Asset Accountability is Reputation-Critical in Business and at Work


In business and at work, a lack of accountability for organizational assets and funds that go missing is fairly black and white and straightforward to remediate, particularly when expenditures occur on an organization’s credit card, and the individual responsible fails to file detailed expense reports, as reported this week in the Times Union regarding the conduct of former Public Employees Federation (PEF) Rockland County Council Leader Deborah Lee:

The focus on Lee’s expenditures began when several members of her local union questioned her failure to file detailed expense reports. In internal complaints filed with PEF, the local union officials also said Lee refused to hold council meetings more than once a year. They also complained they couldn’t review her expenditures because Lee was the only person who could appoint an audit committee. (Emphasis mine – anyone else see a problem here with controllership, segregation of duties and leadership asleep at the switch?)

In late 2013, the local union was finally able to appoint an audit panel that examined seven months’ worth of Lee’s spending and discovered many of her receipts had been cut off so that the items purchased were not listed. (Emphasis mine.) Other questionable expenses included five purchases at Bed, Bath & Beyond; 19 transactions at a drugstore that totaled $1,500; and 62 purchases at various restaurants in the area of Rockland County where Lee lives. There were also 54 purchases at grocery stores that totaled more than $4,798.

Last summer, two members of the local union, including an assistant council leader, presented evidence of possible financial malfeasance by Lee to two Rockland County district attorney’s investigators and a senior assistant district attorney, Richard K. Moran. People briefed on that meeting told the Times Union that Moran informed the council members that he contacted PEF’s headquarters but was told the union wanted to handle the issue internally. (Emphasis mine.)

Kent has denied that the exchange with Moran took place or that her administration asked prosecutors to back off. She did not respond to a request for comment on Wednesday.

The two union officers who met with the district attorney, Liz Falco and Santhosh Thomas, later filed an ethics complaint against Lee with PEF. Falco and Thomas both have declined to comment. Rockland County District Attorney Thomas P. Zugibe also has declined to comment on the meeting.

In most organizations, such misappropriation (a.k.a., theft), would be grounds for immediate termination – not, it would seem, at PEF:

After Lee’s case became public, officials at PEF’s headquarters in Latham conducted a review of Lee’s expenditures.

The union’s secretary-treasurer, Carlos Garcia, ruled that Lee needed to pay back only $5,100 in “questionable charges.”

Members of Local 235 challenged Garcia’s ruling. They said their internal audit indicated Lee may have made more than $30,000 in improper expenditures, including regular purchases at grocery stores near her home.

A grievance filed with PEF, and obtained by the Times Union, indicated Lee made 156 purchases — totaling $11,924 — with the council’s debit card during the seven-month period reviewed by the audit panel for the local union. Its leaders said the expenditures may have dated back years, and called for PEF to approve an independent audit.

Lee headed a PEF council that represents nearly 800 government workers, most of whom work at Rockland Psychiatric Center.

Lee, 65, was cleared of wrongdoing last year by a union ethics panel appointed by Kent. The internal review rankled many PEF executive board members who accused Kent of appointing political allies to the ethics panel. The decision was later overturned by PEF’s executive board, which voted to remove Lee from their union for at least three years. (Emphasis mine.)

It’s reputation-damaging enough when an organization’s leader does not follow through immediately and decisively with an immediate termination once the theft of an organization’s funds and/or assets is determined as a thorough and factual investigation, and then fails to alert law enforcement about the theft. It’s just plain embarrassing when third-party law enforcement takes the initiative to get involved, stepping into the leadership vacuum:

U.S. Attorney Preet Bharara of Manhattan is investigating a former Public Employees Federation council leader who was accused of using a union debit card to run up thousands of dollars in questionable purchases at stores and restaurants.

The investigation, which is being led by the U.S. Department of Labor, was revealed last month when a federal grand jury subpoena was sent to the Rockland County PEF union formerly headed by Deborah J. Lee, whose purchases first drew scrutiny within her union’s ranks two years ago.

The probe by Bharara’s office comes as first-term PEF President Susan Kent, who faced criticism for her handling of Lee’s case, is running for re-election to the top post in the state’s second-largest public labor union.

How will you best assume the mantle of leadership accountability to protect your organization’s assets and reputation this week, in business and at work?

Close up of used credit card,

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