​Books Bring Down the Mayor

Strengthening ethics codes could deter government officials from using their positions to profit from inappropriate business deals.

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​Baltimore Mayor Catherine Pugh resigned last week amid an investigation into deals involving her self-published children's books, The Baltimore Sun reports. The newspaper has published a series of articles detailing allegedly inappropriate deals. For example, Pugh sold tens of thousands of copies of books to the University of Maryland Medical System (UMMS) while she was a member of that organization's board. More recently, the paper found evidence that health insurer Kaiser Permanente had purchased Pugh's books at a time when the company was bidding for a $48 million city contract, which it eventually won.

Pugh is the second Baltimore mayor to resign from office following a scandal in this decade. In her rise to the office, Pugh was "once seen as a more ethical option in a city with a history of wrongdoing by politicians," The Sun noted.

Lessons Learned

In the wake of Mayor Pugh's resignation, Maryland's Office of the State Prosecutor has launched an investigation. In the meantime, the Baltimore City Council, UMMS, and those companies that bought copies of Pugh's books should review and strengthen policies and controls that may have contributed to the allegedly inappropriate sales. Internal auditors in  those organizations can assist and advise by reviewing these areas:

  • Organizations should review and strengthen conflict of interest/code of conduct rules, processes, and compliance testing. How was it possible that a board member was able to sell copies of her book to UMMS without raising any red flags? How was the mayor able to sell books to companies that had contractual relationships with the City of Baltimore and UMMS?

    If such questions were asked, those two organizations should have thoroughly reviewed these situations in accordance with a clear ethics office/code of conduct regime, supported by audit work as necessary. Perhaps an additional question for the Maryland State Prosecutor's Office to consider is whether there may be similar situations within other state and municipal institutions where conflict of interest/ethics rules need strengthening.
     
  • UMMS and the state prosecutor should review grants and contracting regimes and practices. An Associated Press article reports that Pugh and UMMS did not have a contract in place for the $500,000 purchase of copies of her books. Also, some book purchases were classified as "grants" in filings to the federal government.

    Again, the question of whether other state institutions have similar control weaknesses is in need of review and investigation. Recognizing the systemic nature of the problem, the State of Maryland passed a new law in April that bars board members of state institutions from receiving contracts without a bidding process. That law also prohibits board members from leveraging their position on the board for personal gain.

    Other companies reportedly purchased significant numbers of copies of Pugh's books. While no particular wrongdoing has been disclosed thus far, those companies should review their own ethics, conflict of interest, and contracting regimes for potentially inappropriate relationships, conduct, and "pay for play" schemes.

  • There need to be consequences for wrongdoing, including negligence and poor management, when and where it is found. Those consequences, where applied, also need public dissemination as a deterrent. Baltimore Mayor Pugh has already resigned and UMMS' CEO and President Robert Chrencik also has stepped down. Other individuals may face consequences as federal and state investigations are completed. These investigations may extend beyond the direct circumstances involving former Mayor Pugh.
Art Stewart
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About the Author

 

 

Art StewartArt Stewart<p>​Art Stewart is an independent management consultant with more than 35 years of experience in internal audit, financial management, performance measurement, governance, and strategic policy planning.​​​</p>https://iaonline.theiia.org/authors/Pages/Art-Stewart.aspx

 

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