Jeff Smith 2:30 p.m., June 26
LA Times Cites San Diego Public Corruption
In a front page story today (Nov. 12), the Los Angeles Times states, "Audits of city finances often cover up serious problems...independent audits that public agencies in California are legally required to obtain frequently fail to flag cases of fraud and mismanagement." The Times goes on, "Many cities that have been troubled by public corruption or mismanagement during the last decade -- including San Diego, Compton and South Gate -- got clean audits."
Says the Times about San Diego: "Four years ago, when some said the city was teetering on the brink of bankruptcy, a number of officials, including former Mayor Dick Murphy, resigned after it was revealed that the city had a $1.5 billion deficit in its pension program. An independent investigation led by Arthur Levitt, Jr., a former chairman of the Securities and Exchange Commission, found mismanagement and illegal financial manipulations. And yet, during that period, auditors had given the city a clean bill of health. In 2007, the auditor agreed to pay a $15,000 fine to the SEC for signing off on misleading financial statements."
The article quotes Mike Aguirre, former San Diego city attorney, saying, "The audits of municipal governments in California...are more creative than reality[-based.They come in and help cover up what has been going on in a city so they can issue a clean financial statement, for which they are charging lots and lots of money."
More like this:
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- Ad Hoc Committee Says Auditor Should Be Independent; Says City's Financial Processes Ill-Defined — April 26, 2008
- "Independent" Analyst Swayed National Expert To Soften Position on Appointed Auditor — Jan. 14, 2008
- Why the Strong Mayor Idea Won't Work with a Dishonest Mayor — Jan. 10, 2008