Lindsay Marks 6 p.m., Dec. 5
Slippery SEDC bonus requests underneath City Council radar
In our distinguished daily paper today (Sept. 6), a letter by Mel Shapiro points out several facts regarding the Southeastern Economic Development Corporation (SEDC) self-dealing bonus approvals by outgoing president Carolyn Smith for herself and other staffers.
From Shapiro's letter: "A lot has been written about the unauthorized bonuses received and given by Carolyn Smith... [b]ut were they really unauthorized? How many people saw them but didn't question them?
"The SEDC budget for fiscal 2008 shows $114,000 budgeted for 'overtime, temporary, bonus.' The budget does not show who would get a bonus. None of the City Council has asked this important question. Did they actually read SEDC's budget? I have my doubts. But the council approved it."
Shapiro, a former accountant and interested taxpayer, then described how SEDC receives at least part of its funding: "Every month, SEDC sends a 'Request for Payment' to the City Comptroller Department for reimbursement for administrative expenses, including payroll. The 'request' lists each employee's biweekly salary. So there was nothing clandestine about Carolyn Smith's bonuses. ... [sample detail of budgeted salary for given two-week periods plus the amount of salary overpaid past the budget] ... The Comptroller's Department, which is under Mayor Sander's jurisdiction, dutifully reimbursed SEDC for those salaries, apparently with no questions asked."
First of all, I have to agree with Shapiro that the auditing firm Macias Gini & O'Connell was quite possibly overpaid, given its failure to discover the budget-bonus discrepancies before they were uncovered by voiceofsandiego.org earlier this year.
At the same time, I have to withhold any judgment that the bonuses paid were not clandestine.
If they were truly done in sunshine, so that everybody could see what was going on, then the entry cited by Shapiro above, "overtime, temporary, bonus", was just plain wrong.
As a salaried president of any corporation, what was Smith doing by approving any kind of "overtime" bonus for herself?
If it wasn't an overtime bonus, then did she actually divert funds from the named overtime-bonus budget line item from other employees to her own benefit and enrichment?
Further, without seeing the documentation obtained by Shapiro, I would have to say that unless the monthly administrative reimbursement request from SEDC to the City Comptroller's Department actually contained an item-by-item breakdown of each SEDC check paid out with enough details to figure out why it was being paid, the Comptroller was stuck in the position of being unable to challenge a lump sum reimbursement because the self-dealing bonuses were "hiding" in the total request amount for each employee every month this went on.
I make this assumption based on the Independent Budget Analyst's repeated requests back in 2006 that city redevelopment agencies submit budgets and budget changes with enough details for auditors and the public to figure out just what was going on. (See http://www.sandiegoreader.com/weblogs...)
As it was, voiceofsandiego.org didn't have anything to say until after it had compared SEDC's city-approved budget with the tax information SEDC had sent to the State of California.
Now, how many of us ordinary taxpayers would have thought to do that?
Clandestine, indeed... as befitting Enron by the Sea.
One thing I'm not certain that Shapiro has seen is that part of SEDC's 2006-07 revised budget that actually breaks down the proposed salaries to be paid. To me, what's most interesting is the listing of job titles:
One vice president of operations
One director of finance
One director of corporate communications
One manager of projects/development
One senior planner
One projects coordinator
One executive assistant
One assistant projects coordinator
One accounting technician
One administrative support coordinator
One assistant community development coordinator
One communications coordinator (half time)
One messenger clerk (half time)
There seems to be a lot of chiefs but few indians in this tribe.
Of the 15 positions listed, two are listed as being related to finance and accounting.
It would be interesting how the outgoing president, the director of finance, or even the accounting technician can explain why the Independent Budget Analyst's warning of inadequate budget and budget change detail was never been addressed by SEDC to the point where auditor Macias Gini & O'Connell could even figure out what was going on.
As I said before, I don't know that a proper audit has ever been done at SEDC... internally, there doesn't seem to be enough qualified people to do one without the internal auditors auditing their own work.
Any accountants want to offer up any comment on the ethics of that in a public benefit corporation?