Governance, Risk, and Compliance in the Public Sphere

How to Help Prevent Government Corruption

Insider loans.  Phantom contracts.  Millions in tax dollars gone.

The small city of Bell, California has been at the center of one of the most notorious local government corruption cases in years, corruption that may have been impossible to hide or even carry out if the City had a proper GRC system.

According to media reports and courtroom testimony, in the course of seven years, former Bell City Manager Robert Rizzo increased his salary by ten-fold and loaned hundreds of thousands of dollars of City money to council members, friends and co-workers, all the while keeping few if any notes, let alone proper documentation.  In his time there Rizzo got a $70 million parks improvement bond passed and proceeded to siphon off more than $23 million to cover other expenses.  All of this was done in a city of less than 40,000 people and less than half the acreage of nearby Los Angeles International Airport.

For nearly a decade, the pay and benefits of the top 10 employees of the city gobbled up half of the entire city budget, illegal fines were levied on residents, contracts were simply made up, the public was denied access to information, but all the while the city continued to receive clean bills of health from its auditing firm.

Obviously, controlling illegal behavior is difficult; no matter what system is in place clever crooks will try to find a way around it to their own benefit.  But by having no controls in place at all (the city didn’t even have a policies and procedures manual and the city council didn’t care because they were in on the deal), Bell became ripe for the picking.  Rizzo and his cohorts even bragged about the situation amongst themselves, declaring that they would all “get fat” working in Bell.

So how could this situation have been prevented?  First and foremost, if the city had proper GRC systems in place it would have simply been impossible for Rizzo and his cronies to do what they did.  A system such as Brinqa’s would have automatically thrown up so many red flags, notices, and alerts that the information about the corruption simply could not have stayed hidden for long.  As the various criminal cases wind their way through the courts, employee after employee has testified to the effect that they thought everything was legal because their boss said it was okay.  GRC software would have made that statement impossible to make.

Using the Brinqa GRC Platform to document city policies would have ensured the effective communication of such policies to all relevant levels within Bell, eliminating the opportunity for employees to deny culpability.  Connecting the processes and controls (e.g. approval processes for raises and Segregation of Duties) that effect adherence to the city’s policies through Brinqa GRC Platform would have prevented, or at least red flagged and documented, violations.  Lastly, the centralized auditing and tracking of issues, reporting, and dashboards provided by Brinqa GRC Platform would have forced accountability through regular certifications internally and provided a clear picture to Bell’s auditing firm of where the city employees were illegally circumventing policy.

One often thinks of GRC solutions in the context of private industry, of having to comply, in part, with government regulations and edicts.  But as the sad situation in Bell points out, even government agencies can benefit from better governance procedures.

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