Council Hears Details of City Hall Changes Implemented in Wake of Embezzlement

The Pasadena City Council spent more than three hours during Monday night’s meeting reviewing City Hall’s progress in implementing sweeping new financial safeguards being put into place following last year’s discovery of a $6.3 million embezzlement scheme, for which three were arrested.

Mayor Terry Tomek said he and the Council would like “to reassure” the public that change was happening without delay.

“The Council is saying there’s an urgency (and) it won’t be a 3-year timeline,” the mayor said.

The elected officials learned from the city’s new finance director that four new positions are going to be created within several weeks. The hiring comes as officials and staff are rolling out measures to be able to spot corruption faster, almost a year since the city was roiled by the revelation of the financial scandal involving a city utility program.

Pasadena’s new finance director, Matthew Hawkesworth, addressed the Council towards the meeting’s finale around 10 p.m. Monday.

The Council was presented a condensed overview of consulting firm KMPG wide-ranging recommendations by City Manager Michael J. Beck and his staff.

At the core of discussion into the details of how city staff are applying changes — and could prevent future embezzlement — was hiring enough personnel.

The group of volunteers comprising the city task force that recommended specific changes as outlined by KPMG was also in attendance.

A new electronic vendor system commonly called ERP is being installed and Council is considering posting a “top 100 vendor” list on the city’s website, city leaders said.

Newly hired Internal Audit Manager Ruthe Holden said “there is a lot of reliance on the controls within the ERP system,” but in addition to that, information technology, fraud-detection and other processes have to be facilitated by competent staffers.

Holden referred to “segregation of duties” as a key tenet of the recovery and told the Council that she plans to work closely with City Attorney Michele Beal Bagneris to monitor the city’s financials.

Holden warned some of the discussion would be sensitive to personnel and as such, have to be carried out in closed Council meetings.

“This is something Michele and I will be discussing,” Holden said. “Looking into progress assessments,” she said, she saw “what needs to be dealt with.

“I am experienced doing risk assessments in a public forum but sometimes we will discuss some information in a confidential forum,” she said.

In addition to the four new jobs – in accounts payable, purchasing and special projects – the city’s new finance director Hawkesworth said he “may make more” hiring recommendations in the 2016-17 budget.

Additionally, City Manager Beck told the Council that he expected “final recommendations for insurance” to be available “in a week” and that he would look into “job classifications and their vacation time” in light of the alleged embezzlement being discovered only when the accused staff member was on vacation.

According to Beck, Pasadena was insured for up to $5 million against improprieties including embezzlement.

The Council’s public meeting began close to 7 p.m. with a quick but emotionally charged plea from the lawyer representing the mother Kendrec McDade, a young black man who was killed by Pasadena police in 2012, who asked the Council to support the public release of the Office of Independent Review report about the shooting.

The subsequent terse discussion was stopped by Mayor Tornek after the city attorney reaffirmed the city would need to wait for the issue to play out in court Tuesday to make any decisions (check for updated story on this later today).