The Morning Report
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Mayor Jerry Sanders threatened to take “all measures necessary” against Kroll Inc. for consistently delaying its investigation of the city’s financial practices, according to a statement he is expected to make publicly to the City Council tomorrow. Sanders’ office released the statement this afternoon.
Kroll and its lawyers make up the city’s independent audit committee, which is investigating city finances. The team has so far cost the city more than $20 million.
“I don’t think it’s an exaggeration at this point to say that they are holding our City hostage,” Sanders’ statement reads.
Read the mayor’s full statement here.
Sanders said the committee missed another target date for delivery of its much-anticipated report, and that he “will take all measures necessary to protect our citizens from any actions that impede our collective productivity as a city.”
The mayor said he wouldn’t hesitate to give testimony before Congress or complain to the national media “about the ways in which I believe this profit-making entity has taken advantage of a bad situation.”
In his statement, Sanders said that the arrangement between the city and Kroll, led by former SEC Chairman Arthur Levitt, was “ill conceived and overly general.”
“I have been extremely patient with Kroll. I have asked you on two separate occasions to authorize additional funds. I have publicly rationalized their repeated delays. It all stops today,” Sanders said in the statement, which is directed to the City Council.
He goes on.
“There is no reason that I can think of as to why a private corporation with a profit motive should be allowed to serve as an audit committee – or worse, as an investigations arm with no controls – for a government entity with limited resources,” the mayor said.
Sanders reiterated that Kroll will not receive any more money from the city for its services and that he is attempting to gain access to the public bond markets by the end of the calendar year. The series of events that need to take place before the city reenters the borrowing markets – which includes the blessings of outside auditors and credit rating agencies – are contingent on the release of the Kroll report.
He also called on Congress to loosen impact of the Sarbanes-Oxley Act on municipalities. The landmark legislation, passed in the wake of corporate America’s accounting scandals, “has the potential to become a cottage industry where troubled municipalities can be easily exploited,” Sanders said.
The mayor was supposed to make his presentation today, but City Attorney Mike Aguirre had concerns with the noticing of his speech.