The company that manages Roanoke's bus system has tightened its watch on spending and is willing to repay taxpayer money that its managers allegedly squandered through alleged bid rigging and misuse of corporate credit cards.

This year the Greater Roanoke Transit Co., which runs the Valley Metro bus service, has been the subject of two scathing audits that revealed it had overspent at least $55,000 on interior decorating and that its general manager had billed the company for more than $14,000 in improper and possibly illegal purchases.

Since the audits were released, First Transit -- the Cincinnati-based company that manages the GRTC for the city -- has fired Dave Morgan and William "Chip" Holdren, who had served as the agency's general manager and assistant general manager respectively.

On Monday, Roanoke Municipal Auditor Drew Harmon briefed the city council publicly for the first time on his findings -- and what's been done since. The council serves as GRTC's board of directors.

"The bottom line is why did it happen? It was the tone at the top," Harmon told the council. "When you have your general manager and your assistant general manager as your top two folks who are directly involved in the situation and not following the rules and not asking their staff to follow the rules, this is what can happen."

Morgan was implicated in a city audit last month for using his corporate credit card to bill Valley Metro more than $14,000 for golf fees, premium cigars and alcohol-soaked meals at restaurants during work hours. In doing so Morgan violated federal, state and local regulations, Harmon wrote.

Holdren, meanwhile, was implicated in January after questions were raised about whether bids had been fabricated to make it appear as if $223,301 for redecorating was awarded after competitive bidding, according to search warrants.

The furnishing and redecorating in question was handled by Holdren's Interiors, which is owned by Chip Holdren's wife, Diane.

Harmon told the council that by a conservative estimate, GRTC overpaid by at least $55,000 for the furniture. He said that the old furniture, reportedly still in good condition, was improperly disposed of by an internal auction to GRTC employees. Some 59 items -- 40 of which had only a single bidder -- were sold for just a little more than $1,000.

No charges have been filed in either case. The audits have been turned over to the U.S. Attorney's Office. Morgan and Chip Holdren have not commented on the matter to date.

In a recent statement, Matthew Broughton, a Roanoke attorney who represents Diane Holdren, said that his review of the audit report found little to do with his client's business. "The small portion of the one report that refers to Holdren's Interiors really presents nothing new," he said.

Roanoke Assistant City Manager Jim Grigsby said that after city administrators became aware of the audits, they asked First Transit to implement "nine additional reporting and oversight requirements," which it has done. He said that since the audits were formally released last month, city officials have pressed for First Transit to also incorporate a number of recommendations that Harmon recommended; that should be done by next week, he said.

The recommendations include closer scrutiny by auditors, more regular meetings between the bus company's managers and city officials, and a tighter control on expenditure authorization.

Roanoke City Manager Darlene Burcham said that First Transit representatives have also offered to repay whatever money is owed to the city, state and federal government.

"We're in the process of trying to identify ... what that number might be," Burcham said. "No city money would be lost through this, and no federal or state money associated with it would be lost either."

First Transit spokeswoman Glenda Lamont confirmed that the company is working with city officials to determine a settlement amount.

Also, Burcham said city officials issued a new request for proposals to manage the bus system when First Transit's contract expires next spring, despite the fact that the city could have automatically extended the contract with First Transit without a new bid process.

"I felt it was within the city's best interest to issue a new RFP," Burcham said.

Lamont said that First Transit intends to submit a proposal to Roanoke to continue to manage the bus service.

Other, large-scale changes in GRTC's management may be yet to come. Councilwoman Gwen Mason asked about the council's role as GRTC's board and whether that's the most effective way to manage the quasi-public agency.

Burcham said the current structure stems from a council decision made when the bus company shifted from private to public management. Although the council didn't discuss the matter in depth, there was some sentiment that a change in that structure may be worth a closer look.

Councilman Rupert Cutler said that during his years as a board member for the Western Virginia Water Authority, "we got into the nuts and bolts of what was going on, in contrast with my experience as a member of the GRTC board, which was essentially rubber stamp. We didn't have any idea of what was going on over there, which has got to change, one way or another."