I wasn't talking about the disparity study. I was actually talking about the new strategy at MBEC and whether it is actually based upon new practices, whether the best 163 Bill 040255 - 4/13/04 practices have already been illustrated, in terms of the Baltimore model, and already incorporated in legislation passed by this Council.
Will financial records be prepared tomorrow to address that?
Thank you, Councilman. I find it said that we've been having this debate about the head of MBEC, when it comes down to people not working. And certainly, if the gentleman who came forward and testified last -- I guess it was last week -- we lose track of time -- were arguing or pleading for inclusion, saying they weren't included in job training. They didn't need to be 164 Bill 040255 - 4/13/04 trained. They're already small businessmen. But that this they still were not included. So, if we're having a 2.2 percent level of inclusion, the bottom line is that the core of it is people need jobs; and that's where we are. Councilman Cohen.
Madam Chair, would it be possible -- I'm raising this with the witness -- to have answered by the Mayor or the Mayor's Office a response to a questionnaire such as this: Who pays for the apprenticeship program? Give us the figures over the last ten years of the members of minority, including women, who were accepted into the apprenticeship program. How many had a part originally? How many were accepted? How many went successfully from the apprenticeship program into union membership? And of those that got into union 165 Bill 040255 - 4/13/04 membership, how many of them continue today to be in union membership? And what was their record of employment at that time while they had union membership? Could we get something like that. That's the scorecard. That tells us numbers of how many people, different people, not the same person getting a number of jobs. Because isn't it a fact that when they compute reports now, they list the number of hours put in, say, by minority workers? But we don't know how spread that minority group is. It could be ten workers occupying the level of jobs, instead of it being dispersed among a hundred or a thousand. Now, would it be possible, I ask of the witness, to whom I have a high regard in this area, because I know of her personal commitment --
She worked in Council on them. Because what's important is what the result is, both for the entrepreneurial end and for the worker end. How many actual additional hours of time have minorities succeeded in getting jobs for Philadelphians?
I understand what the request is. I'll have to see if we can get that for you.
Thank you, Councilman. Now we're ready for the Inspector General. We'll ask you to identify yourself for the record, and then we will ask Councilman Nutter to pose his questions, if that is okay. All right, 167 Bill 040255 - 4/13/04 Councilman?
Thank you, Madam Chair. Just for continuity purposes, Miss Wilkerson, one last question in the last area. And then I have questions for the Inspector General. Wasn't there also a survey or an analysis of current MBEC practices or activities conducted sometime of last year? Are you familiar with that outside company? I think it was done by an outside company.
Rather than speculate on whether it's a '98 study, a more recent study, I'll...
Yeah. I'm 168 Bill 040255 - 4/13/04 talking about something I believe occurred just last year.
Yeah. I thought there was something more recent, too. But I'll make sure Miss Davis is prepared to respond to that.
I don't know that that is a disparity study, as opposed to an analysis of what's going on with the program, and perspectives of people who might have some insight about the program. I don't think this is a disparity study.
Were you anticipating providing testimony today for the budget hearings?
You were not. 169 Bill 040255 - 4/13/04 Okay. But your department is anticipating or requesting additional funding for three new positions; is that correct?
Could you bring that microphone a little closer? (Complies with request.)
Yes, sir. In this fiscal year we're requesting three additional positions.
I think you're requesting for the next fiscal year, aren't you?
Well, we're in an FY '05 budget hearing at the moment. so how are you getting the funding for the current fiscal year? Is that in a transfer somewhere?
I don't know where the funding is coming from, but I'm in the process of hiring three -- for three 170 Bill 040255 - 4/13/04 positions for this fiscal year that we're in now. COUNCIMLAN NUTTER: Madam Chief of Staff, could you tell us how the Inspector General is hiring three new people in the current fiscal year?
We're identifying people -- I think it will actually start in FY '05.
What do you mean; hired in FY '05 or will they be hired in FY '04 to start in FY '05?
I thought your testimony was that we were... This... The FY '05 budget was anticipating an increase to accommodate three positions.
This will increase the total number of people in the office to six. 171 Bill 040255 - 4/13/04
No. Three current -- There are three currently employed and three new in FY '05.
All right. Well, why don't we... You know, some big numbers I don't have a problem with. It's the little numbers that really kind of trip me up. How many people do you have in your office today?
There are a total of five. There are three: Myself, the deputy, and an administrative assistant. We are supplemented by one individual who is on detail from the prison system, internal affairs; and one part-time special investigator, a contract employee.
Can I clarify something? I think I've created confusion 172 Bill 040255 - 4/13/04 about the number of slots.
Yeah. There are... The proposal is an extra $300,000, approximately, for the Office of the Inspector General. There would be three internal auditors, two...
Yeah. 21, and would be the staffing 15 for the Office of the Inspector General. 16 And that is... There are currently... 17
Well, for those 18 items we're showing a total of what appears 19 to be six new positions. 20
That's right. And 21 those are new positions that would be 22 funded in FY '05 for the first time. There 23 is currently the Inspector General, a deputy, and an executive assistant position. 173 Bill 040255 - 4/13/04
Then I believe it's one of the positions in Number 1 is...
Right, is support staff in the Office of the Inspector General.
Okay. I think the gentleman indicated that he had... Presently there are a total of six of you? Yourself and five other people?
Yourself and four others. All right. So we've accounted for you, a deputy, and one administrative assistant. Where are the other two people?
One is a full-time 174 Bill 040255 - 4/13/04 investigator who was on loan to my office from the prison system, internal affairs division. And the fifth individual is a part-time contract investigator.
That's one of the consultant contracts in the Mayor's Office.
Give me one of these jobs. And so, then you plan to hire one clerical assistant, two investigators, and three internal auditors.
Is that correct? All to start in FY '05. 175 Bill 040255 - 4/13/04
Mr. Gill, looks like you didn't maybe have much opportunity to spend some time with either the Chief of Staff or the Budget Director for budget hearings?
All right. Well, I feel confident now. So, what made you decide to ask for six new people?
It is based upon the mission of the Office of the Inspector General, as outlined in the executive order which created the office.
How long have 176 Bill 040255 - 4/13/04 you been on the job?
months, since January 4 of '03. 5 In that executive order it states 6 that the office has the responsibility to 7 conduct audits and investigations. 8 However, the office was never staffed for 9 auditing. 10
Okay. Could you 11 provide to us, through the Chair, a copy of 12 that executive order? 13
Okay. And what 15 were you doing before you came to the City as Inspector General?
For the immediately preceding three and a half years, I was the Director of Public Safety for the City of Beverly, New Jersey. And preceding that, I spent 28 years with the United States Treasury Department. The last job I held was Regional Inspector General.
Okay. And tell 177 Bill 040255 - 4/13/04 us about the... not with too much detail, but the activities of the office over the last months. 5
Well, we have conducted a 6 number of investigations. 7 Currently we have approximately 48 8 active investigations within the control of 9 my office. 10 We have conducted a number of audits 11 using outside consulting firms. The 12 sources of the audits were identified 13 through our investigations. The purpose of 14 the audits -- 15
The objective of the audits that we conducted was identified and defined by ongoing administrative and criminal investigations being conducted by my office. The purpose of those audits were both to provide economy and efficiency and introduce an internal control system within certain functions of the City government. 178 Bill 040255 - 4/13/04
What's the difference between an audit and an investigation?
An investigation usually has a specific target. It is based upon an allegation of either administrative misconduct or of a criminal. An audit is, especially an internal audit, is designed to identify the causes that allowed the criminal activity to occur, and to provide management with the necessary information to correct those causes so the activity is not a recurring event.
I will assume that your jurisdiction, with regard to criminal activity, must have certain parameters or... I mean, you could only go so far with the criminal investigation, I'm going to assume.
Yes, sir, that is correct. We have at our disposal a group of detectives called the Internal Investigations Unit of the Philadelphia 179 Bill 040255 - 4/13/04 Police Department. And they conduct criminal inquiries under my supervision, and we also have other avenues to conduct criminal investigations.
What is your level of contact with outside law enforcement agencies?
Extensive. We do a considerable amount of work and liaison with other agencies.
Okay. And when did you decide to increase your staff and why?
Well, almost from the outset I recognized the fact that we were not fulfilling the mission that was required by the creation of the office. Secondarily, after conducting several investigations, we identified numerous areas where the City needed improvement in its internal control structures, both in the handling of funds and in the processing of information.
Again, without 180 Bill 040255 - 4/13/04 getting into any of the deeper details, what exactly does that mean? What internal control functions? What are you talking about?
Well, there are... It is a system whereby management institutes certain reviews in a systematic way, to ensure that funds are not being misappropriated, embezzled, that the processing of information is done in its most efficient way.
Okay. And... So you got here in January of '03 at a time when we would have been starting to take up the FY '04 budget. Somewhere in the course of the year you decided or realized that you needed more staff?
Yes, sir. It was an ongoing process, but it was an increase in the level -- in the number of investigations that we were conducting and the number of audits that were resulting from those investigations.
Have you been 181 Bill 040255 - 4/13/04 involved in any of the... as it's been published in the paper a fair amount, any of the current probe activities?
Since Mr. Gill came to the City folk have found his advice and services very valuable. And I think that find -- you know, a number of people find themselves going to him and saying, look, we think we have, you know, a problem here. Can you help us; can you take a look at this?
And that... that there is a, you know, a real demand for his support out of his office. I think he also played a real critical role with the 21st Century Forum in helping the City take a look at developing an ethics policy. It's something we had started before the forum 182 Bill 040255 - 4/13/04 even convened, but it's a project that was initiated under Mr. Gill's leadership. You know, because he has such an extensive background out of the Federal system, it's been real helpful having his insight and expertise within the City.
All right. And I do appreciate that. Just, you know, regret that we have not had the opportunity to meet before, not that I really have much to talk to you about. But so, what are you going to do differently now than before?
Well, we've already instituted a program. As I mentioned, we have hired some outside firms to assist us in conducting ongoing audits. But on a cost benefit basis, it is much more economical to hire an internal staff to conduct these types of inquiries. And we are linking our investigative efforts towards identifying areas where the City can improve the control, as I said 183 Bill 040255 - 4/13/04 before, of its funding, the daily handling of monies, and information and equipment even.
Are you able to provide, without maybe something from the past or something that's already become public -- Are you able to provide any examples of the kind of work that you've been involved in, and I guess, what the result was?
Well, my office conducted the investigation, which was recently reported in the newspaper, involving the embezzlement of significant amounts of money from the Cashier's Office. There was an embezzlement that was ongoing for several years, and it was a total breakdown in the internal control procedures.
From the head cashier on the plaza at MSB. We investigated that individual and arrested, and she was 184 Bill 040255 - 4/13/04 recently prosecuted. It is one discrete incident to investigate an individual and have that individual prosecuted.
Far more important, in my mind, for the City and the protection of its assets, to analyze specifically how that person was allowed to continue that. And we were able to provide some feedback to the responsible managers, to put in place processes that will not -- that will hinder that from occurring again.
Right. And what responsibility -- And maybe this is laid out in the executive order -- What responsibility do you have with regard to either the Mayor, representing the Executive Branch or to the City Council or any other components of the government?
Under executive order, which was a Mayoral executive order, I work directly for the Mayor.
All right. So you report to the Mayor and you serve at the pleasure of the Mayor?
Two last questions. Tell me a little bit about any outreach efforts that you have. I mean, how would either public employees or citizens know to call you or to let you know of anything that they observe or that might be possibly violative of the law. How do people know that the office exists?
Well, we are on the City's web site clearly identified. My predecessors have conducted campaigns, brochures... poster campaigns. We have not done that while I have been here, simply because we have been overwhelmed with the amount of work that we needed to respond to. 186 Bill 040255 - 4/13/04 However, we do receive a large number of citizen complaints through e-mails, and telephone, and in person.
Is there a difference between an internal audit and a forensic audit?
Yes, sir, there is a considerable difference between those two.
Well, an internal audit may focus on policy, procedure, internal controls. A forensic audit is much more directed at following the money, if you will, insuring that appropriate accounting procedures have been followed, and certifying that those procedures have been followed correctly.
Is yours the kind of position that -- and I'm not -- hopefully, and obviously, been getting along well with the Mayor. So this has nothing to do with either yourself individually or Mayor Street in particular, but I'm now talking about the position. 187 Bill 040255 - 4/13/04 Is this the type of position -- and given some of the things that maybe that have happened over the last years or so, 5 obviously created in 1984 under then Mayor 6 Goode. Is this the kind of position that 7 should have any enhanced level of both 8 independence and protection, given the 9 nature of the work that you do? 10
The recommendation of the 11 Ethics Committee was that the position be 12 altered slightly, and that the incumbent 13 should be appointed for a five-year term, 14 to be removed only for cause. That 15 enhances greatly the public perception of 16 independence which is one of the hallmarks 17 of the position. 18
Okay. Okay. Thank you. I don't have any more questions for the Inspector General. 188 Bill 040255 - 4/13/04 I do have other questions, but I know I went way over my time. Thank you, Madam Chair.
Thank you very much. We will recess just a few moments to allow the stenographer to step out a moment. (Brief recess.)
I think, Madam Chair, I had finished for the moment with Mr. Gill. I had other questions, but I thought another member started to ask questions.
Thank you, Councilman. Councilman Goode. COUNCIMLAN GOODE: Thank you, Madam Chair.
Mr. Gill, good afternoon. I think you stated in response to questioning that you were hiring new six employees because it's the smartest thing to do to build in-house capacity than to 189 Bill 040255 - 4/13/04 use contractors; is that correct?
Well, specifically, the example you gave of the embezzlement at the Cashier's Office. How was that investigated? Was that done by an employee or by a contractor?
It was initiated by our office. And the actual criminal aspects of that investigation was conducted by the Internal Investigations Unit of the Philadelphia Police Department.
Okay. In terms of contracts that you have now, can you tell me examples of how many contracts you have, other contracts, when those contracts began and where they end? In other words, I may buy the argument that it's better to build in-house capacity to use contractors, but there may be an issue of whether we're doing one versus the other or whether we're actually doing both for some period of time. And 190 Bill 040255 - 4/13/04 over the next fiscal year are we, in fact, doing both, in terms of the terms of your contracts?
Yes, sir. I can address that. Currently I have, as I mentioned earlier, one part-time investigator as a contract employee. Regarding the auditing contracts, they were for specific events for specific periods of time. And to date, we have had one completed and two currently under way. It is not my intention to use both an internal audit staff, employees of the City, and to use outside contracting expertise at the same time, auditing expertise at the same time.
But My question is, what overlap is there? What savings are actually achieved over the next year? Because I believe Miss Wilkerson testified that the purpose of building in-house capacity would result in the reduction of, I believe, $250,000 in contracting. 191 Bill 040255 - 4/13/04 So is there actually reduction over the next year, in terms of the in-house capacity versus the contracts or is there actual overlap that shows no actual savings next year?
It is my intention, that if we are successful in our current recruiting, and we are able to attract three experienced internal auditors, that we will not use any funding in the next fiscal year to do outside -- hire outside auditing.
But you are budgeting for both contractors and new employees.
This is a transition period. I cannot guarantee that we are going to be able to attract the types of individuals. We are in the beginning stages right now of recruiting.
So our approval of your department's budget may actually not result in a savings next year but result in both contracting and the hiring 192 Bill 040255 - 4/13/04 of six additional employees.
I would say that I can't guarantee it, but it is not our intention to do both at the same time.
It's, you know, our intention not to do both at the same time. To the extent that we -- you know, we get the three auditors on and the other support people on staff, and we won't need to dip into the contracting money to the extent we get one auditor and have to contract --
Let me ask a more specific question and go back to the original question. Do you have any contracts that run into the next fiscal year?
We have one that is literally starting, as we speak, with an outside consulting firm. And the target for completion is the end of this fiscal year. We are targeting --
Do you have any contracts that will run into... definitely one and two next year? 193 Bill 040255 - 4/13/04
No. With exception of the one that I just mentioned, there may be some overage beyond June 30th.
But you're not obligated under your current contract that it goes past June 30th.
Do you have any arrangements, in terms of who handles these that go into next year?
You're welcome. Councilman Nutter -- Councilman Rizzo, and then Councilman Nutter.
Thank you. Mr. Gill, I understand that since you have arrived, that you're not just strictly investigating based on tips that you may have receive or areas that there are suggestions that there are problems. Would you explain -- I understand 194 Bill 040255 - 4/13/04 that your office is proactive also.
Yes. We have instituted extensive liaison with other offices that are engaged in similar activities. There are other Inspectors Generals in the City, including on the Federal level the Housing Inspector General. Many times their activities overlap our activities. And we are constantly exchanging information, and we are conducting joint investigations with many agencies, including some Federal Inspectors General.
So if you know of areas that have -- that are potentially loose, that there is the possibility of a problem, do Inspector Generals and the people who are in your business, do you look for areas that... With 20 years of Federal experience, local law enforcement, are there areas that you say, just to make sure we take a look at that?
Absolutely. One of the prime examples is the control of funds, 195 Bill 040255 - 4/13/04 either cash or checks, or receipts. Additionally, we have an active, a proactive program, called the Integrity Officer Program, where we have senior individuals in each of the City agencies who act as the eyes and ears of our office, who both provide us information and conduct inquiries on our behalf. It leverages the number of individuals in our office. There are approximately 30 integrity officers. They also provide us information about what is ongoing in particular functions within the City that may cause us to conduct an investigation. They have received training from us on an annual basis, and they review their programs and provide us information.
Thank you, Councilman. Councilman Nutter. 196 Bill 040255 - 4/13/04
Thank you, Madam Chair. I guess lastly for Mr. Gill, can you tell us the difference between an Office of Inspector General audit and any of the audits conducted by the City Controller? There seems like there might be some similarity or possible overlap between what the two offices do.
Yes, sir. At first blush, there would be a distinct similarity. However, what we have limited our auditing to is reaction to investigative information. We have not at this point done any proactive auditing which principally it's my understanding of what the Controller does. He has program audits, systematic audits, areas which he reviews every year. We have directed our reference towards addressing issues that have been uncovered as a result of a criminal investigation or a serious misconduct investigation. 197 Bill 040255 - 4/13/04
With the additional staff, do you anticipate doing a more proactive type investigation or... I mean, I got the impression from your statement that unless someone reports something to you, the office would not necessarily be looking for anything.
Well, I'm sorry. Maybe I wasn't clear in that. In terms of auditing, with three people on staff it would be almost impossible for us to do proactive activities. Auditing is an extremely labor intensive issue.
My long-range goal is to continue to leverage our investigations, to provide the auditors leads, and then ultimately use there reports for management purposes.
Do you produce any form of annual report? And if you do, who does it go to?
We produce a monthly 198 Bill 040255 - 4/13/04 statistical report. And at the end of the year those monthly reports are rolled into an annual report. And since I report to the Mayor, it goes to the Mayor's Office.
Does it only go to the Mayor's Office because of the dictates of the executive order or has that just been the past practice?
Well, there are a number of issues involved. First of all, most of the information that my office comes in contact with is sensitive information. There was a ruling by the Law Department that any work product from the Office of the Inspector General is non-discloseable outside the chain of management command that would use it to take action.
Well, but you've also testified here today that you have 48 ongoing investigations. I don't know how many you actually started and completed last year. I mean, I understand that certain 199 Bill 040255 - 4/13/04 information should not be out in the public. On the other hand, is there any way for us either here in Council or the general public to have some level of... I don't want to say evaluation, but certainly some sense, if you will, of just what the office is doing, how much activity there was in the past year, what have the trends been over the past couple of years. Are we having more investigations because, you know, people are doing more things? Are we having more investigations because the office is better staffed and has more opportunity to go after certain things or do you have fewer investigations which is, you know, not a bad thing because, you know, the message is getting out? I mean, how do we... I'm not questioning whether you come to work every day. I assume you do. But how do we know on a regular basis, you know, basically what's going on? 200 Bill 040255 - 4/13/04
Well, sir, my initial reaction to that is is I would be more than happy to share the statistical report.
I would like to just verify that it's acceptable through the Law Department, through the people who issued the original...
If you can get an answer to that and forward it to the Chair, I would greatly appreciate it.