Ensuring public trust at the municipal level: inspectors general enter the mix.

• Author: Salkin, Patricia E.

1. INTRODUCTION

   Inspectors General represent one more strategy in a significant national effort to gain greater oversight and accountability over governmental agencies and operations. Although federal, state, and local government officials are subject to applicable codes of ethical conduct and are under the jurisdiction of ethics enforcement agencies created pursuant to these laws, ethics oversight agencies are limited in the breadth and scope of covered activities. Ethics enforcement agencies may, following investigations and hearings, impose civil penalties on those found to have violated ethics laws; and ethics agencies may refer appropriate matters to attorneys general or district attorney offices for further inquiries into criminal wrongdoing. The public trust, however, also encompasses notions of protecting the public fisc, meaning avoiding fraud, waste, and abuse of precious government dollars. (1) The ability to audit governmental operations typically rests with the Government Accountability Office at the federal level (2) and various state level comptroller offices that may have dual jurisdiction to audit agencies and programs at both the state and local levels. However, the use of an auditor alone may be insufficient to fully guard the public's interest, as this authority is typically limited to financial and performance audits. In contrast, an office of inspector general combines the duty of an auditor to conduct financial and performance audits with the authority to further investigate fraud, waste, and misuse of government assets. (3)

   The reported lack of ethical conduct at the municipal level in jurisdictions across the country is appalling. (4) Although, as one prominent municipal ethicist points out, most municipal officials are basically good and honest people trying to do the right thing; (5) the reality is that hardly a day goes by without media attention spotlighting allegations of abuse of the public trust by elected and appointed local government officials. Therefore, it is not surprising that the public has sought and demanded additional methods of monitoring the conduct of public officials. (6) Part II begins with a very brief historical overview of the emergence of the inspector general concept in Europe and its adoption in the United States at the federal and state levels. The article continues in Part III with a focused examination of the reasons behind the creation of inspectors general at the municipal level and the various models or forms that have emerged in the establishment, jurisdiction, and operation of these offices, as well as budgetary issues. Part IV examines the interplay between inspectors general, ethics commissions, and law enforcement agencies. Part V considers the cost-benefit analysis of the municipal inspector general, exploring whether the expense can be justified by the savings and other associated benefits. Part VI concludes with a recommendation that, in the current era of scarce fiscal resources, especially at the local level, municipalities should consider whether the establishment of an inspector general office can assist in not only furthering a commitment to ethical government, but in identifying cost-savings for the locality.

2. HISTORICAL PERSPECTIVE

   The inspector general concept emerged during the reign of King Louis XIV in France. (7) The inspector general position was established within the military, being charged with inspecting the army, examining records and books, and removing those who were no longer fit to serve. (8) The French inspectors general would evaluate the army and report directly to the King once a month. (9) This inspector general function spread throughout European armies, and eventually to the United States. (10)

   The historical underpinnings of the American inspector general were fraught with issues of ineffectiveness and quick turnover. (11) These first inspectors general had limited roles, (12) and were soon replaced in December 1777 by two inspectors general with jurisdiction over the Army as a whole, having the responsibility to review and instruct the troops, and to review and report on numerous topics including inventory, rations, and money spent. (13) Under this broad job description, the first individual to actually take the post was the Prussian immigrant Friedrich W. A. von Steuben, more commonly known as Baron von Steuben. (14)

   From this advancement in military accountability emerged the use of inspectors general on the civilian side of the American government. (15) The modern inspector general model can be traced to the United States Department of Agriculture ("U.S.D.A.") scandal in the 1960's: the Billy Sol Estes controversy. (16) This controversy involved Billy Sol Estes, an American financier and Ponzi scheme architect, (17) who "created a financial empire by deceiving various Department of Agriculture divisions and investigative organizations with respect to such things as grain storage, nonexistent fertilizer tanks, and cotton allotments." (18) A congressional investigation led by Representative L.H. Fountain led to the finding that the fraudulent activities could have been observed by staff had there been a coordinated and competent investigatory effort. (19) As a result of this finding, the U.S.D.A. administratively created an inspector general who reported directly to the Secretary of the U.S.D.A. (20)

   More than a decade later, and shortly after the statutory creation of offices of the inspector general in two different departments, (21) Congress passed the Inspector General Act of 1978. (22) The necessity for the Act was due to a growing concern "that fraud, abuse and waste in the operations of Federal departments and agencies and in federally-funded programs [were] reaching epidemic proportions." (23) Such waste included the erroneous spending of $440 million through the food stamp program in one fiscal year, as well as the nonperformance of government contracts totaling over $2 million. (24) Additionally, the Senate report accompanying the legislation indicated that the newly formed Inspector General of the Department of Health, Education, and Welfare ("HEW") "estimated that between $6.3 and $7.4 billion of HEW funds were misspent annually as a result of fraud, abuse and waste," totaling five percent of HEW's budget. (25)

   Given these cases, as well as other instances of fraud, waste, and abuse, Congress believed statutory offices of inspector general should be required, as previous attempts to ensure proper performance of government auditing and investigation had clearly failed. (26) Precipitated by this need, the new law greatly expanded the use of inspectors general at the federal level, establishing statutory offices in the Departments of Agriculture, Commerce, Housing and Urban Development, Interior, the Department of Labor, Transportation, Community Services Administration, Environmental Protection Agency, the General Services Administration, the National Aeronautics and Space Administration, Small Business Administration, and the Veterans' Administration. (27) Subsequent amendments (28) created offices of the Inspector General in other agencies, such as the Federal Deposit Insurance Commission, Nuclear Regulatory Commission, and Homeland Security. (29)

   Under the Inspector General Act of 1978, as amended, the inspectors general of the various federal agencies and departments are "to conduct and supervise audits and investigations relating to the programs and operations." (30) When conducting such activities, the various inspectors general are to promote the efficiency, effectiveness, and economy of government administration, while also detecting fraud and abuse of government programs. (31) Additionally, the inspectors general must make recommendations to improve efficiency and reduce abuse, (32) as well as make semiannual reports to the head of the agency or department involved, which are then forwarded to Congress. (33)

   Soon after the broad implementation of inspectors general at the federal level, Massachusetts started a trend in the state inspector general movement, creating the first state office of inspector general in 1980; this was in the wake of the troubling findings of the Ward Commission, (34) which specifically found massive fraud and waste in state and municipal government. (35) Other states soon followed, enacting statewide (36) or agency-based inspector general offices. (37) Today, almost half the states have either statewide inspectors general or agency-specific inspectors general, or both. (38)

   In response to this growing community of inspectors general, in 1996, the Association of Inspectors General was formed

   to foster and promote public accountability and integrity in the general areas of prevention, examination, investigation, audit, detection, elimination and prosecution of fraud, waste and abuse, through policy research and analysis; standardization of practices, policies, conduct and ethics; encouragement of professional development by providing and sponsoring educational programs; and the establishment of professional qualifications, certifications, and licensing. (39) In addition to providing training and education, the Association promulgated model legislation for establishing offices of inspectors general. (40) It is also worth noting that the profession of the inspector general has become specialized to the point that colleges are now offering advanced degrees in the field. (41)

3. THE ADVENT OF THE MUNICIPAL INSPECTOR GENERAL

   Although there is no record documenting which municipality created the first inspector general at the local level, New York City was among the earliest to institute a similar office, creating in 1873 the Office of Commissioner of Accounts, now known as the Department of Investigation. (42) Other municipalities eventually followed suit and, while there is no published official accounting of municipal inspectors general offices, such offices...