Does Culver City’s Staff act without authority or ignore City Council policy? If so, government officials’ reaction informs us as to whether they deserve our vote. The scandal surrounding Culver City’s implementation of an effective fraud, waste, and abuse program (FWA Program/Hotline) is a case in point.
First, whether you are just tuning in, or if you need a refresher, I’ll provide a brief summary of Culver City’s FWA-Program/Hotline scandal. Second, we’ll hear from some of the City-Council candidates. Third, we’ll look at where this is leading.
In 2015, Culver City hired Moss Adams LLP (Moss) as our Internal Auditor to “[p]rovide recommendations for strengthening internal controls in order to lower identified risks to the City and improve fraud detection and prevention.”
On September 9, 2019, the City Council accepted the recommendations in Moss’s FWA Program Report, e.g., “In order to facilitate reports of fraud, waste, or abuse, a FWA hotline is administered by a hotline contractor. The contractor receives calls on the FWA hotline and forwards the incident report to the City’s Internal Auditor. … Management Response — The City is committed to fully implement a Fraud, Waste and Abuse Program per the recommendations of Moss Adams.” The next day, Moss emailed Chief Financial Officer Onyx Jones stating, “One item I wanted to comment on is the Ethics Hotline. It is best practice and industry standard for reports received by the third-party hotline provider … go to the Internal Auditor for evaluation and dissemination, which ensures independence and protects confidentiality.”
n October, City Attorney Carol Schwab and City Manager John Nachbar secretly hijacked the FWA Program/Hotline by putting foxes in command of the henhouse. Schwab, Jones and Assistant City Manager Serena Wright—not our Internal Auditor—were designated to manage the FWA Program/Hotline. Subsequently, Schwab and Wright were mysteriously dropped. Jones abdicated her duties in favor of a Senior Management Analyst. (In response to a recent PRA request, Culver City responded that it had no “record setting forth the decision-making authority in the operation of the [FWA Program/Hotline].”)
In November, when I learned of and first publicly revealed the aforesaid shenanigans, Jones explained Staff’s insubordination by simply claiming, “things changed.” City officials on the Finance Advisory Committee and the City Council meekly surrendered. Even a sixth grader would have known the first question to ask: “What changed?” It remains unanswered.
In December, Staff revealed, “The City has committed to fully implementing a Fraud, Waste and Abuse Program per the recommendations of Moss Adams. … [T]he City plans to first conduct a pilot program, which will initially direct any reports or calls to the City Attorney’s Office. Based on the activity during the pilot program, the City will implement a full roll-out of the hotline.” Staff did not explain the inconsistency—a purported need for a “pilot program” when Culver City was already “committed to fully implement a [FWA Program/Hotline] per the recommendations of Moss.” Culver City’s subsequent responses to my Public Records Act (PRA) requests demonstrated that the “pilot program” was a figment of Staff’s imagination, i.e. a sham.
In March 2020, Staff announced that it would “[r]eview other cities[‘] procedures on how they handle investigation of the hotline reports.” According to PRA responses, the “research” consisted of gathering copies of 10 cities’ websites, without any direct communication. Even though one might have suspicions as to why Staff selected those particular cities, e.g., City of Azusa, the “research” demonstrates that seven FWA Programs/Hotlines are managed by the Internal Auditor and three of those Internal Auditors are elected officials.
The purported “research” was not necessary and constitutes another waste of taxpayers’ funds. Staff should not need to “research” how to avoid conflicts-of-interest. Further, Moss—the expert—had already been paid handsomely for its recommendation on the same subject, and the City Council accepted that recommendation. More importantly, the secret hijacking by Schwab and Nachbar and implementation by Jones clearly demonstrate that they are not qualified to design or administer a FWA Program/Hotline.
Some City Council candidates have stated opinions on the FWA Program/Hotline as others—those currently holding offices—have floundered. One candidate stated, “I do support a Fraud, Waste and Abuse hotline in Culver City and find it to be very valuable to the city. … [I]t makes sense to have an independent third-party to manage and facilitate the hotline.” Another stated, “I support a fraud, waste and abuse hotline that the Council has already accepted on September 9, 2019. It is time to implement it.” A third stated, “I’ve been listening to your concerns [about a FWA Program/Hotline] for quite some time and quite frankly, I am appalled that the current City Council has been dismissive to your suggestions.”
What started out as Staff’s insubordination may end up telling us which City-Council candidates are worthy of our vote, and whose employment with Culver City should be terminated. To be continued.
Les Greenberg, Esquire