The Importance of Diligent Oversight

This week we learned of the Societe Generale fraud, a costly but excellent example of what can happen when oversight either does not exist or is not diligently exercised by those required to perform it.

When legislators set up agencies or allow regulated businesses to exist, they usually impose oversight requirements to prevent abuses and protect the public.

Some of us who live in Coeur d'Alene, Idaho, have been concerned about our Mayor and City Council's failure to exert diligent oversight over our urban renewal agency, the Lake City Development Corporation. See Whitecaps post titled LCDC - The Cancer in Coeur d'Alene.

In the SoGen fraud, a low-level employee characterized as Mr. Average was able to circumvent a six-level system of security checks and execute futures trades which resulted in a $7 billion loss to SoGen.

How was the alleged fraudster, Jerome Kerviel, able to beat the elaborate oversight system that should have caught him much earlier? Early reports suggest he began work in a rather menial position that enabled him to learn the vulnerabilities of the protections in place. He then slowly and patiently worked himself into a position as a trader where here was able to do the unthinkable.

In her January 27, 2008, New York Times article headlined Rogue Trader in Custody in France, writer Nicola Clark reports:

Daniel Bouton, the Société Générale chief executive ... described Mr. Kerviel’s elaborate efforts to hide his activities as being like a “mutating virus.” "The nature of his fictitious and fraudulent operations were constantly evolving,” Mr. Bouton said. “And when the control systems detected an anomaly, he managed to convince control officers that it was nothing more than a minor error.”

In short, Kerviel was apparently able to convince those with responsibility for oversight that what he was doing was the right thing to do. The oversight appears to have failed in part because Kerviel's overseers wanted to believe him. They lacked the healthy skepticism diligent overseers have.

Hayden Police Department

In the Wednesday, January 16, 2008, Coeur d'Alene Press staff writer Marc Stewart is reporting the city of Hayden, Idaho, is considering starting its own police department. It currently contracts with the Kootenai County Sheriff's Department for some law enforcement services. The article is headlined Hayden may create police force.

A city's decision to start its own police force should involve the city's citizens. It is as much a social decision as it is a political one.

On September 7, 2006, Whitecaps posted a brief article titled Starting a New Police Department? The article has links to several very readable guides published by the US Department of Justice's Office of Community Oriented Policing Services (COPS). While the guides were intended to be read mainly by public officials considering starting a police department, they are also suitable for informing citizens about both sides of that decision. The guides will help Hayden citizens better understand the negatives as well as the positives about having your own police department.

County Sheriffs: Law Enforcement Administrators or Influence Peddlers?

The disagreement about whether county sheriffs should be elected or appointed will not likely ever be resolved to everyone's satisfaction. One side will argue that requiring sheriffs to stand for election ensures some accountability to the people in the county. The other side argues, equally effectively, that it often results in political hacks rather than competent public administrators being put in offices that oversee large budgets and make patronage appointments.

This conflict has come to the front in Orange County, California, where Orange County Sheriff Michael Carona has been indicted by a federal grand jury on charges of conspiracy, mail fraud, depriving the public of the right of honest services of a public official, witness tampering, false statement in bankruptcy, fraudulent concealment of property in bankruptcy, and aiding and abetting.

Reading the grand jury indictment and the series of Los Angeles Times articles, one will quickly see that former Sheriff Carona has been accused of public corruption, selling his office "...for a stream of gifts and money." The articles are all worth reading. In addition to laying out the evidence against the allegedly corrupt sheriff of the second largest county in California, the articles provide snippets of insight into how the federal government investigates allegations of public corruption.

How local politics is insinuated into the Carona case is in today's Los Angeles Times article headlined O.C. sheriff's resignation causes turmoil. Just before resigning, Carona fired one of his assistant sheriffs and appointed Assistant Sheriff Jack Anderson to succeed him. Anderson is an official in the Orange County Republican party.

Every chief law enforcement officer expects to be subjected to political pressure. When they begin to sell their office in return for preferential treatment for donors, they must not only be removed, they must be prosecuted. Some will rationalize their preferential treatment by saying it improves the department's image to have high-profile "special deputies" or "sheriff's posse" or "executive reserve" members in decision-making or -influencing positions in the community. That can be true, but only as long as the sheriff or chief does not sell those pseudo-commissions for political or personal gain. When that happens, the official has betrayed the public's trust and confidence and must be removed.

Heed the Warning

The Coeur d'Alene Press online posted a story on January 2, 2008, headlined Planner won't face criminal charges. The story by staff writer Marc Stewart reported that a former Kootenai County senior planner would not face criminal charges for allegedly ordering the destruction of an audio tape recording of a County Planning Commission meeting.

This newspaper story was pitifully short on the facts supporting and refuting the allegation and the laws that may have been violated. Consequently, it is difficult for readers to conclude if the decision to not prosecute her was appropriate.

With no more information about the facts than anyone else, we can only speculate on what laws may have been involved and allegedly violated.

It seems most likely that the planner may have been accused of violating Idaho Code 18-3201 - Officer Stealing, Mutilating, or Falsifying Public Records. That law says:

Any public officer, law enforcement officer, or subordinate thereof, who wilfully destroys, alters, falsifies or commits the theft of the whole or any part of any police report or any record kept as part of the official governmental records of the state or any county or municipality in the state, shall be guilty of a felony and is punishable by imprisonment in the state prison for not more than fourteen (14) years.

Obviously the planner was a public officer or a subordinate thereof. Obviously there was the destruction of a county government record. The questions of interest are:

• What part, if any, did the planner play in the destruction of the recording?
• Who was the custodian of the recording? Was it the planner or someone else?
• Was the destruction "wilful" [sic]?
• Did the planner know that the audio recording was required to be preserved as part of the public record? If not, why not? How could she not know?

The Press story says the planner was accused of ordering the destruction. It does not further explain exactly what form that order took, nor does it identify who actually destroyed the recording. Innocent casual remarks, even humorously uttered, can sometimes be misinterpreted by subordinates or unwitting employees as orders or strong suggestions.

To be chargeable as a crime under IC 18-3201, the destruction had to be "wilful" [sic]. Black's Law Dictionary, 8th ed., defines "willful" as "Voluntary and intentional but not necessarily malicious." If that is the applicable definition here, then it would be difficult for the planner to argue that ordering someone else to destroy the recording was involuntary and unintentional. Notice that the statute does not explicitly require criminal intent, only that the destruction have been "wilful" [sic] .

That raises the next question: Did the planner know, or should she have known, that the recording was in fact part of the record of the meeting and that it had to be preserved intact? Logically, any public officer ought to be expected to know what is and is not part of the record of meetings in which the officer regularly participates. To relieve a public officer from that obligation is to allow intentional ignorance as a blanket defense in prosecutions for alleged violations of IC 18-3201. Here are the critical definitions from Idaho Code 9-337:

(13) "Public record" includes, but is not limited to, any writing containing information relating to the conduct or administration of the public's business prepared, owned, used or retained by any state agency,independent public body corporate and politic or local agency regardless of physical form or characteristics.

(15) "Writing" includes, but is not limited to, handwriting, typewriting, printing, photostating, photographing and every means of recording, including letters, words, pictures, sounds or symbols or combination thereof, and all papers, maps, magnetic or paper tapes, photographic films and prints, magnetic or punched cards, discs, drums or other documents.

(3) "Custodian" means the person having personal custody and control of the public records in question. If no such designation is made by the public agency or independent public body corporate and politic, then custodian means any public official having custody of, control of, or authorized access to public records and includes all delegates of such officials, employees or representatives.

Given the clarity of the statute, the planner could reasonably have been expected to know that the recording was part of the public record and that it must be preserved intact. That is even more true if she was the custodian of the recording. If she was not the custodian of the recording, then the designated custodian should never have allowed the recording's destruction.

Because the Press did not address these issues and report the relevant facts in detail, it is unfair to presume the planner violated IC 18-3201. It is likewise unfair to presume the Coeur d'Alene Chief Criminal Deputy Prosecutor made an improper decision to not prosecute.

But now that the criminal investigation has ended, the Press should obtain the investigative reports to the extent allowed by the Idaho Public Record Law. The Press should analyze and fully report the basis for the decision to not prosecute. It is appropriate for the public to review the facts of the case and decide if the prosecutor's decision to not prosecute was reasonable. The public is entitled to hold prosecutors, even appointed ones, accountable.

Regardless of what the Press does, every public official in Kootenai County should heed this warning: The public record must not be destroyed, altered, or falsified in violation of the law no matter how noble or innocent the purpose might seem. Law enforcement officers and prosecutors should also understand that the public expects its public officials to know their obligations to preserve the public record intact. Ignorance of that obligation, and especially intentional ignorance, must never be allowed to excuse its violation. To allow that is to render the Idaho Public Record Law meaningless.

Tools to Use: Forcing Local Government Transparency

The first workday in 2008 seems like a good time to remind Coeur d'Alene and Kootenai County residents about the resources we have available to encourage our local governments to be more open and honest with us.

The Idaho Attorney General has published several informative pamphlets and manuals for citizens. They are available in hard copy from the Attorney General's office and online at the Idaho Attorney General's webpage. The pamphlets and manuals are written in easily understood language for us interested citizens. They cover topics such as the Idaho Ethics in Government Law, the Idaho Public Records Law, and the Idaho Open Meeting Law.

Next time you're in contact with an Idaho legislator, ask why our public officials are not uniformly provided with copies of those pamphlets and manuals when they assume their elected or appointed position. Ask why those officials are not required to sign a public record statement affirming they have read, understood, and will comply with the laws described in those manuals. This simple requirement would go a long way toward challenging an official's defense that s/he didn't "knowingly" violate the law. And it seems only fair that our elected and appointed officials be required to be as conversant with applicable laws as the citizenry can be.

The Idaho Attorney General is not the only source of information about government transparency. The Reporters Committee for Freedom of the Press has published online its Open Government Guide, a "...compendium of information on every state's open records and open meetings laws."

The Open Government Guide: Idaho was written by Debora K. Kristensen, an attorney with Givens Pursley, LLP. It elaborates on some of the topics raised in the Attorney General's manuals and pamphlets, but it is no less readable.

These publications are tools, nothing more. They are totally useless unless citizens use them. How will you know if you're using them effectively? One way is that officials will begin to criticize you for even using them. You are likely to be accused of abusing them. One city councilman here in Coeur d'Alene commented about citizens who he believed were abusing the public records and open meeting laws. When asked to define abuse, he could not.

This is not to suggest that public records and open meeting law complaints should be used to harrass officials and agencies. They should not. They should be used to legitimately gather information about the conduct of the public's business and to hold public officials accountable to we, the people.