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State auditors finger-wag city on ethics training

Oct 26, 2020

Credit CITY News

Two weeks after the family of Daniel Prude and its attorneys made his death and the circumstances around it public, Mayor Lovely Warren, under pressure for her administration’s handling of the matter, announced several actions to repair the damage.

One of those was directing the city’s Office of Public Integrity to determine whether any employees tied to the matter, herself included, had violated any city or departmental policies or ethical standards.

In calling for the review, Warren placed attention on the city’s code of ethics, a three-page document that in essence instructs city employees to refrain from using their positions for personal gain, particularly for their own financial benefit.

But state auditors found recently that enforcement of the code is lacking in areas — so much so that the members of the Board of Ethics, the seven-person body tasked with rendering advisory opinions on matters related to the ethics code, received no ethics training.

That was a key finding of a draft of an audit of the city’s ethics oversight by the office of state Comptroller Thomas Dinapoli and independently obtained by CITY.

Two other significant findings were that more than a third of city employees required to file annual financial disclosure statements either did not file them or filed them late, and that employees’ disclosed outside business dealings were not cross-referenced with payments made to city contractors to weed out any potential conflicts of interest prohibited by law.

The draft audit, which covered the period of January 2017 to September 2018, did not suggest that any city contracts were improperly authorized or in violation of the law, but noted that the city’s lack of oversight made conflicts a possibility.

A final version of the audit, which would likely contain revisions and a formal response from the city, could be released in the comings days or weeks. It would be unlikely, however, that auditors would significantly alter their findings.

In an unusual move, the Warren administration on Monday released a copy of the audit and its response, with a spokesperson citing having received inquiries about it from media.

“Running an ethical and transparent government is a top priority for the city of Rochester and the draft audit reflects our success in doing so,” read a statement attributed to Tim Weir, the Office of Public Integrity director, whose role as secretary of the Board of Ethics was cited throughout the audit.

“The draft audit does not raise issues regarding the ethics of any city contracts, city employees, or the operations of the Board of Ethics,” the statement went on. “The audit makes minor recommendations regarding formal group training versus the current practice of one-on-one discussions to educate members on Board of Ethics operations and responsibilities.”

The statement noted that auditors also recommended better communication between the Human Resources Department and the Board of Ethics to ensure more timely completion of personal financial disclosure documents.

“The city has already taken action to enact these minor recommendations,” Weir said.

FINANCIAL DISCLOSURES MISSING, FILED LATE

Much of the audit focuses on the city’s handling of financial disclosure statements that roughly 200 city employees, elected officials, and other people associated with the city, like appointed members of various boards, are required to file.

The forms, which ask recipients to list things like personal banking information, stock and real estate holdings, and business dealings, are intended to be used to ward off any conflicts of interest before they arise.

The Board of Ethics is ostensibly tasked with administering the city’s financial disclosure system. But when City Council created the board, it assigned responsibility for collecting and reviewing the filings to the board’s secretary, a role filled by director the city’s Office of Public Integrity Director.

That job has been held since 2014 by Weir, a longtime FBI veteran who specialized in forensic accounting at the bureau. Auditors found that Weir generally carried out his duties, but that inadequate procedures were in place to ensure all the forms were filed.

For instance, roughly 11 percent of officers and employees who were required to file forms never bothered, and as did about 14 percent of people associated with the city who were to fill out forms. More than half of City Council members handed theirs in late.

Among those who didn’t file over the course of the audit period were the chief of police, the assistant director of parking, and members of the Planning Commission and the Board of Ethics, according to the audit.

The findings are hardly damning, but warned that, “Under these circumstances, there is an increased risk that potential conflicts of interest were not identified and/or not reported to the Board of Ethics.”

The audit also noted that the code of ethics requires the mayor or the City Council president, or their designees, to review the disclosure statements for possible violations of ethical standards.

Weir told auditors that, as the mayor’s designee, he reviews the forms. Auditors found, however, that the filings were not checked against payments to city vendors. The audit recommended that the city’s procurement officials be provided a list of business interests to be compared against vendors.

“Without careful review of the information reported on disclosure statements, and procedures to identify transactions that could pose a conflict of interest, taxpayers have less assurance that the city has a strong stance on transparency and can identify conflicts of interest of officers and employees that could compromise impartiality in decision-making,” warns the report.

FEWER INTERNAL INVESTIGATIONS AT OPI

The Office of Public Integrity was established in 2006 during the administration of Mayor Robert Duffy to watchdog and audit city operations for corruption and waste. At first, the office did that to some extent. In its early years, its investigators unraveled a city contractor kickback scheme and a parking meter theft ring.

But the law that created the office presented inherent challenges, namely ensuring that the director was truly independent of the mayor. The director is appointed by the mayor.

During the Warren administration, investigations focused on financial crimes have plummeted. The Democrat and Chronicle reported in 2018 that the number of such cases dropped to 5.4 per year from an average of 18.5 per year prior to Warren’s tenure.

City officials have said that the office was returning to basics, focusing on audits and on strengthening internal controls and education.

Newly-hired city employees are to receive ethics training, which is to include an overview of the code of ethics, during their orientation. The workers are required to attest in writing to receiving and understanding the code of ethics.

Auditors noted that Weir told them he provided ethics compliance training to new workers, but auditors found that nearly half of all workers hired during the audit period — 9 out of 20 — claimed they did not receive the code. City officials explained that those workers were seasonal workers who were not required to attend new-hire orientation.

ETHICS BOARD WASN'T TRAINED ON ETHICS

The audit contained some irony: Members of the Board of Ethics also never received ethics training. Auditors recommended that the members be trained on the provisions of state law relating to ethics and conflicts of interest.

In its formal response to auditors, the city acknowledged that Board of Ethics members did not receive ethics training, but explained that it was because the members were volunteers and not city employees. The city went on to explain that board members are provided a package of materials relevant to ethics and can seek guidance from the secretary and other city officials.

“The city is confident that each board member is afforded the proper guidance and resources to effectively carry out their responsibilities,” the statement read.

The Board of Ethics is tasked with issuing written advisory opinions to city employees and officers regarding the code of ethics.

For example, in June the ethics board issued an advisory opinion that stated Warren ran afoul of a provision prohibiting city officers or employees from using “city-owned vehicles, equipment, materials or property for the convenience or profit of himself or herself or any other person” when she mailed a letter to Rochester Police Department retirees encouraging them to donate to United Way. The board was acting on a complaint from a Rochester resident.

Auditors recommended that City Council require all employees to receive training that includes an overview of the ethics code and of whistleblower protections.

“Unless the Council reinforces employee awareness of the code of ethics, there is a higher risk that officers’ and employees’ actions may violate the city’s code of ethics and public assets could be subject to misuse,” the audit read.

David Andreatta is CITY's editor. He can be reached at dandreatta@rochester-citynews.com.