The New Orleans Office of Inspector General outlined a wide range of investigations and audits it has planned for city departments and agencies at a City Council budget hearing on Tuesday. The targets of the investigations include some of the most high profile issues in the city, including the city’s lax enforcement of short-term rental rules, Sewerage and Water Board billing and the NOPD’s response to a recent rise in violent crime.
The agency also plans to look into the city’s handling of the Edward Wisner Donation trust, an issue that has led to litigation between the City Council and Mayor LaToya Cantrell’s administration. In addition, it will take a look at the Orleans Parish Sheriff’s Office, which has recently come under scrutiny over spending, as well as a city-owned hospital in New Orleans East that’s run by private healthcare provider Louisiana Children’s Medical Center (LCMC).
Inspector General Ed Michel told The Lens that there could be additional investigations that aren’t being discussed publicly because they relate to ongoing criminal investigations.
The office, for example, has seized computers from city employees involved in contract-fixing allegations related to the city’s now scandalous “smart cities” project, but declined to confirm the investigation. It also recently issued subpoenas to Forward Together New Orleans, a nonprofit founded by Cantrell that has since shut down operations and returned over $1 million in public funding following allegations of financial misconduct.
The OIG has become a much busier agency after Michel took over the agency in 2020. At the budget hearing, Michel said the office has increased its productivity by over 400 percent since then. Michel’s predecessor, Derry Harper, resigned in 2020 amid criticisms about the office’s lack of output.
The OIG is currently investigating the Orleans Parish Communications District, a state agency that runs the city’s 911 and 311 systems. The agency was identified by the OIG in a 2021 risk assessment report as one of the highest risk entities it considered, and the agency’s 2023 work plan notes that “there have been concerns about the reliability of the call center’s operations, including concerns raised in a lawsuit about OPCD’s bidding process”
Michel on Tuesday also noted that OPCD had tried to block its investigations by challenging in court the OIG’s authority to issue financial subpoenas. OPCD argued that although it received funding from the city, it was technically a state body, and therefore not under the jurisdiction of the local OIG.
The courts ultimately sided with the OIG and upheld the subpoenas. But Michel on Tuesday said that lawsuit cost the office time and roughly $50,000 to defend.
The OIG also has an open investigation into whether city employees are accurately reporting their work attendance.
“We’ve come across a lot of employees who are potentially committing payroll fraud,” Michel said. “So we are going to launch a city wide attendance report to determine if the city has proper policies and procedures in place.”
The office is looking into the Cantrell’s administration handling of the Wisner Trust, which has become one of the top points of contention between the mayor and City Council. The Cantrell administration in 2020 renewed the trust, forcing the city to continue sharing the trust’s annual revenues with a group of private individuals and groups. The council sued the administration and the trust, arguing that it was illegally renewed and that all of the trust’s proceeds rightfully belong to the city.
“In 2020, City officials agreed to continue the Wisner Fund in perpetuity, which was meant to terminate in 2014,” the OIG’s 2023 work plan said. “The agreement potentially deprived the City of revenue, and there are questions about the legality of the agreement.”
The council’s lawsuit is ongoing, but a judge in Civil District Court has already put a temporary hold on trust expenditures in the meantime.
The OIG is looking into another issue that has caused clashes between the council and Cantrell — short-term rentals. Council members and residents have complained for years about the city’s frustratingly lax enforcement of the city’s short-term rental laws, allowing for Airbnbs to continue to proliferate.
“The Wisner foundation and Safety and Permits audit is going to reveal some potential violations we feel are in need of correction,” Michel said.
New investigations and audits
Along with those ongoing projects, Michel outlined a number of new investigations and audits his office has planned for next year.
The office plans to complete an audit of the Sewerage and Water Board billing practices, something that has been under massive public scrutiny in recent years. It has been so heavily debated that Councilman Joe Giarrusso on Tuesday asked whether the OIG audit was even necessary.
“I don’t know how else to ask it, do we really need another report on Sewerage and Water Board billing?” Giarrusso asked. “We know what the problems are.”
Giarrusso pointed out that the city had even already set up a task force specifically to deal with billing issues. But Michel indicated the OIG investigation will cover different ground. While the task force and public criticisms have mostly centered on the Sewerage and Water Board sending out shockingly high and inaccurate bills, the OIG investigation will focus on the agency’s difficulties in collecting outstanding unpaid bills, Michel said.
“It may have an interesting twist,” Michel told Giarrusso. “Some of these individuals who are not paying their water bills are Sewerage and Water Board employees themselves. And while we can’t talk about aspects of the ongoing investigation, there are different aspects that are very telling and it’s something that has to be corrected.”
The OIG plans to do full audits of two entities: the Orleans Parish Sheriff’s Office and a city-owned, privately run hospital in New Orleans East formally called the Orleans Parish Hospital Service District A.
The hospital was opened in 2014 through a cooperative endeavor agreement between the city and LCMC health.
“Our office has not performed any audits or evaluations of the hospital since its inception and we have decided to conduct an audit of the hospital’s use of funds,” said Alison Broyles, who leads the office’s audit division.
The OIG 2023 work plan noted that the hospital had taken in $17 million in covid relief aid through the federal CARES Act.
The sheriff’s office, meanwhile, has long been questioned over how it uses its large budget, and has been subject of recent criticisms by the public and the council over spending under new Sheriff Susan Hutson.
“There’s a lot of outside agencies we give money to, is there a reason why the sheriff specifically is being selected?” Giarrusso asked.
OIG officials told him that the office hadn’t audited the sheriff in over a decade, and that its large budget was in and of itself a reason to take a closer look.
“Based on the amount of transactions and the large financial expenditure, the more money you spend the more possibility there is,” Michel said.
Giarrusso pointed out that the sheriff is currently asking the council to significantly increase its 2023 budget.
“Their budget is already $55 million and they’re asking for another $13 million in operating and other $40 million in [American Rescue Plan Act funds].” Giarrusso said. “So it needs to be scrutinized.”
Finally, the office is launching an investigation into the Office of Code Enforcement’s responsiveness to resident requests and updating two previous reports on the city’s Equipment Maintenance division regarding its upkeep and tracking of the city’s vehicle fleet and fuel purchasing policies.
Michel added that his office would continue the general mission of conducting public corruption investigations as well.
“Regrettably, the City has a well-documented history of corruption,” the OIG 2023 work plan said. “A lack of internal controls, insufficient processes and outdated technology at many departments and agencies create opportunities for fraud. The City’s decentralized structure with more than 100 outside boards and commissions also creates the potential for a lack of accountability and transparency.”