The release of the Legislature’s financial records connected to the 2011 audit report has revealed plenty of evidence of lavish travel expenses and questionable construction contracts. What it has not revealed, however, are very many surprises.
In the second sentence of the audit report, the investigators succinctly outlined exactly what we should expect to discover in the documents.
“We found that the Legislature is not using sound business practices in its stewardship of public funds and resources, and that there is an absence of transparency, accountability, and documented procedure to prevent fraud, waste, and mismanagement,” they wrote.
In the year since the audit was released, many in the public have come to believe that the inspector general found evidence that senators simply stole $6.9 million from the government. Unfortunately, the reality of the situation is far more complicated. What the auditors actually argued was that the Legislature was cavalier and irresponsible in the way it spent public money, and as a result much was needlessly wasted.
If Sen. Ronald Russell’s claims of an ongoing federal investigation are true, then some of the more egregious misuses of the Legislature’s travel expense fund may ultimately prove illegal, but the odds of a clear-cut, prosecutorial slam-dunk may be slim. That’s because every senator can make the same frustratingly plausible argument in their defense: “How can what I did be wrong if there was no rule against it?”
The Revised Organic Act of 1954 gives the Legislature wide authority to govern its own affairs. At the beginning of each term, the senators agree on a set of rules. Many of these rules are borrowed from previous Legislatures, but there is very little preventing them from making large-scale changes to how things are done.
Throughout the audit, the investigators criticized this system, arguing instead for a set of codified rules that would bring consistency and greater transparency to the operations of the Legislature.
“Without codified rules and regulations to govern the administrative functions of the legislative branch and ensure accountability and proper management, a culture has developed in the Legislature of the Virgin Islands that exposes public funds to the potential for fraud, waste, and mismanagement,” he wrote.
Specifically, the investigators wanted rules governing travel expenses, the awarding of bonuses, procurement policies and inventory control to be set in stone.
The investigators cited many examples where the Legislature’s internal rules fell short. The most egregious was a 2-1/2 page document that attempted to lay out all the Legislature’s travel, procurement, and payroll practices.
“The document’s cursory rules inadequately address what would normally be required to specify the acceptable use of public funds,” the investigators wrote. “Furthermore, the document is routinely disregarded by senators and legislative employees.”
On the issue of travel expenses, the legislative rules effectively set up an honor system. Senators would estimate how much their trip would cost and were then advanced that money. There was no system in place to later reconcile their expenses with receipts or even verify that the senator had, in fact, taken the trip.
Also, the investigators found that the Legislature’s rules did not adequately control the amount senators were spending. So while news of senators spending $600 a night on hotel rooms at President Obama’s inauguration may be jarring to the public, those senators are correct when they argue that they did nothing wrong as far as the rules of the Legislature are concerned.
When Russell became senate president, he issued a memorandum changing the Legislature’s rules, replacing the cash advance system with per diem payments as recommended by the audit report. However, the investigators pointed out that this could prove a hollow gesture because the change did not carry the force of law.
“The next senate president could disregard the memorandum because there are no codified laws to ensure that cash advances are not abused in the future,” they wrote.
So where are the reforms? What progress, if any, has been made in codifying the rules of the Legislature? The answer is very little.
The V.I. Office of the Inspector General is solely an investigative agency with no authority to enforce its recommendations. Inspector General Steven van Beverhoudt said his office does not even have an organized system to follow up on its reports to see if their recommendations have been adopted. He said the Legislature has not kept him updated on their actions concerning the audit and that much of what he knows about what they’ve done he has learned from reading the newspaper.
So barring a change to the Organic Act or the adoption of a new constitution, the power to impose greater regulations on the Legislature remains solely with the Legislature itself. That doesn’t mean attempts at reform haven’t been made, however.
The most direct attempt at implementing the inspector general’s recommendations was a bill written by Sen. Louis Patrick Hill that would have codified the Legislature’s procurement process.
Prior to 2010, the Legislature was not required to conduct a competitive bidding process when contracting for construction services. Contracts could be given directly to favored contractors regardless of whether they offered the best price.
In the audit report, the investigators sited a particular instance where the Legislature paid $18.65 per square foot to install glazed porcelain and coral tiles. The investigators put out a bid for similar work and found that the highest rate they were quoted was just $5 per square foot. By not putting the project out to bid, the Legislature paid $124,599 more than it should have.
In the 29th Legislature, Russell instituted a rule mandating that the Legislature collect at least three bids for construction projects, but again, the rule does not carry the weight of law and may be rejected by the 30th Legislature.
Hill’s bill would have written a procurement policy for the Legislature into the V.I. Code, thereby binding future Legislatures to the same set of rules. Under his plan, the Legislature would have to take bids on any contract worth more than $75,000.
The bill also would have codified the Legislature’s bonus policy, though the policy proposed fell short of the audit’s recommendation of clearly tying bonuses to a merit scale. Rather, it would have given the senate president the sole power of determining the size of awards.
The bill was soundly defeated in a hearing of the Senate Committee on Rules and the Judiciary on Oct. 11. Sens. Carlton Dowe, Alicia Hansen, Ronald Russell, Sammuel Sanes, Celestino White, Usie Richards, and Patrick Simeon Sprauve all voted against it. The bill received no votes in favor.
Russell and Sanes have both since said they supported the concept of the bill, but problems with the language outlining the bonuses caused them to vote against it.
Russell said a section of the passage that would make the bonus policy retroactive was misconstrued by the Daily News to mean that the senate president would gain the power to retroactively give bonuses to former employees.
During the hearing, legislative legal counsel Yvonne Tharpe explained that this was not the case, and that the reason the retroactive language was placed in the law was to lend legitimacy and continuity to bonuses that had been awarded in the past.
Still, Russell felt the language needed to be removed before the bill could move forward.
Sanes said he felt like the bonus language did not go far enough, and that he wanted to see the merit scale suggested by the audit report added to the legislation. He also said he would have liked to remove the retroactive language.
Both said they supported the codification of the procurement process, however, and Russell vowed that if he were reelected he would attempt to push the measure through the 30th Legislature.
Speaking on the other side of the issue, Richards and White argued against the codification of the Legislature’s rules.
Richards said that every Legislature has had the right to manage its own affairs and he felt uneasy about forcing rules upon future lawmakers.
White further argued that accepting these regulations would give the impression that previous Legislatures had done something wrong.
It is as yet unclear exactly where each senator stands on the issue of codifying legislative rules, but what is certain is that the recommendations of the inspector general have not been implemented.
No bills are currently under consideration to codify the Legislature’s travel or inventory control practices. According to Russell, Hill’s bill to codify the procurement processes simply does not have the votes to make it through committee and will not be revisited before the end of the term.
With no actions pending, it will fall to members of the 30th Legislature to either accept the reforms suggested by the audit report or continue with the status quo, however flawed and controversial.
