Comptroller Orders Review, Audit of Council Funds

By GRACE RAUH, Staff Reporter of the Sun
April 10, 2008

Comptroller William Thompson Jr. is ensuring that the speaker of the City Council and a likely mayoral rival, Christine Quinn, will face more questions about the council's practice of hiding budget money behind phantom organizations, a sign that the mayoral race may be off to an early start.

Mr. Thompson, in a letter sent yesterday to Ms. Quinn, said his office would require all organizations that receive discretionary funding from the City Council to be reviewed by his office and that he would direct the city's auditors, Deloitte and Touche, to independently audit the council's allocation of those funds.

The letter reached reporters just moments before Ms. Quinn appeared at a press conference in the East Village, ensuring that she would face immediate inquiries about the fictitious groups, which were first disclosed last week, and the comptroller's plans to dig deeper into the council's budget. Mr. Thompson said yesterday that the letter was not politically motivated and said there was no specific reason it came out yesterday, other than the fact that it was ready to go.

"This is all about identifying and recognizing a problem that existed and then moving forward with recommendations and corrective action to make sure the people of the city are able to say that they have full confidence in the budget process," he said.

The council's budget practices are being investigated by the U.S. attorney's office and the Department of Investigation.

Ms. Quinn said she welcomed any assistance in making sure the council's budget process follows the best possible practices. She said she had no doubt that whatever efforts Mr. Thompson made would be of the highest professional caliber.

The comptroller recently audited the council's internal budget, Ms. Quinn noted. In that audit, Mr. Thompson examined the procedures the council followed when making purchases under a former speaker, Gifford Miller, and did not uncover fictitious organizations in the budget. Mr. Thompson said yesterday that it would have been virtually impossible to detect the fake groups in the budget.

The executive director of Citizens Union, Richard Dadey, has said he does not understand how the comptroller or the mayor's budget office did not uncover the practice earlier.

Since 2001, the council hid more than $17 million behind fake organizations in the city's budget. Ms. Quinn said last week that the $4.7 million set aside on her watch was later spent on legitimate community initiatives.

She has said that she only learned about the fake groups several months ago. Prior to the discovery she ordered her staff to stop setting aside money in the budget so that it could be allocated at a later date, but her directive was ignored, she has said.

When asked yesterday if she was satisfied that all the money had been accounted for and not misspent, she demurred.

"We are in the midst of an investigation into this with the U.S. attorney and with the Department of Investigation, so I'm not sure if I can fully comment on that," she said.