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What a difference a year and a half makes. Go check out the tape of the day the City Council, with the blessing of the city attorney, hired Kroll Inc. and principally, the partner Lynn Turner.
The City Council has so far spent $20 million on Kroll’s investigation. How much did we think was going to be spent on the firm when it was hired? When he appeared before the council for his “interview” on the recommendation of the city manager and city attorney, Turner spoke about a similar case of a “large insurance company” that the firm handled. He said the company was under investigation by the SEC and others and its experience provided an example of what the city could expect as far as cost and time to get things settled.
First, how long was this Kroll thing going to take? This is Turner in his own words, Feb. 14, 2005 (this is a transcript of part of his talk, the emphasis is mine):
We had a similar type thing about a year and a half ago that we did with a large private insurance company that found itself in an SEC investigation and congressional investigation. It took us about five months – start to finish – to resolve the issues between the auditor, which was another Big Four firm in that situation, and the board and the company. Whether it takes one month, six months or eight months here I think depends in part how quickly we can get to the issues and the work plan worked up with KPMG.
We’re at 17 months and counting. How about the cost?
The other question that I would suspect that sooner or later you’ll come around to asking is ‘What’s this going to cost? Is this going to cost us an arm, two arms, a leg, whatever.’ I assume you’ve got your own budgetary issues here. Certainly we do with our other cities and states out in Colorado. When we did the one for the large private company, it had some of its own nuances. That one ended up costing $300,000. Whether it’s $300,000, $200,000 or $400,000 here is going to depend a lot upon, at the end of the day, of what’s in these reports and what exactly it is KPMG wants. But that should at least give you a flavor for another experience I went through in a similar type situation and what it took in that situation. It’s very difficult to judge time and very difficult to judge costs but I think perhaps that example gives you something to work with.
In other words, plan on about $400,000 at most. We’re at $20 million and counting. Only yesterday did the City Council say clearly it won’t pay any more.
And finally, what exactly was Kroll going to do? Right now, of course, all the millions are going supposedly to a vast investigation. How about when they started?
We’ve got no desire to get into the politics of the situation. We’ve got no desire to get into the ‘whodunit.’ We’ll leave that to the investigators and we’re going to leave that to the law-enforcement agencies.
Hey, when you’re interviewing for a job, I suppose you tell the boss what he wants to hear.