Inspector General’s 2012 Statement to Chicago City Council Budget Committee

Opening Statement of the Inspector General 2012 Budget Hearings

Madam Chair, and members of the City Council:

At the nearly two year mark of my term, the OIG continues to provide Chicago residents with an important service – guarding against waste, fraud, abuse, and inefficiency in City government.

Over the past year, OIG audits and program reviews have identified more than $700,000 in lost or wasted City expenditures, operational inefficiencies that cost the City about $19 million a year, and identified more than $13.5 million inappropriate and out of protocol spending, including:

  • $134,325 in lost merchandise (City Clerk Vehicle Sticker Audit, 2010 Q4)
  • $13,678,786 in inappropriate expenditures (OEMC Audit, 2011 Q2)
  • $19,001 in missing electronics (OEMC Audit)
  • $481,641 in unnecessary spending due to failure to utilize contract guaranty (Tree Audit, 2011 Q2)
  • $19 million in annual waste due to redundant staffing in the ranks of Motor Truck Drivers across numerous City Departments.

Audits reported out in 2010 involved 6 City Departments, 16 over the past two years. Closely related program review work touched upon operations spanning all executive departments, as well as additional delegate agencies.

We also continued to press on with our efforts to steer the City’s MWBE program into more lawful and effective operation, to better assure the viability of the program legally and to assure program dollars reach their intended targets to maximize social and economic benefit. We also published an expanded budget options report from the prior year, delivered earlier in the budget process to provide options with some hard data and analysis to contribute to the larger effort of tackling the structural deficit – both this year’s and future years as the City moves to address pension issues.

On the investigations side, we have completed 241 separate cases to date in 2011, and have assisted Federal and State prosecutors in 31 ongoing or completed criminal prosecutions that stemmed from OIG investigations. This helps to ensure a strong disincentive for City employees and contractors who would engage in fraud and other unlawful conduct to profit from the City.

Current pending cases in federal court from OIG investigations include major multi-defendant M/WBE program fraud cases arising from matters in which the City was defrauded of millions of dollars. Trials, pleas and sentences in the still ongoing Operation Crooked Code initiative involving corruption in the Building Department has now reached 21 convicted individuals, 15 of whom were City employees. There will be additional trials in the coming months.

Over the past year we have also taken a number of steps to improve our accountability to the City.

A. Quarterlies: In the first full quarter I was in this office, I shifted our quarterly reports from single sheet statistical offerings to narrative summaries of our investigative cases in order to allow City Council, City employees, and Chicago residents a window into what sort of cases we investigate and how we go about investigating them. It is important, especially in times of government austerity, we allow for greater transparency into our work.

B. Interim Rules and Regulations for OIG Investigative Activity: To further our public accountability, I am pleased to report that for the first time in twenty two years, the OIG has published rules and regulations for OIG investigations. We previously posted to the OIG website FAQs – frequently asked questions – that we will periodically update to ensure those who must deal directly or indirectly with an OIG investigation understand their procedural rights and responsibilities under the law. The new rules and regulations are the first step of a continuing process. The regulations themselves obligate the office to evaluate and update the rules on a two year cycle, consonant with best practices seen at the federal level.

C. Peer Review: Lastly, I am often asked ‘who watches the watchdogs?’ To better accountability to elected officials and the public, I have started the work to guarantee the OIG undergoes a triennial quality assessment peer review. The first review – to be conducted by the National Association of Inspectors General – is scheduled for next summer. It will assess how well the office is meeting the so-called Green Book, which provides the national standards for government oversight bodies. This review will provide the public with the assurance that our work is performed fairly and records kept appropriately.

We also brought in an outside audit firm to conduct a review of our investigative accounts going back five years, which is available for review on our website. I have committed the office to submit to such outside review every two years.

The mission of this office is to identify ways in which City operations can improve its performance. The OIG, therefore, has an even greater obligation to constantly be looking at its own operations to find ways to better serve the citizens and this body. So I am glad to take your questions, and comments.