Inspector general's criticism of S&WB sets off a firestorm

Published: Jul. 31, 2012 at 10:16 PM CDT|Updated: Aug. 14, 2012 at 10:16 PM CDT
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New Orleans, La. -- The city's inspector general says the Sewerage and Water Board needs more oversight before the public is asked to pay more for services.

Ed Quatrevaux said Tuesday that the agency is at risk for fraud, waste, and abuse.  And now he is suggesting that his office be used as an independent monitor for the S&WB.

"Our concern is the same I think as many people, many of the citizens, and that is, would this money be spent responsibly?" said Quatrevaux.

The IG sent Mayor Mitch Landrieu a letter, containing serious criticisms of the S&WB's operations.

The city's water and sewer systems have been in need of an overhaul for decades, but money has been an issue.  The water board is considering a package of rate increases that could nearly double residential bills by 2016.  Customers would see their water rates jump by 12 percent a year through that period.

Quatrevaux said a risk assessment his office conducted last year found that the S&WB is vulnerable to fraud.

"The S&WB is the most likely of the city's component entities to engage in fraud, waste, and abuse according to standard risk assessment methodology," Quatrevaux wrote.

But in an interview with FOX 8 News following the release of the letter, Quatrevaux said he is not alleging any fraudulent activity.

"It's a risk -- it's not saying that there's something there," Quatrevaux said.

He said, when the S&WB was compared to some other city entities, the risk factor was glaring.

"It's just a score used to rate them and compare them to other agencies, and the Sewerage and Water Board came out on top.  We look at things like management structure, turnover, domination of a board by an individual, whether or not they have an ethics code, whether or not they have a financial manual," he said.

The IG also points to a FOX 8 News investigation which focused on the lucrative retirement package for S&WB Executive Director Marcia St. Martin.

"The employer's 28 percent, the employee's 4 percent, that's a 7-to-1 match that you rarely see in the private sector," he said.

However, Quatrevaux said the biggest deficiency is board members' meddling in procurement processes.

"A board's job is to set policy, even procurement policy -- that's an appropriate role for the board.  What's not appropriate is dealing in individual contracts -- that's a management responsibility and the management did their job," he continued.

Quatrevaux said the agency needs an independent monitor and he is offering his services.

"We're suggesting that what they do is the same thing that the city does with the general fund, and that's to allocate three quarters of one percent to fund an OIG oversight operation. That's our recommendation and I think that would give the public a lot of assurance that things would be different, that the money would be spent responsibly," he stated.

In his capacity as board president, Mayor Landrieu sent a letter of his own to board members in the middle of July, urging up to a 60-day delay in a vote on the proposed rate hike.  Landrieu said he had numerous concerns about the proposed rate structure.

In response to Quatrevaux's letter, Ryan Berni, director of communications for the mayor's office issued a statement:

As we work with the Sewerage and Water Board to develop a plan to improve efficiencies and customer service, we will take a hard look at the Inspector General's recommendations. The OIG's reviews of boards, commissions, and agencies continue to be a helpful tool in our efforts to rid City government of waste, fraud, and abuse.

Earlier this month, the Mayor asked the Board and staff to identify the reforms and customer service improvements that would accompany any new revenue from ratepayers. The Board has already taken action on its pension by increasing the employee contribution from 4 to 5 percent. Under Mayor Landrieu's leadership, we worked with the management to correct previous audit findings, and we are pleased that the Sewerage and Water Board's 2011 audit confirms that we have resolved those issues. The Board has also adopted many of our procurement policies. We expect additional pension and contracting reforms would be included in a list of further improvements. However, any suggestion of impropriety by the current executive director would be baseless. Marcia St. Martin has played by the rules and has been a dedicated public servant for over 40 years..

We have made significant progress in improving the operations and funding of the Sewerage and Water Board in our more than 2 years in office, but we must do more. It is clear to us that the S&WB currently does not have what it needs in terms of infrastructure and funding to serve a 21st century American city. It is the Mayor's hope that with key reforms and improvements identified and outstanding questions answered within the next 60 days, we can find consensus on a pathway forward," the statement said.

St. Martin later issued a letter that she addressed to Quatrevaux, in which she sharply criticized the IG over the assertions made in his letter.  She writes, in part:

It is unfortunate and perhaps even irresponsible for an individual in your position to have authored such a letter to our Mayor and to the local media without first having checked on the accuracy of the purported facts that you represent in your correspondence.

You can read St. Martin's entire response at this link.