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Thursday, February 16, 2012

Portland auditor finds rat's nest of problems at PDC

The City of Portland's official watchdog over public funds issued an extensive report late yesterday that lambasted the Portland Development Commission for all sorts of sloppiness -- or worse -- in handling public money. The report is here. The whole thing is worth study, but there are a few highlights (or are they lowlights?) that jump out at first reading: doing business with unregistered companies, keeping inadequate records about vendors, lax conflict-of-interest rules, falsely showing overtime pay as regular pay, illegal "awards" to employees, writing checks to itself, issuing duplicate checks and skipping transaction numbers in the payment registry, the list goes on and on.

PDC officials did not consistently make businesses follow its own requirements for doing business with PDC. Ultimately, by not verifying business registry, PDC is providing City funds to businesses that may not be operating in the City legally and paying applicable City business taxes....

PDC has several weaknesses in its conflicts of interest and related party practices. PDC existing policies are not inclusive enough to meet the Oregon Ethics Law definition for “public officials,” and are silent about relationships between employees. In addition, there is compelling evidence that employee relationships warrant additional work in identifying and monitoring potential conflicts of interest and related parties. Lastly, PDC has not consistently followed its own requirements related to purchasing from businesses where employees may have a personal interest or hiring former employees....

PDC is not adhering to its own accounting system due to the combined reporting of regular and overtime wages in the regular wages account. Combining these significant expenditures makes the specific wage types less transparent for the public and PDC decisionmakers....

After consulting with the Oregon Government Ethics Commission, we do not believe the [Employee] Service Awards are consistent with the Oregon Ethics Law. PDC discontinued the practice of distributing Service Awards to its employees after hearing our concerns about these awards....

PDC’s current practice of data management does not consistently produce complete records in the vendor master as required by policy. By using incomplete records, PDC has also missed an opportunity to verify, update and scrutinize information in its vendor master to add reasonable assurances against errors and fraud....

PDC issues checks to itself on a regular basis but for different reasons. It is unclear whether this practice is appropriate, especially for all the reasons described. Fraud schemes use a similar practice to steal funds. PDC’s practice presents the opportunity for the misappropriation of funds, especially when more secure methods – such as wire transfers or journal entries – are available alternatives....

A number of payment sequence gaps and [check] duplicates went undetected by PDC. In addition, the log used to monitor and explain any gaps and duplicates was not always accurate or complete, which impacted its effectiveness as a tracking tool. While PDC officials were able to explain most of the sequence issues, regular and timely reviews of gaps and duplicates can prevent errors or potential misuse of funds....

What a mess. In any other business, people would be fired over a report like this. Even the Urban League chopped off a guy's head over far lesser accounting problems. But hey, this is Portland, and the PDC slush fund is accountable to no one.

That whole operation needs to be disbanded. It's bankrupting Portland, even if you take its word for what it's doing. And heaven only knows how much money is being flat-out stolen out of there. Yoo hoo! Amanda Marshall!

Comments (19)

The original mission of the PDC is to be a slush fund so pols can hand out money to friends and family.

Gee what a shock one more CoP group pissing away taxpayer money and with lax accounting.

These people are the true creative class.

Vote NO on every bond.

I'm surprised the auditor hasn't yet been replaced with someone of lesser visual acuity.

If nobody is going to jail for the massive fraud from the NYC and London banking crowd, do you think anything will be done here?

What are the odds that any of the mayoral candidates will even mention this audit?

If they do, they are likely to phrase it as such, "Corruption and criminal misuse of public assets is vital to Portland's economic recovery"

"The original mission of the PDC is to be a slush fund so pols can hand out money to friends and family."

Yeah - I mean, being a slush fund is the whole point of PDC, isn't it?

Accounting controls would only get in the way of their "creativity".

I just hope this won't interefere with everybody getting merit increases.

Are these age-old problems, or more recent problems after PDC became "accountable" to City Council?

They are age-old problems. From 2006's audit:

Gary Blackmer, the usually mild-mannered city auditor, has accused Portland Development Commission managers of delaying an analysis of the urban renewal agency's books and seeking an inappropriate level of control over the report.

Blackmer and PDC Executive Director Bruce Warner have agreed to hire an outside accounting firm to conduct a routine annual audit of the agency's finances and financial practices as part of a larger review of city government spending. Staff from Blackmer's office and the development commission have been negotiating the terms of the audit, which would combine separate studies by the PDC and the auditor's office, for almost six months.

But in a memo sent Friday to City Council members and Warner, Blackmer said he's ending negotiations because PDC managers have made several unacceptable demands. Chief among them:

* They want to sign off on the accounting firm before the auditors are hired.
* They want the right to approve any change in the audit's scope.
* And they want to review and approve the auditors' "management letter," essentially a paper outlining what the auditors think of how the PDC is run, before Blackmer sees it.

Even I, who sees government through rose-colored glasses, who accepts as valid the theoretical basis of the PDC and TIF, sees this program as way, WAY past usefulness, and now firmly established as unnecessary at best. City government does not need to shrink in monetary terms (in my opinion), but it sure as hell needs less bureaucracy like the PDC.

Aren't they supposed to wait until Friday night to publish stuff like this?

Interesting that Charles Wilhoite is both an Urban League board member and a PDC commissioner. A regular Sgt. Shultz of the Portland civic scene.

I'm surprised he hasn't yet been appointed to the TriMet board. He seems well-qualified.

Some 2012 predictions saying an end to ....?
This can mean an end to old systems and new ways. Perhaps an end to PDC?
I think there has been enough "redo" in our city to last for awhile.

Interesting that Charles Wilhoite is both an Urban League board member and a PDC commissioner. A regular Sgt. Shultz of the Portland civic scene.

He's also the chair of the board (I kid you not) at OHSU:


Definitely a symptom of Sammy Boy accounting and his misappropriated version of commingled funds and transparency. Another trip to the developer’s candy store, anyone?

Who's going to start the petition to make PDC MORE accountable since the last vote didn't seem to help... We need changes there - quickly. It is out of control.

Ride this thing until it dies Jack...

First couple of pages indicate PDC gave $12.5 million to businesses from out of State, unregistered with any entity here. That is some serious shuffling of money. And the Auditor said that was her low end estimate.

"Move along, move along. These are not the droids you are looking for. . . "

Perhaps the description "sustained criminality," borrowed from the investigation of Mr Murdoch's corrupt operations, can be usefully applied to PDC? Arrests and closures are, sadly, more likely in the News Group than in the PDC.

"Sustained criminality" does appear to be the most enduring, most sustainable legacy of the local institution.

Isn't about time the Feds investigated this city? A few more years and this city will be as dirty as Chicago.

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