State auditors tend to embody the excellent advice of President Teddy Roosevelt: They speak softly and carry a big stick. Most state audit shops work under a broad legislative mandate – this includes the ability to examine any and all records of state and local agencies, and this includes subpoena power, when necessary.
In practice, state audit shops rarely threaten to flex their legal muscles, and this is mostly because their legislative mandate and mission are widely understood by public policy makers and managers. When the State Auditor calls, you pick up the phone and give them what they need, so to speak. Now, there are definitely instances where an agency will dig in and try to refuse a specific records request, etc., but that almost invariably ends poorly for that agency. It’s even rarer for an agency to not only refuse to cooperate, but to also engage legal counsel to threaten legal action against the state auditor for even insinuating their intention to audit an agency. And yet, here we are…
For those unfamiliar with the greater Kansas City metropolitan area, Clay County occupies roughly the northeast quadrant of the KC metro. The county’s population is about 250,000 and growing, and it’s a fairly large county geographically, so while Clay County residents are part of a relatively bustling urban midwestern city, the county retains a rural, provincial character. This is attractive for many residents who move there seeking reasonably-priced land, good schools, an increasing number of amenities and retail options, and a sane commuting distance to almost any part of the Kansas City area.
Unfortunately, small-town living also tends to include small-town politics, and things have been getting a bit…testy…up in Clay County recently.
KC television station WDAF “Fox 4 KC” has been conducting an extensive, in-depth journalistic investigation of Clay county commissioners and numerous reports of government waste, fraud, and abuse associated with the county government. In my experience, it is unusual for a local TV news department to devote such a significant amount of resources to a local public policy matter, and I’d like to recognize the excellent reporting of Megan Dillard and the entire Problem Solvers team at Fox 4.
Last year, reports of wasteful spending and poor oversight began surfacing in Clay County. $600 coffee makers. Unexplained $5,000 cash transfers to Paypal. The hiring of ELEVEN legal firms to conduct legal work on behalf of the county and the commissioners. Procurement card abuse by county management. Failure to follow the approval process for significant expenditures. Managers signing their own expense reimbursements. In other words, the familiar tale that we public-sector auditors too often end up investigating as fraud and turning over to law enforcement for prosecution. WDAF aired their first story about this mess on Feb. 28, 2018, and it’s a doozy:
This Northland county is facing growing public outrage after slashed budgets, salary increases for elected officials and possible misuse of taxpayer money.
Stop wasteful spending. It`s a message, a mantra, that Clay County citizens have made their battle cry. They’re frustrated by what they see as a misuse of taxpayer money, overspending, lack of internal controls and budget cuts to much-needed county departments.
‘I was just embarrassed by how our county was being run. Enough was enough,’ said Clay County resident Jason Withington. He started the petition drive along with former Clay County employee Sherry Duffett.
We’ve got everything in this story: Arrogant public employees, both elected and appointed, who resent open records requests and do everything they can to avoid accountability? Check!
Ridiculous-seeming expenses, that even if justified, still look terrible on an investigative report on television? Check!
A whistleblower putting their livelihood on the line for coming forward to resist and/or expose the avarice and greed of the villainous county employees? Check!
Clay County residents have noticed all of this alleged malfeasance and are understandably pissed off. Part of their collective response has been to start a petition drive to implore Missouri State Auditor Nicole Galloway’s office to conduct a thorough, comprehensive, non-partisan/non-political audit and investigation of the alleged waste, fraud, and abuse.
There’s a lot more to this story, and I encourage any of you who are interested in good governance and fraud investigation to view and follow the story. However, recent developments in this story have kind of blown my mind. Essentially, Clay County hired an attorney to send threatening letters to both the County Clerk AND THE STATE AUDITOR. That’s right – these local government “public servants” are insinuating that the State Auditor not only has no jurisdiction to conduct an audit or investigation of the county’s books but that even attempting to do so will result in legal action against the State Auditor herself! In addition to the letter to Galloway, the law firm also served whistleblowing Clay County Clerk Megan Thompson with a similarly-worded threatening letter in late March. Needless to say, Galloway ain’t having any of that nonsense.
Days after voicing concerns about the red flags FOX4’s investigation uncovered, Missouri State Auditor Nicole Galloway also received a threatening letter from Pearson…”It is clear there are questionable activities,” Galloway previously said of Clay County spending.
The eight-page letter she received said Galloway’s comments to FOX4 “reflect an inappropriate prejudging of issues based on far less than all the facts,” and her comments “violate the state law that defines the duties of the auditor. Frankly, the comments make clear that you and your office are now incapable of objectively performing an audit or any other activities regarding clay county,” Pearson said in his letter…
…Pearson says Galloway and her office should recuse themselves from such action, not participate in any activities in Clay County, and refer all Clay County matters to an external accounting firm. ‘”t is unfortunate that such measures are necessary to ensure an independent process that complies with state law,” Pearson wrote, “but given the comments on camera, I see no other alternative.”
Pearson gave Galloway 10 days to heed his request. “If you do not do so, Clay County, on behalf of its taxpayers, reserves all rights to take legal action to enjoin any unlawful actions,” he said.
Galloway’s office sent its own letter in which she repeated, “there are legitimate concerns” in Clay County and “citizens concerns appear to be numerous and widespread.” Galloway’s general counsel also said Pearson “mischaracterized” and took the auditor’s comments “out of context.”
“While we could speculate as to your motivations for doing so, this office takes any concern related to these matters seriously,” general counsel Paul Harper wrote.
He added that Galloway’s comments in FOX4’s story “clearly demonstrate that the auditor remains objective and has neither made any predetermined assessment of the facts nor predetermined any recommendations for a future report.”
The letter concludes, “We stand ready to assist any citizens with their concerns about how public funds are handled.” – Fox4KC
That takes some pretty big brass ones to tell a state auditor’s office that they have 10 days to stand down. Elected officials in Clay County are now backpedaling, stating that the law firm in question did not bring the letter before the County Commission for review and approval before it was sent, blah blah blah.
Plausible deniability – The provenance of weasels worldwide! I suspect there will be much more to this story going forward, and we’ll update as things develop.
Music Recommendation: All Them Witches from Nashville, TN. These guys aren’t breaking any particularly new ground, but they definitely ARE producing some groovy, stoned-out, blues-space-rock jams. I particularly dig https://open.spotify.com/embed/track/2EvUjCWg5zeaeKxGeOaHPh“>When God Comes Back, Heavy/Like A Witch, and Elk.Blood.Heart. Go ahead, eat an edible or three, and trip out on these spacey sounds. Tip of the hat to my cousin-in-law (I think), Jack Vogel for turning me on to these dudes!
Food Recommendation: Look, it was just recently Easter, and holidays require, nay, they DEMAND high-quality, high-calorie sugary treats. For my (considerable) money, it’s impossible to beat See’s Candies
If they were good enough for Warren Buffet to buy the entire company after trying them, they’re good enough for your broke ass. My personal favorites in the See’s lineup: Milk/Dark Bordeaux, Toffee-ettes, and Butterscotch Squares. As Amy, my lovely & talented spouse says, “They’re just little drops of Heaven.”
Until next time, keep fighting the good fight!