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voiceofsandiego.org: Opinion… The Kroll Offensive

voiceofsandiego.org: Opinion… The Kroll Offensive

by Rick Turoczy on July 11, 2006

The mayor is right to put the blame in three places: Kroll, a private corporation with a profit motive; the original contract with the firm, structured by city officials and Kroll; and the imposition of the Sarbanes-Oxley Act upon the city — the first instance of a municipality facing it in the post-Enron era.

The result: an ill-defined engagement that has allowed Kroll unfettered power to run roughshod over the city.

To do so, Kroll has ironically used the very controls Congress implemented to curb corporate excesses. The Sarbanes-Oxley Act was Washington’s reaction to the accounting scandals that led to the wild, fraudulent successes of corporate America a half-decade ago. However, the financial controls aren’t made for municipalities — they’re made for corporations. The attempt to force these mandated corporate practices on a taxpayer-funded organization has proved to be a costly disaster for the residents of San Diego. The audit committee that has resulted looks little like those envisioned in Sarbanes-Oxley.

In the future, other municipalities will surely run afoul of the Securities and Exchange Commission and will be in need of the type of services Kroll was supposed to produce for San Diego.

voiceofsandiego.org: Opinion… The Kroll Offensive

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