Wednesday, May 3, 2006 | The audit committee has learned at least one thing in its costly, year-old probe of City Hall: how easy it is to bleed money out of a city that seemingly doesn’t have any left.
The high-priced accountants and attorneys, led by former Securities and Exchange Commission Chairman Arthur Levitt, entered San Diego’s shattered picture early last year on the hopes and promises that they would be the final, key fix to the city’s myriad legal, political and financial problems.
More than one year later, they’ve become the newest addition to the city’s long list of woes.
The audit committee’s work was supposed to be finished many months and multiple millions of dollars ago, but has been delayed every single step of the way, to the harm of the basic services city residents receive every day. The committee has now been paid $16.2 million; word is it will be returning to ask for another multi-million payment soon.
It has used every bump in the road – indictments of pension officials, technical glitches, document access and the release of a similar report by the pension system – as an excuse to continue delaying the investigative report that is supposed to thaw the city from its Wall Street freeze and return it to fiscal credibility.
The latest deadline is mid-summer, says Council President Scott Peters. But the audit committee’s stated deadlines don’t matter too much. They’re not credible.
We’ll offer a deadline: the audit committee should finish its report by July 1 or be fired and sued for breach of contract.
The committee has taken advantage of a desperate, broke city. Its consultants have leveraged the auditor’s desire for an independent investigation, invoking the need for independence anytime their big bills are questioned. At the same time, they’ve dined with Peters – who they are supposed to be investigating – and kept an office next to City Manager Lamont Ewell during the beginning months of their engagement.
We once easily discarded theories that the consultants were brought in to simply defend the City Council and other city officials from the harsh crack of the SEC and U.S. attorney’s whip.
However, as federal agents have moved closer to completing their investigations of city finances and the majority of City Council members have sheepishly approved more money after more money for the audit committee, these theories gain credence by the day.
Take Levitt, who charges $900 an hour, for example. The former SEC leader was admittedly brought in to be the political muscle behind the group of accountants and attorneys. But who is he muscling? If the committee provided detailed accounting for its $16.2 million, we would know. But it doesn’t. Instead, we only know through questioning that he’s spent a good deal of time talking with the editorial board of The San Diego Union-Tribune, which has been more than glowing in its support and praise of the political workhorse.
The residents of this city need an independent investigation into the alleged wrongdoing that led us to this point so it can return to being a normal city, able to access the cash to keep its drinking water clean and build needed fire stations. San Diegans don’t need another press secretary or a lobbyist for its wayward officials.
By now, the audit committee has more than enough information to tell San Diego’s story. Two separate sets of prosecutors have found enough information to bring criminal charges. The consultants have millions of pages of documents, years’ worth of e-mails, access to sufficient interviews, federal indictments and a litany of investigative reports from other outfits to draw on.
The possibility will always exist that there’s one more document out there that hasn’t been reviewed, one more stone that hasn’t been turned over. But at some point, a line must be drawn. It would be naïve to think that every second of a full decade could be reconstructed for an operation the size of the city of San Diego.
To his credit, new Mayor Jerry Sanders has agonized, like a growing many, over the retention of the audit committee. The city is desperate, there’s no doubt. It needs this report badly. The question has always been: What’s the alternative?
It’s still not clear what the alternative is to the audit committee. But it’s becoming clear that it isn’t the answer. At some point, situations get so bad that we must simply end them and deal with the consequences.