

The City of Charlotte has not committed public funds to that area. However, Henderson’s hiring announcement described another part of her role as “professional executive staff” to oversight boards governing the three other areas.

The city has committed $72 million for digital efforts and the opportunity corridors.

And even before the massive effort was announced, the process was criticized by community advocates pushing for more direct restorative justice investments in Black communities destroyed by urban renewal and other policies.

One year ago, representatives of Restorative Justice CLT criticized what they described as a lack of transparency over who was included in the planning and how investment areas were chosen.

Will Wright contributed to this report.