New Orleans Inspector General Ed Quatrevaux called the Sewerage & Water Board (S&WB) "the most likely of the City's component entities to engage in fraud, waste, and abuse" in a July 31 letter to Mayor Mitch Landrieu. Quatrevaux concluded that the S&WB shouldn't be trusted to manage proceeds of proposed rate hikes.
In the letter, Quatrevaux outlined issues he recommends the City Council address before enacting any rate increases. The S&WB wants to raise water rates 14 percent and sewerage rates 15 percent each July through 2016. The agency says the rate hikes are necessary because revenues for decades have not kept pace with amounts recommended to maintain the systems.
In his letter, Quatrevaux made a pitch for scrutinizing the S&WB's money management — by his office or another entity — and eventually moving the agency into City Hall, where it would fall under the city's procurement policies and oversight.
However, Quatrevaux incorrectly claimed in his letter that the board's "felonious former director, Benjamin Edwards" went to jail for crimes related to his service at the S&WB. The board's executive director is and has been Marcia St. Martin, who has never been implicated in a criminal investigation. In 2010, former S&WB board member Edwards was sentenced to 21 years in prison for demanding kickbacks from contractors hired by the board.
In a statement emailed to Gambit, Landrieu spokesman Ryan Berni says the mayor "will take a hard look at the Inspector General's recommendations." He says the Landrieu administration has been working with the S&WB to improve deficient areas and improve overall operations — and will continue to do so.
"However, any suggestion of impropriety by the current executive director would be baseless," the statement says. "Marcia St. Martin has played by the rules and has been a dedicated public servant for over 40 years."
St. Martin spokesman Robert Jackson says the executive director responded quickly, penning a letter to the IG the same day the IG wrote to Landrieu. "Our main concern was that there's a number of inaccuracies in his [letter to Landrieu]," Jackson says. "It was somewhat of a contrived and incorrect report."
St. Martin's letter was more pointed. "It is unfortunate and perhaps even irresponsible for an individual in your position to have authored such a letter to our mayor and to the local media without having first checked on the accuracy of the purported facts that you represent in your correspondence," she wrote. "If the Sewerage and Water Board of New Orleans faces any risk, it is the risk that it will face due to inaction to implement long-standing rate relief as has been identified in its Comprehensive Rate Study."
In his letter to the mayor, Quatrevaux also pointed out problems that he alleges could make the S&WB pension plan unsustainable; waste and possible fraud in employee insurance programs; and abuse of publicly funded take-home cars (one of every seven S&WB employees has a take-home car). Quatrevaux also mentioned problems in contract management and a questionable procurement process. St. Martin's letter disputed some of his assertions.
The fact that the S&WB needs a large influx of funds to repair and revamp the city's waterworks is not in dispute by either party. In a letter to the S&WB dated July 17, Landrieu affirmed the need to fund infrastructure improvements but asked the S&WB to find ways to lower the rate increases. He requested a reply within 60 days.
"It is clear to us that the S&WB currently does not have what it needs in terms of infrastructure and funding to serve a 21st-century American city," Berni wrote in his email. "It is the mayor's hope that with key reforms and improvements identified and outstanding questions answered within the next 60 days, we can find consensus on a pathway forward." — KANDACE POWER GRAVES