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HomeMy WebLinkAbout2001-12-27 RMLD Oversight Task Force MinutesPt 1; i SS. RMLD Oversight Task Force Meeting iF02 JA.N - P 2: 0 December 27, 2001 The meeting convened at 6:00 p.m. in the Conference Room, 16 Lowell Street, Reading, Massachusetts. Present were Chairman George Hines, Selectman Matthew Cummings, Vice Chairman Richard McDonald, Finance Committee member Jim Francis (arrived at 6:55 p.m.), RMLD Chairman Allan Ames, RMLD member Dan Halloran, CAB member Roger Lessard, Town Manager Peter Hechenbleikne, Town Accountant Richard Foley. Also present were RMLD General Manager Len Rucker, RMLD employee Priscilla Gotwald, RMLD Board member Bill Hughes, residents Bill Brown, Fred Livingstone, Gerry MacDonald, Dennis Shaugnessy from the Lowell Sun, Joe Haggerty from the Chronicle, Nadine from the Advocate, John Sullivan and Karen Roberts from Melanson and Heath, Eric Skramstad from Price Waterhouse. Interview of Auditors Melanson and Heath - John Sullivan and Karen Roberts made a presentation to the committee. They noted that they could start within 10 days, they estimate 150 hours of work, the duration of the contract would be three months plus or minus, the hourly rate would be $40 - $145 per hour (per page 3 of their proposal) up to a total of $46,000. Anticipate that they will need to contact others outside of the Town. There is no additional charge for expenses. Melanson and Heath does auditing for other municipal light departments - Peabody, Dedham and Wakefield - and also does audits for a number of communities. Sullivan noted that is one of the issues that's being used is the issue of excessive expenses, then someone is going to need to advise the auditors as to what excessive would mean. Matt Cummings noted that he thought the use of the per diem rate times the number of people present would be reasonable. George Hines noted that as part of the travel review, if the employee was on vacation then we need to look at the time records to make sure that the time was charged as vacation. Matt Cummings noted that we needed to include air travel and tie air travel into registrations and conferences. Karen Roberts noted that they would look at double billing as a possibility. John Sullivan noted that they would also look at trips by employees and members of the Board and whether there were cash advances and any duplication. Cummings noted that we have asked the Light Department for past audits and management reports. Dick McDonald noted that we need to look at the policies and see whether policies were followed. We also need to look at petty cash, and time records. Allan Ames asked what kind of audits there are and Sullivan noted there are standard audits, forensic audits, management audits and specific audits. Dick McDonald noted that 450 hours seems high, and Sullivan noted that they feel that's the maximum hours. They asked whether they are going to get full cooperation, in which case it is less expensive to do these kinds of forensic audits. He did note that these audits do take a lot of would have full cooperation. Ames noted that we need to have more discussion on this matter. RMLD Oversight Task Force Meeting - December 27, 2001 -page 2 He feels that the mission statement is problematic. If the mission statement stands as proposed then there may not be full cooperation. Mission Statement The Task Force reviewed the Dick McDonald revised draft of the mission statement, and made some modifications. Interview of Auditor Price Waterhouse and Cooper - Eric Skramstad, a partner at Price Waterhouse Coopers made a presentation to the Task Force. He outlined the firms extensive work in the field - they have a group of 40 people working in the investigative practices section in the northeast located in Boston. He asked the Task Force a number of questions including what the scope of the audit would be, how they view the Inspector General's report. Hines noted that the Inspector General's report has raised questions and issues. They want to get answers to the issues raised. Included in this process would be direct responses from the Reading Municipal Light Department. Skramstad noted that the proposed scope which would go through calendar year 2001 is 30% greater than what the Inspector General included in their investigation. He would not want to redo the Inspector General's work and would look forward to cooperation with the Inspector General's office. Richard McDonald noted that one major issue is whether policies and procedures of the Light Department were followed. Hines noted that we don't necessarily want to repeat everything that the Inspector General did, but may want to broaden it to include all travel and entertainment, credit card and particularly compare it with payroll and time records. Matt Cummings noted that we don't want to reinvent what the Inspector General has done, but we want to look at travel, entertainment and credit card use broadly. Skramstad noted that he doubted that we would find anything new that was different from the Inspector General's report. He feels the Task Force's duty is to understand what was spent, whether policies were followed, and what to do to correct situations where the policies were not followed. The bottom line is that the community needs to learn how the process broke down and the corrective actions could be: reimbursement of funds inappropriately spent, personnel actions, insurance claims, or changes in policies. Hines noted that the outcomes will be dependent on the audit, but the range of options are exactly why the Task Force is made up in the manner that it is. Skranstad noted that their rate is $225 plus or minus per hour. He feels that this assignment would require at least 100 hours. Hines noted that they would want progress reports. Skranstad asked whether, these records are automated, and Len Rucker noted that they are increasingly automated particularly since 1999. Skranstad felt that given the scope of what he understands the Task Force is looking for, this would require more like 200 - 300 hours of work. Hines asked about expertise with municipal government and light departments. Skranstad noted that-this isa generalmanagement_issue,_and_.that-particulan_expertise_in__light_departments_would._. not be required. Skranstad noted that the audit should take less than two months, depending on RMLD Oversight Task Force Meeting - December 27, 2001 - page 3 the information. They will want full cooperation from the Inspector General's office, and they will want the information from the General Manager of the Light Department ASAP. Selection of Auditor Members of the Task Force reviewed the results of the interviews. They felt that both were qualified. The preference was for Melanson and Heath. On motion by Cummings seconded by McDonald the Task Force voted to recommend the firm of Melanson and Heath to perform the forensic audit of the Reading Municipal Light Department. The Task Force got involved in a discussion on how payment was going to be done, and different suggestions were made. The Town Manager will try to work this out before the next Task Force meeting. The vote of the motion was 7-0-0 and the Task Force recommended Melanson and Heath. The Committee went back to the mission statement and on motion by Francis seconded by Cummings the Task Force adopted the following mission statement on a vote of 5-2-0 with Ames and Halloran opposed. RMLD Oversight Task Force Mission Statement "The Reading Municipal Light Department (RMLD) Oversight Task Force (ROTF) will examine the Inspector General's (IG) report with the assistance of a professional forensic auditor. The Task Force will seek the complete cooperation of the RMLD and the Board of Commissioners to determine what, if any inappropriate or illegal use of public resources may have taken place or may still exist; and whether formal RMLD policy was violated. ROTF will make recommendations on what specific actions (short-term and/or long-term measures) should be instituted to remedy past inappropriate expenditures and to prevent future occurrences of any such acts or practices. ROTF may also seek the assistance of local or state agencies in investigating the IG's report and future audit results and in establishing recommendations for potential remedies." The Town Manager was directed to post a meeting for next week for all bodies that may need to be involved in the issue of funding the audit. The Town Manager reviewed the material that was received to date. To date we have received the organization chart, the General Manager's contract (which is the only employment contract) and a copy of the policies. The Task Force asked to have copies of all of this material to them along with an agenda. Additional information was requested of the Light Department. The Chairman of the Light Board felt that we should have this within one week, and Mr. Rucker indicated that he has four people working on this material full time, but it may take longer than one week. _The- Task__Force -discussed-the -funding- of -the -audit- and--the-oversight. -Selectman Matthew- - - - Cummings expressed preference that the oversight be within the municipal government, and that RMLD Oversight Task Force Meeting - December 27, 2001 -12ag_e4 the funding be committed to the municipal government rather than bills being paid by the Reading Municipal Light Department Approval of Minutes On motion by Ames seconded by McDonald, the Task Force voted to approve the minutes of the meeting of December 19, 2001 by a vote of 7-0-0. Jim Francis went back to the issue of whether or not there would be complete cooperation from the Light Department. Allan Ames noted that he believes the Commission members scope of actions is restricted by law and does not believe that he can commit to it. Rucker noted that the Light Department will not withhold any information and that the Light Department will assist fully in this process. There will be no interference by the General Manager or by staff. Chairman Hines noted that he believed these statements indicate that there will be complete cooperation. Public Comment Len Rucker asked if the auditor and the Task Force will review the Town's obligation to review bills. There were no objections to that from the Task Force. Gerry MacDonald noted that he would like to recommend that FinCom pay for the audit and figure out how to bill the Light Department. Dick McDonald felt that FinCom would be willing to do that if necessary. Bill Brown agreed with MacDonald's comments. He also felt a nonresident should not be allowed to be on the Task Force. The Task Force agreed to meet on January 3, 2002 at 7:30 p.m. On motion by Cummings seconded by vote of 7-0-0. Wct submitted, Secretary Allan Ames the Task Force adjourned at 8:10 p.m. on a Materials Attached At this meeting the following materials were copied to members of the Task Force: ♦ Draft Mission Statement by George Hines ♦ Draft Mission Statement by Richard McDonald ♦ Letter of March 22, 2001 from the Attorney General's Office to Allan Posner of Rubin and Rudman relative to cooperation ♦ Letter from Daniel O'Neil, Inspector General's Office to the Board of Commissioners dated September 26, 2000 - - ♦--Memo and attachmentto Len Rinker from Bob Fournier-re: -oducationtravel expen-- analysis Reading Municipal Light Department RIVILD OVERSIG"U'll" TASK FORCE FISSION STATEMENT The RMLD Oversight Task Force (ROTF) shrill examine the Inspector General's (IG) report with the assistance of a professional forensic auditor and seek the complete cooperation of the F.MLD and the Board of Commissioners, to determine; what if any inappropriate or illegal use of public resources may have taken place or may still exist, whether formal RMLD policy was violated, and make recommendations on what specific actions should be instituted to remedy past and prevent future occurrences of any such acts or practices to the responsible individual or body. These recommendations may include immediate short-terra measures and any long-term measures, which will have the effect of correcting past problems and preventing future problems. The ROTE may also seek the assistance of any local or state agency in investigating the details of the issues cited in the IG's report or any other issues raised as a result of this inquiry and in establishing recommendations for potential remedies. Draft 12/27/01 REM RMLD OVERSIGHT TASK FORCE Mission Statement The Reading Municipal Light Department (RM LD) Oversight Task Force (ROTF) will examine the Inspector General's (IG) report with the assistance of a professional forensic auditor. The task foxce will seek the complete cooperation of RMLD and the Board of Commissioners to determine what, tdN^k\P-A if any inappropriate or illegal use of public resources taken place or may still exist.' ROTF will make recommendations on what specific actions (short-term and/or long-term measures) should be instituted to remedy past inappropriate expenditures and to prevent future occurrences of any such acts or practices. ROTF may also seek the assistance of local or state agencies in investigating the IG's report and future audit results and in establishing recommendations for potential remedies. L PC\0 ~C _ommonfueaft4 of ~fassa.rhusetts (Office of the ~Jnspertnr (general ROBERT A. CERASOLI INSPECTOR GENERAL March 22, 2001 JOHN W MCCORMACK STATE OFFICE BUILDING ROOM 1311 TEL. X617) 727.9140 Fax -6171723.2334 Alan K. Posner Rubin and Rudman, LLP Counselors at Law 50 Rowes Wharf Boston, MA 02110-3319 Dear Mr. Posner: MAILING ADDRESS STATE HOUSE STATION PO BOX 270 BOSTON MA 02133 In a telephone conversation today you informed me that Leonard Rucker, the General Manager of the Reading Municipal Light Department (RMLD), a public body, has refused this Office's request to interview him regarding RMLD expenditures. As you know, this Office is currently conducting a review, pursuant to M.G.L. c. 12A, of RMLD expenditures. It is this Office's view that Mr. Rucker's refusal to cooperate with this Office's review is inconsistent with his duties as a public official. I direct your attention to M.G.L. c.12 A, §9, which states that: [The Inspector General] shall have direct and prompt access to the head of any public body when necessary for any purpose pertaining to the performance of his duties and responsibilities under this chapter. As an individual, Mr. Rucker has the right to refuse to voluntarily cooperate with this Office's' review. However, it is this Office's understanding that you do not represent Mr. Rucker as an individual, but rather that you represent the RMLD in this matter. I therefore recommend that you advise Mr. Rucker to seek independent legal counsel to represent him as an individual, since it appears likely that his personal interests in this matter are not consistent with his duties as a public official. Sincerely, Janet Werkman First Assistant Inspector General r Leaal Attalrs Alan K. Posner Rubin and Rudman, LLP Counselors at Law 50 Rowes Wharf Boston, MA 02110-3319 Dear Mr. Posner: i i March 22, 2001 / In a telephone conversation today you informed me that Leonard Rucker, the General Manager of the Reading Municipal Light Department (RMLD), a public body, has refused this Office's request to interview him regarding RMLD expenditures. As you know, this Office is currently conducting a review, pursuant to M.G.L. c. 12A, of RMLD expenditures. It is this Office's view that Mr. Rucker's refusal to cooperate with this Office's review is inconsistent with his duties as a public official. I direct your attention to M.G.L. c.12 A, §9, which states that: [The Inspector General] shall have direct and prompt access to the head of any public body when necessary for any purpose pertaining to the performance of his duties and responsibilities under this chapter. As an individual, Mr. Rucker has the right to refuse to voluntarily cooperate with this Office's review. However, it is this Office's understanding that you do not represent Mr. Rucker as an individual, but rather that you represent the RiV1LD in this matter. I therefore recommend that you advise Mr. Rucker to seek independent legal counsel to represent him as an individual, since it appears likely that his personal interests in this matter are not consistent with his duties as a public official. Sincerely, Janet Werkman First Assistant Inspector General `c hr QT'ummnnf"ea1t4 of 4Ea5sttrhusetts Office of the ~Jnspertor General ROBERT A. CERASOLI INSPECTOR GENERAL September 26, 2000 Board of Commissioners Reading Municipal Light Department 230 Ash Street P.O. 150 Reading, MA 01867-3623 Dear Gentlemen: JOHN W. MCCORMACK STATE OFFICE BUILDING ROOM 1311 TEL: (617) 727-9140 FAX: (617) 723.2334 MAILING ADDRESS: STATE HOUSE STATION P.O. BOX 270 BOSTON, MA 021 33 I am writing on behalf of the Inspector General, pursuant to M.G.L. c. 12A, section 9, to request your cooperation and assistance in providing this Office with certain documents in the care, custody, or control of the Reading Municipal Light Department (RMLD). Specifically, I am requesting information relating to credit card transactions and reimbursable expenses incurred by RMLD employees. In addition, I am requesting all information relating to the RMLD's affiliations with Energy New England (ENE) and Interscience Consultants, Inc. (ICI). The following definition shall apply to the item described below: Document: shall mean identical copies and all drafts of any book, pamphlet, letter or other form of correspondence, telegram, telex, cable, report, study, memorandum, note, diary entry, telephone message, facsimile communication, electronic mail communication, check (front and back), wire transfer, payment, voucher, receipt, form, chart, drawing; agreement, contract, summary, financial record, or other verbal, numerical or pictorial photograph and/or recording, whether printed, typed, handwritten, drawn, recorded on film, magnetic tape or within any data processing system or recorded by any other means. 3 l 1. Please provide all documents pertaining to RMLD credit card(s) usage from January 1998 to the present, including but not limited to: a. Names of all the RMLD employees who have been authorized to use RMLD issued credit cards; b. All RIVILD policies and procedures relating to credit card use; c. All monthly statements issued to the RMLD for all credit cards; d. All payment voucher slips; e. -All records submitted by em loyees to document expenses; and f. All records of weekly and monthly reim~uisa e expense statements, forms and payment voucher slips submitted on behalf of all RIVMLD erriptoyees Unless otherwise specified, please provide the following documents for the period January 1997 through the present: 2. All documents pertaining to the kNILD's affiliations with ENE or ICI, including but not limited to: a. All solicitations, advertisements, requests for proposals and invitations for bids; b. All responses to the above solicitations including proposals, bids, applications, resumes; c. All records of the RMLD's evaluation process; and d. All contracts and any modifications thereto. If you have withheld any information or documents for any reason, please describe the documents, the item number to which the information or documents refer, and the reason for not providing the information or documents. If any document sought has been destroyed, and no copy exists, identify the subject and, if applicable, author of the document, the date of destruction, the person responsible for ordering said destruction, and the purpose for said destruction. Please provide the requested information and documents on or before 3:00 p.m. on October 6, 2000 to the Office of the Inspector General. Thank you for your assistance. Please contact me with any questions you may-have. Sincerely. 141-L Daniel O'Neil Deputy.Chief Criminal Investigations Division Dt: December 17, 2001 To: Len Rucker i' ~t Fr: Bob Fournier r" S.j: Education and Travel Expense Analysis Per your request, attached is a four year actual versus budget comparison for education and travel expenses. The expenses captured in this account include tuition reimbursement, seminar fees, travel, meals, lodging, parking fees, car rentals and any miscellaneous expenses related to education and travel. Budgeted amounts are usually calculated at $2,500.00 per non-union employee per year with additional allowances made for committee appointments. Some cost centers will pick up company wide training in their budget amounts (Human Resources and Mgmt Info Systems). Others will have employees enrolled in a special job requirement training (Station Technicians). The number of employees in each cost center will also affect the budgeted amounts. N .y a N C d C r O 0 0. 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