The Morning Report
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The city of San Diego is shopping for a monitor – someone to oversee its reform after a decade of troubles involving its pension system, wastewater department and its officials’ behavior.
The New York Times today takes an inside look at the activity of one federal monitor who recently grabbed attention after forcing the resignation of the chief executive of Bristol-Myers Squibb.
The article states:
Independent federal monitors like Mr. (Frederick B.) Lacey, who are often appointed under deferred-prosecution agreements, have become an increasingly popular way to deal with accusations of corporate crime in recent years. Their presence is held out as a way for companies to be sanctioned without risking their extinction and the related loss of jobs. At least 16 such agreements have been signed since 2001, involving large companies including Bank of New York, AOL and the Prudential Equity Group.
But Mr. Lacey appears to have exercised unprecedented power in prompting Mr. Dolan’s ouster. And the episode has set off a debate whether Mr. Lacey represents a tougher-style monitor who may put new teeth into that role in corporate America – as some admirers hope – or whether, in the view of some critics, he has overstepped his authority at Bristol-Myers.
Consultants from Kroll Inc. have recommended that the city employ a similar model, with the monitor also reporting to federal regulators on the progress of reform. They noted that previous reform efforts at the city had fallen on their face.
The position is expected to cost between $3 million and $4 million over three years. The Mayor’s Office has said that it has spoken with three former Securities and Exchange Commission chairmen regarding the position, but said today that the issue will need to be debated further by the City Council before someone is hired.