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Palo Alto to launch fraud hotline for city workers
In revamp of ethics policies, city plans to develop new 'code of conduct'

by Gennady Sheyner

City workers who sniff out fraud at Palo Alto's City Hall could soon have a new whistle-blowing tool at their disposal.

The city is preparing to revamp its ethics policies and is considering a new whistleblower hotline that employees could use to report workplace fraud, waste and abuse. City officials are undertaking these parallel efforts to comply with a 2008 ethics audit issued by then-City Auditor Sharon Erickson.

The city has already implemented four of the audit's seven recommendations, including provision of periodic ethics training for employees, devoting a section on the city's internal website to ethics policies, requiring supervisors to review workers' Form 700s (legally required statements of economic interest), and surveying the employees' ethical culture. City officials hope to complete the three remaining recommendations <0x2104> a formal policy on ethics training, an official "code of ethics" and a new fraud, waste and abuse hotline — by the end of the year.

Assistant City Manager Pamela Antil said the city has already begun its effort to institute a clear ethics policy to guide employees' conduct. The policy, she told the Weekly, would be based on "values," rather than rules. The city's consultant, Tom Shanks of The Ethics Company, has been discussing the policy with senior City Hall staff.

"Rather than just adopting a code of ethics (from existing agencies and organizations), we have decided to create our own program that will be for all of our workforce to build an ethical culture and enhance public trust," Antil said.

Erickson had recommended a new ethics code and a formal ethics-training program to clarify what she characterized as the city's "scattered" policies. Codes of ethics, she wrote, "are commonly used to promote ethical values and help avoid problems.

"While Palo Alto has a plethora of rules and regulations, and offers some ethics training for employees, it does not have a formal employee code of ethics or employee ethics program," Erickson wrote.

She also recommended the new hotline, citing a study by the Association of Certified Examiners that found organizations with fraud hotlines had a median loss of $100,000 per fraud scheme, compared to $200,000 in organizations without such a hotline. The organizations with fraud hotlines also detected the fraud within 15 months of inception, compared to 24 months for those without the hotlines.

"These programs can be provided at minimal cost," she wrote. "Studies indicate that the City could minimize potential losses by establishing a hotline and whistleblower policy and procedures."

So far, Palo Alto officials have been cautious about the potential costs of the new hotline and the ways in which the tool would be used. In July 2010, the council's Policy and Services Committee recommended pursuing the hotline but specified the city should create policies and procedures before the hotline is implemented.

Under the pilot proposal currently on the table, the whistleblower hotline would be available to city workers but not to the general public — the same model currently used in Stockton, San Bernardino County and Mesa, Ariz. Some cities, including San Francisco, Oakland and San Diego, also allow residents to use these hotlines to report fraud.

Members of the Policies and Services Committee and staff agreed the new line should not become a tool used by residents to make every kind of complaint against the city. Antil pointed out at the July meeting that Palo Alto is much smaller than the cities whose hotlines allow citizen complaints. The city, she said, does not have the resources to pursue every allegation or to hire new staff to chase down complaints about potholes or tree branches.

"We didn't want it to turn into something that people use as a catch-all for every complaint," Antil told the Weekly.

Palo Alto officials plan to have a third party oversee the hotline. The offices of the city auditor, the city manager and the city attorney will work together in the coming months to develop the general protocols and procedures for responding to complaints, according to a recent report from the auditor's office. They hope to complete this effort by December.

Ian Hagerman, a senior auditor at the City Auditor's Office, said his office is in the midst of developing protocols, evaluating vendors and studying examples from other jurisdictions. The goal, he said, is to make sure the new policies "fit Palo Alto." The effort was delayed by staff changes in both the city auditor's and the city manager's office, he said, citing the departures of Erickson and (former assistant city manager) Emily Harrison.

But "it's one of the things we'll focus on from our office's standpoint in getting these recommendations closed down," Hagerman said.

Staff Writer Gennady Sheyner can be emailed at gsheyner@paweekly.com.

Posted by The Shadow Knows, a resident of Another Palo Alto neighborhood, on Apr 29, 2011 at 9:22 am

Perhaps such a review should start with a look at the compensation of City Manager James Keene. As an initial example, let's review the recent pay and compensation cuts being taken by most City Employees and still in negotiation with others.

City Manager Keene led the drive for such reductions, citing the need for "permanent structural change" in compensation and expenditures. After imposing such reductions on SEIU and Management employees he "voluntarily" took a 5% pay cut himself and received a standing ovation from the City Council when he announced it.

What has not previously come to light is that his reduction was for one year only, and has since been quietly restored. So much for "permanent structural change", let alone equal treatment of all employees.

This would appear to be a classic case of "do as I say, not as I do".

While it may not be fraud in the legal sense, it is certainly fraudulent leadership and reeks of hypocrisy.

This will be the first in a series of postings about the compensation of the City Manager, revealing the true amount of total compensation and many prior undisclosed and unreported items.

The Shadow

Posted by Detail Observer, a resident of another community, on Apr 29, 2011 at 10:48 am

Start by examining the $100K per year utility workers who collect used light bulbs from the hardware stores.

Posted by Who-Needs-Ethics--And-Why-Now?, a resident of Another Palo Alto neighborhood, on Apr 29, 2011 at 11:50 am

There is no mention of documenting the results of this "hotline", or new "ethics" policy. If the premise is to hide the results under a barrel, and not let the public know how the staff is reporting on itself, then what's the point?

And what about the public? When we see police sitting around coffee shops for an hour, or more, at a time--who can we call? Or Utility employees parked under a shady tree on a hot day--who can we call? Of when half of city hall can't be found on a Friday after noon--who should we call?

Without making the public a part of the enforcement mechanism for the "ethics code" .. this is not as meaningful as it seems.

Posted by Inside Observer, a resident of Another Palo Alto neighborhood, on Apr 29, 2011 at 12:25 pm

Audit Public Works + Human Relations. City Manager's office needs an overhaul. Same mindset & methods? Same bad outcome. Who, in their right mind, would speak up, under the same circumstances & with the same people?

Posted by Who-Needs-Ethics--And-Why-Now?, a resident of Another Palo Alto neighborhood, on Apr 29, 2011 at 12:53 pm

City Workers Make Porn Film While On the Job:

Web Link

City officials failed to discipline two traffic officers who appeared in a pornographic film while on the job, NBC4 LA has found

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Thinking back to the well-documented Utilities scandal, virtually no one was punished, although a couple of people ended up losing their jobs, or moved on. Even then, former City Manager Benest, more interested in "talking care of our own" keep the Head on the Utilities on staff, being the highest paid individual on the payroll at the time, in order to get to his next birthday and be able to make a higher pension payout when he retired. Were Benest's actions "ethical"? Probably not. But no one on the City Council seemed to care. If memory serves, not one Council Member showed any outrage, or called for a release of the internal probe that turned up many more problems than just the "moonlighting" that turned up in Menlo Park.

When there is this kind of "ethics" in place in a City Government, it's difficult to believe that anything will change until there is a "top-down" house cleaning. That's not likely until the Council is elected to insure that there is good government, not just to make sure that special interest groups, like the Friends of the Children's Theater, the Airport crowd, the Children's Zoo, the Art Center, etc. and so on and so on.

Too many people in Palo Alto don't care about honesty in government--just that they get "their piece of the pie".

Posted by Doron Levin, a resident of the Crescent Park neighborhood, on Sep 26, 2011 at 4:03 pm

The False Claims Act provides a legal tool to counteract fraudulent billings turned in to the Federal Government. Claims under the law have been filed by people with insider knowledge of false claims which have typically involved health care, military, or other government spending programs. It is practice of fraud hotline.

Web Link