An important part of ProgressLex’s mission is to improve local government transparency. In light of the trio of scandals uncovered last year by the Lexington Herald-Leader involving the misuse of public funds at the Public Library, Bluegrass Airport and Kentucky League of Cities, the need for improvement on this front is evident. And while readers would likely agree that more transparency in government is good and less is bad, sometimes the issue isn’t so black and white. Such is the case with the developing story centering on the fraud allegations made by LFUCG’s director of the Division of Risk Assessment, Patrick Johnston.
If you haven’t been following the story, the implications it could have on local government transparency are significant; which is precisely why it is incumbent upon us as citizens to closely monitor the story as it unfolds and call on our local elected to leaders to do the same.
The story has been chronicled by Linda Blackford with the Lexington Herald-Leader. Additionally, ProgressLex released a comprehensive timeline (see sidebar) and list of key players as resources to help readers stay abreast as the story unfolds.
I spent much of my weekend learning as much as I could about the facts of the story. In the process, I realized just how many questions related to Johnston’s fraud allegations have yet to be answered. The following questions relate not just to transparency but another equally important aspect of effective government — checks and balances.
The city’s Director of Internal Audit, Bruce Sahli, and the Internal Audit Board (IAB) Chairman, DeWitt Hisle, kept Johnston’s fraud allegations from council members, including those on the IAB. Was doing so in keeping with the checks and balances normally expected in government — especially given the fact that Hisle currently serves as Newberry’s reelection Finance Chair?
Who did Sahli and Law Commissioner, Logan Askew, share the allegations with?
The firm that conducts LFUCG’s Comprehensive Annual Financial Report is Mountjoy Chilton Medley. One of the main reasons the Newberry administration has cited for not sharing Johnston’s allegations with anyone outside a very small circle of people is that the city’s contract with Mountjoy stipulates that all information/materials collected during LFUCG’s annual audits is confidential and the property of Mountjoy? What is the logic behind this arrangement, and is it in the best interest of the city?
Based on what information did Sahli conclude that the city’s internal and external auditors found no evidence of fraud to merit the allegations? Were there proper checks and balances in place to ensure there were no conflicts of interest among the city’s internal and external auditors?
The City’s Staff Attorney, Keith Horn, explained why the fraud allegations didn’t go to the Internal Audit Board by saying that “routine allegations of fraud wouldn’t go to the board.” How does the city define “routine,” and how and by whom is this interpreted on a case by case basis?
The administration cited a 2007 in-depth LFUCG Partners Management Audit to create greater efficiencies in government as one of the reasons for eliminating Johnston’s position and making the Division of Risk Assessment a part of the Law and Finance Divisions. Prior to Paul Schoninger’s 5/10/10 memo to Council Member Myers, did anyone in the administration question the audit’s findings and the administration’s subsequent Division of Risk Assessment reorganization proposal?
During an April 27th Council meeting, representatives from Mountjoy told Council Member Crosbie that the normal protocol if an LFUCG employee alleges that his/her boss may be engaging in and/or complicit in fraud, would be for Mountjoy to take those allegations not to his/her direct superior but rather one level up. Was this protocol followed in Johnston’s case?
We hope the special investigative committee created to probe into the matter and State Auditor, Crit Luallen (invited by Mayor Newberry to do the same) will take all of these questions into consideration as they conduct their investigations.
Nathan Cryder is a board member at ProgressLex (http://www.progresslex.org).
