Analyzing waste, fraud and abuse: Oklahoma state Auditor Jones attacks all three
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Published: 24-Jan-2013

OKLAHOMA CITY -- Since assuming office two years ago, Auditor & Inspector Gary Jones has undertaken highly visible investigative audits of state agencies, county governments and other arms of Oklahoma government. 

Whereas that might be expected, given the name of the agency he runs, past performance at the agency was spotty – either lethargic in the era of Jeff McMahon, or unfocused under Jones’ immediate predecessor, Steve Burrage. 

This week brought the two latest installments in Jones’ work product: a critical look at spending by the administrator of Oklahoma City’s Emergency Medical Services Authority (EMSA), and a special investigative report on the City of New Cordell (in response to a city council request) from July 2007 to the present. 

In the first case, the agency audit pored through three-and-a-half-years of excessive spending and minimal oversight at EMSA program in Oklahoma City.

With a total of 19 recommendations, Jones detailed “serious board inadequacies” and “abusive expenditure patterns.” Among the particulars: a total of $35,190 spent on floral arrangements, rental of an apartment in the “Deep Deuce” district along N.E. 2nd Street, $900 in spa treatments for lifetime subscriptions of Sirius Satellite Radio for the agency’s CEO. 

In the second case, Jones laid out problems in multiple payments and fringe benefits which “greatly exceeded the authorized pay” for the elective mayor’s job in New Cordell. 

That audit also found abuse of utility billing and collection employees touching by one current and four former employees. The audit reached several critical conclusions about the mayor and others, with the executive summary disclosing issues had been referred “to appropriate legal authorities for further review and investigation.” 

For more than two years now, Jones has been busy: slapping mismanagement of funds at a state commission, responding to citizen audit requests, identifying clear violations of government transparency requirements, and carrying out local investigations that have resulted in criminal investigations. And that’s the just visible investigations. 

Newsworthy given the agency’s past performance: his staff has eliminated most of a backlog in county audits – a jam-up that had lasted for decades

Less visible, perhaps, is the cumulative impact of the audits, and the bipartisan focus of the work: waste identified in the investigations, including his look at fundraising by both the current and the immediate past superintendent of public instruction, an audit of the Native American Cultural Center, a critical analysis of contracts issued from the Department of Rehabilitation Services (DRS), and other probes.

Exploiting disability preference to secure “significant waste”

In the DRS case, Jones released (in November) an expose of waste and apparent fraud in provision of canteen services at Fort Sill in southwest Oklahoma. Cantu Services, through its sub-contractor Swanson Services, Inc., carried a canteen contract governed in part through a 1936 law (the Randolph Sheppard Act) intended to provide economic opportunities for blind people in vending operations.

Jones was able to look at the situation because the paired businesses used market advantages created through the state Department of Rehabilitation Services (DRS).

In Auditor Jones’ summary, “Cantu utilized Mr. Swanson’s disability to earn millions of dollars from its federal contract by furnishing Swanson Services its requisite expertise to win the food services contract at Ft. Sill. Cantu was the contract manager and Swanson was the licensed manager. Both companies made millions of dollars from the arrangement.”

The auditor’s critique continued, “For his part, Swanson established additional companies to further bilk the contract for additional funds far and above the guaranteed profit margin built into the agreement.” Jones argued “the entire arrangement” appeared to be “little more than a way to exploit” the Depression-era law. 

This week, Jones told CapitolBeatOK that although soldiers were indeed fed through the work, “the overall lack of oversight of the program leaves the whole thing ripe for fraud and abuse.” Further, he characterized the doubled-up nature of costs as “significant waste.” 

Indian Cultural Center Audit finds “Cadillac approach” to spending

In response to requests from Gov. Mary Fallin and with the support of legislative leaders, Jones reviewed operations, management, expenditures, efficiency, effectiveness and reasonableness of decisions in a performance audit of the Native American Cultural and Education Authority.

The authority is guiding construction of a museum on the Oklahoma River in Oklahoma City, and has long been a source of critical scrutiny from legislators.

While the audit did not identify fraud, it pointed to other forms of abuse, finding what Jones characterized as “considerable waste that has prolonged the completion of the project and resulted in skyrocketing costs.” Jones has critiqued the authority’s decision-making over many years as amounting to a “Cadillac approach” despite the Oklahoma’s modest resources. 

In a crucial conclusion, Jones said the authority’s governing board “chose the most expensive of six proposals presented by its architect. “They decided to build a $169 million facility when only $5 million in funding had been secured. Throughout the years, although additional funding was not forthcoming, the board maintained its commitment to the most expensive plan. Our lawmakers need to play a greater role” in oversight.

He recommended the authority be made an independent agency rather than a recipient of “pass-through” funds from the state Department of Commerce. In light of the spending patterns, his analysis pressed for greater accountability and stricter oversight of the museum building process.

Focusing on state Central Services and asking “what do we own?”

In an audit that might have been music to the incoming state House Speaker’s ears, Jones’ auditors pointed to multiple problems with Oklahoma’s capitol asset management program, as run by the Department of Central Services. 

Jones lamented, in a meeting with reporters this month, that the state government has “property we didn’t know we owned or buildings in disrepair that only receive attention when an emergency erupts or the public health is at risk.” 

Speaker T.W. Shannon, a Lawton Republican elected to the top job in the House this month, has in the past pressed for an accurate accounting of state properties, as well as sale of unneeded assets and conversion of that cash to maintenance of buildings that will be retained (http://www.capitolbeatok.com/reports/ok-house-seeks-sale-of-state-properties).  One of his recent between-session “interim studies” focused on reforming the management and use of state assets. 

The foregoing sketches some of the best-known audits impacting state agencies or programs, but in a variety of other investigations, Jones has found significant issues in local programs like the EMSA situation in Oklahoma City.

Some of those studies will be subject of a follow-up report.

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.


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