Crit Luallen

Crit Luallen released her audit report on Lexington’s KLC/insurance whistleblower extravaganza at 1:00 today. I haven’t finished reading it all, but here’s a quick rundown.

The Auditor’s office could find no evidence to support Patrick Johnston’s allegations of fraud in purchasing insurance with the Kentucky League of Cities which he made in the 2008 and 2009 fraud assessment surveys. The audit did, however, expose the complete incompetence within Newberry’s administration when it came to dealing with these allegations (spreading the confidential name), and gives recommendations for reforms that LFUCG needs to make so whistleblowers might feel comfortable enough to speak up in, oh, 100 years or so.

Also of note: the scope of this audit ended with the fraud assessment surveys and how they and the claims they made were handled. While the audit shows that Johnston’s name was carelessly thrown around and not protected, it does not go into whether the Newberry Administration took retaliatory action against Johnston by eliminating his job. This topic has yet to be investigated fully, as both the special investigation committee and the State Auditor felt that this was beyond their scope.

Here are the audit report’s findings below:

• The Senior Advisor for Management was not required to inform an employee that he was the subject of a preliminary investigation for possible fraud allegations.
• The external auditors released the Director of Internal Audit’s conclusion memo to a Council member without redacting the name of the LFUGC employee.
• The Internal Audit Board was advised that closed meetings could not be conducted to discuss confidential issues.
• The Office of Internal Audit is organizationally independent within LFUGC but the Internal Audit Board has not established operating procedures.
• LFUGC has no established method for employees and citizens to anonymously report issues of concern.
• The Office of Internal Audit did not establish policies or procedures regarding employee complaints or concerns unless provided in the form of a “special request.”
• Procurement policies have no clear hierarchy of authority, occasionally conflict, and have not been approved by Council.
• No consistent procurement method was used for purchasing broker services.
• LFUCG does not use a quantitative scoring method for competitively bid vendor proposals.

The full report is here: (BIG PDF)

The Auditor recommended major reforms based on these findings so that no LFUCG employee’s identity will ever be so willfully compromised when blowing the whistle on something they find improper. There are also recommendations to reform the audit board so that certain members (Myers, ahem), aren’t kept completely in the dark on claims as serious as these. Luallen’s office also found complete disorganization in the administrations procurement procedure, with some fly by the seat of your pants Lords of the Flies stuff going on there.

Much more on this later.

Here’s the response by the Jim Gray campaign:

“The state auditor has done a thorough job, as she always does. It’s apparent that had this administration been transparent about potential improper conduct the taxpayers could have been spared a long and expensive process. It makes you wonder what this cat and his aides were really up to in their litter box? I am pleased that the auditor agrees with my conclusion that the internal audit process needs overhauling. (See Fresh Start Plan at http://www.jimgray.org/fsopengov.html) As the auditor recommends it is past time to implement new purchasing practices, ones that will eliminate no-bid contracts and bring efficiency to city hall.”

More later after I’ve read the whole thing.

UPDATE: Linda Blackford’s more detailed write up here, with quotes from Luallen, Newberry and Myers.