The Corporation of Hamilton has been “duped” into paying out $150,000 to a US organisation “created for the purpose of misleading third parties”, it is claimed.

For City Hall is understood to have signed up to host a convention for a new group called the Conference For Black Mayors Inc (CBM), rather than the prestigious and widely-respected National Conference of Black Mayors (NCBM).

The event, scheduled to take place in October, is likely to cost Hamilton ratepayers at least $150,000 after City Hall agreed to fund convention costs.

The CBM is a splinter group created by disgraced former NCBM Executive Director Vanessa Williams.

Ms Williams was sacked by the NCBM last September after spending more than $600,000 of the organisation’s funds on personal expenses and refusing to cooperate with an internal audit.

That scandal came to light following the election of Sacramento Mayor Kevin Johnson as NCBM president last May.

Mr Johnson called for an audit of NCBM finances after discovering that the Atlanta-based group was $1 million in debt.

The Corporation became involved with the NCBM after Hamilton deputy mayor Donal Smith met Ms Williams at another convention in Atlanta last summer — before she had been dismissed.

“And so we set out to do our negotiations with the directors of the NCBM and now we’re here,” Mr Smith said at a press conference in February to confirm that Hamilton would be hosting NCBM’s 40th annual convention this year.

Ms Williams has visited Bermuda twice this year on convention business, maintaining that she was still the Executive Director of NCBM.

On one trip she was accompanied by the mayor of a New Jersey village who claimed to be the NCBM President.

But The Royal Gazette understands the Corporation’s convention contract is with CBM Inc, not NCBM.

The contract was signed last week by the municipality and sent to a residential address in Georgia. An initial payment of $50,000 was wired to an unknown bank account at the same time.

It is understood that the contact’s signatories were Ms Williams, who is named as CEO and CFO of CBM Inc, and deputy mayor Smith.

Public records show that CBM Inc was set up by Ms Williams in April 2013, just prior to Mayor Johnson’s election as NCBM head and before her handling of the organisation came into question.

According to the Georgia Secretary of State website, Ms Williams incorporated the non-profit organisation “for charitable and educational purposes”.

She also lists herself as President, CFO and CEO and states that CBM “is not a membership organisation” — despite pledging to bring scores of her members to Bermuda to attend the convention.

Last week an Atlanta judge ruled that Mayor Johnson’s election as NCBM president and his subsequent dismissal of Ms Williams were valid.

And NCBM lawyers have now advised the Corporation that the two groups are not linked in any way, and that the municipality should “secure” any payments that it may have made “so that an unauthorised person does not convert the funds”

In an e-mail to Hamilton councillor Larry Scott which has since been shared with other members of the Corporation’s board, attorney Bjay Pak of law firm Ballard Spahr said: “It appears that Ms Williams has represented to others that she still represents the NCBM, and may have misrepresented her authority in order to gain credibility with third parties, such as yourself.

“There is no record of any entity that we are aware of that goes by the letters CBM. NCBM is not affiliated with CBM, and it appears that CBM’s agents are misrepresenting their affiliation with NCBM.

“We do not have any information about this event. This year marks the 40th anniversary of NCBM, and not any entity called CBM.”

Mr Pak confirmed that, according to Georgia state records, Ms Williams set up the new CBM entity last year.

She gave her organisation an Atlanta address that the NCBM had intended to move to after Ms Williams failed to pay rent on its former offices.

“The address listed in 160 Trinity Street, which was the location where NCBM was supposed to move to as a result of Ms William’s failure to pay rent at 191 Peachtree Street,” Mr Pak said. “NCBM’s board never authorised her to create an entity so similarly named. This appears to be an entity that was created for the purpose of misleading third parties.”

And informed about a $50,000 payment that the Corporation had made as part of its $150,000 fee to host the conference, Mr Pak warned: “If the money was sent to a residential address in Georgia, we caution you that it may have gone to Ms Williams’s personal address. NCBM did not authorise Ms Williams to receive any funds at her residence.

“We recommend you take any necessary measures to secure the funds so that an unauthorised person does not convert the funds.”

Last night Mr Scott, a longtime critic of Hamilton’s involvement in the convention, claimed that the municipality had been misled into backing the conference.

And he also criticised deputy mayor Smith for providing his Corporation colleagues with inaccurate information about the conference and the parties involved.

“It looks as though the Corporation has been duped into parting with thousands of dollars to a questionable organisation that we know nothing about,” he said.

I have repeatedly stated that the Corporation should never have gotten involved until certain NCBM members had got their house in order. The corporation failed to do that.

“I support what Mayor Kevin Johhnson and others have set out to do — (he) manages Sacramento very well — but it now looks as if we’ve backed the wrong horse.

I have done my due diligence by providing the council with information I feel is relevant to this whole matter.

“At all times at the council the majority of members believed the Deputy over me or the information that I was providing. But we now know that the position I presented was accurate.”

The Royal Gazette informed Hamilton mayor Graeme Outerbridge of Ms Williams’ sacking in January and NCBM lawyers also advised that she was no longer authorised to represent the organisation.

At that time the mayor insisted that the Corporation would do its full due diligence before signing any contract or writing out a cheque.

But last night Mr Scott questioned why the Corporation failed to heed so many red flags that he and others had raised.

“We now have more concerning evidence from the same Atlanta lawyers that have told us to treat Ms Williams with circumspect because she is unreliable — as shown previously in the audit of the NCBM accounts and as acknowledged in the recent court case involving the NCBM,” he said.

“Yet we at the council have not paused in the face of all that information and gratuitous advice.

“I have made the public aware of each and every turn in this matter, because it was being ignored inside the council. That ignorance has consequences.

“I have been told that I am not loyal to the team because of my actions, but my loyalty is not to the team but the city to whom I swore an oath.

“I can live by those decision going forward, despite any uninformed criticism that comes otherwise, and if I had to do it again I would do it the same way.

“That is because I am a public servant in my role as a councillor, and I am bond by a Code of Conduct and Financial Instructions, both which tell how I am to act and what I am to reveal if a person acts contrary to that Code and Instructions.

“I don’t think we should be dealing with Ms Williams without more. And the Deputy Mayor who is involved with her intimately in these arrangements is not that ‘more’. He is too close to the situation to bring any objectivity.

“And now I fear that funds that have been transferred to her singular control by us might well be threatened in light of what we now know of this women and the circumstances by which she set up an entity with which we are now dealing.”