S&WB responds to audit report suggesting possible law violations

City councilwoman says she is not surprised at the findings

Sewerage and Water Board audit

NEW ORLEANS (WVUE) - A new legislative auditor’s report highlights serious problems at the New Orleans Sewerage and Water Board and possible violations of state law.

While the report’s findings are disturbing, City Councilwoman Helena Moreno said it is not the first of its kind.

"Really frustrating, you know, it’s another negative report for the Sewerage and Water Board, but I have to tell you not necessarily very surprising, we’ve seen countless reports that are similar to this one,” Moreno said.

After the widespread flooding in New Orleans in August 2017 following heavy rain, state auditors began looking at the S&WB’s drainage system and later the agency’s contracts dating from 2013 through 2017.

On contracts, the auditors said that the S&WB does not have a centralized, comprehensive master list of all contracts, nor does it have written policies and procedures which address contract record keeping and management reporting.

State Rep. Stephanie Hilferty, who represents a portion of New Orleans, authored a resolution this year calling on the legislative auditor to expand its inquiry to cover S&WB contracts.

"But even in requesting those contracts, because there’s no centralized data base for the contracts, it took a substantial period of time for them to even deliver the contracts to the auditor, and the auditor never even received all the contracts requested and I think that states the general disarray of the organization,” Hilferty said.

Further, the audit report suggests possible bid law violations.

According to the report, none of the five contracts that were publicly bid met the advertising requirements of the S&WB’s specific bid law.

“That to me is really troubling and that is something that they’re going to have to get a handle on relatively quickly,” Moreno said. “So there’s a whole slew of different problems in the Sewerage and Water Board and this is just another report that’s highlights this.”

The audit team also pointed to other possible state law violations involving contracts, related to the donation of tens of thousands of public dollars.

The report mentioned a $35,000 contract from 2016 for an employee awards program held at a local hotel. According to the auditors, an Attorney General’s opinion prohibits the donation of public funds.

In addition to that, the audit found four contracts totaling over $73,000 for annual service awards. Some of the items purchased included 10 thousand gold rings and pendants, tie pins and sterling silver rings.

"The auditor recommended an Attorney General’s opinion on the gifts because some of those were substantial in nature, gold plated watches were mentioned, as well as rings and those two stood out to me,” Hilferty said.

Moreno said the problems with the Sewerage and Water Board feel endless.

"Sometimes I’m almost at a loss for words when we talk about the Sewerage and Water Board because as soon as you start to think, ‘okay, these are all the different problems that we have,’ you peel the onion back a little bit more and then you see that there’s even more,” Moreno said.

Both Moreno - who served in the state House of Representatives until earlier this year - and Hilferty, hope the S&WB’s new leader will turn the agency around.

"His tenure did not overlap with what this report covered, he has an awful lot to look at with the Sewerage and Water Board,” Hilferty said.

"He knows he’s got a lot of work to do but I think that he will create improvements,” Moreno said.

The Sewerage and Water Board issued the following statement Monday afternoon:

“The Sewerage and Water Board of New Orleans (SWBNO) is grateful to the Louisiana Legislative Auditor for its thorough and comprehensive perspective of how this critical utility has conducted business in the past.

The past year has been challenging for SWBNO, but it has emerged from the rain event of Aug. 5, 2017 with a much-improved drainage system and new, forward-thinking leadership dedicated to continuous improvement in all departments.

SWBNO agrees with many of the recommendations of the auditor’s report, and in fact, has already implemented some of those changes independently of the report. For example, the utility has a committee of employees who regularly review emergency operations and preparations for hurricanes. It has ceased to host banquets that spend public funds on employee awards. It provides detailed reports on emergency declarations and after-action evaluations. It requires the Executive Director to have work experience in the utilities industry. And it makes timely, regular presentations of its financial condition to its Board of Directors.

This utility will continue to improve. We are implementing strategies to create better oversight and tracking of contracts. We are constantly reevaluating all policies and procedures to find ways to better serve the public. A good example is the new procurement policy and procedures manual that we are working to finalize in coming days.

“As I have said since September during my first weeks here, if you are going to overhaul a system, you have to do it one step at a time,” Executive Director Ghassan Korban said. “We look forward to working closely with our Legislative and City partners to create a utility that is transparent, accountable and efficient.”

Moreno said the council will continue to push hard for improvements at the troubled agency.

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