City Auditor Dennis Gallagher told me he had to leave to go to a north Denver coffee shop to meet “neighbors about some historic issues.”
One of Gallagher’s aides told Denver’s chief of staff that the auditor had to go see senior citizens about an upcoming vote on electric rates.
Wherever he went, Gallagher clearly felt he had better things to do Wednesday afternoon than talk to Denver’s blue-ribbon committee on city finance.
After reading a brief statement that couched the city’s pending financial reform in terms of Enron and Mussolini, the auditor took a few questions.
Then, he announced he had someplace else to be, left a deputy to take his place and bolted for a coffee klatch.
It was great political theater. But it burned Gallagher like a boiling cup of joe. Snubbing the group of power players who will determine how Denver addresses problems with its money management, Gallagher turned his long-simmering war with Mayor John Hickenlooper into an open, ugly confrontation. In short-changing the committee, Gallagher ruined any chance he might have had to salvage duties that he wants to keep in his office after reform.
Most committee members expected more from the auditor – at least more time. The committee, which had held five previous meetings, carved out nearly two hours for Gallagher. He was gone in 20 minutes.
“I wish he had stayed a little longer,” Daniel Yohannes, a bank vice president, noted sardonically. “I’m glad he could stay 20 minutes.”
“I don’t think we got to ask all the questions we wanted to ask,” added Scott Reiman, who runs an investment firm.
Gallagher made good points about the need for oversight of no-bid city contracts of less than $500,000. Still, his statement to the committee read like a manifesto from a besieged bunker.
He noted his “concern regarding the relationship of our outside audit firm KPMG and the city. There is danger in crossing the line between being the outside, independent auditor and becoming an adviser. … As the former audit firm, Arthur Andersen, learned with Enron, the distance between auditors and management must be maintained.”
If this slam at a Big Four accounting firm and the Hickenlooper administration wasn’t enough, Gallagher proffered that “Italy under Mussolini was famous for having the trains run on time. It may have been gratifying to have the trains run on time and was arguably more efficient, but I don’t think efficiency and expediency are valid justification for the elimination of necessary checks and balances in government.”
Outside the meeting, Gallagher accused Hickenlooper’s chief of staff, Cole Finegan, and the city department of management and budget of personal attacks and “miscategorizing” his work.
Finegan and committee members said talk of consolidating the city’s financial functions under a chief financial officer is not the power grab that Gallagher alleged. They said it is an attempt to deal with accounting problems identified by KPMG and an earlier outside auditor.
“I think the city staff has done an excellent job,” said committee member Gary Reiff, a lawyer at the same firm that Finegan worked for before taking his political post. “They have not attacked anyone.”
One thing that KPMG and others have questioned is the wisdom of letting the auditor do the city’s accounting, then audit that accounting.
“When you initiate the accounting and audit it at the end,” said Reiman, “I see that as a conflict of interest.”
Added Finegan: “To compare KPMG with Arthur Andersen and Enron is simply unfair, inaccurate and regrettable.”
It could also be politically suicidal.
The blue-ribbon committee is poised to recommend that the Denver auditor’s office lose its coveted accounting and payroll functions.
As long as the office is run by a guy who thinks java with the north Denver homeboys is more important than defending his job with the experts, the decision seems like a no-brainer.
Jim Spencer’s column appears Monday, Wednesday and Friday. He can be reached at 303-820-1771 or jspencer@denverpost.com.
