Opinion: ESD's efforts to hinder audits is shameful

In late September, state Auditor Pat McCarthy, hoping to get reelected to her second four-year term, spoke with the Herald-Republic editorial board as part of our election coverage. Not surprisingly, one topic of conversation was the massive fraud perpetrated upon the state Employment Security Department in which cybercriminals stole $576 million through false unemployment claims, coupled with the issue of legitimate unemployment claimants who were not getting their benefits in a timely fashion — or at all.

Did the Auditor’s Office have a role to play in sorting out what happened at ESD? Oh, yes, McCarthy said, laying out multiple ways in which her agency was responding.

What she left unsaid was ESD’s shameful actions that are keeping the Auditor’s Office from doing its job — actions that began months ago and that should embarrass ESD leadership as well as Gov. Jay Inslee even more than they already were in the wake of the cybercrime scandal.

According to The Seattle Times, on Oct. 20, less than a month after the editorial board interview, McCarthy issued a memo to ESD Commissioner Suzi LeVine, chiding her for putting “significant restraints” on state auditors, including delays in providing needed documentation and trying to put limits on how and when auditors interviewed key ESD employees.

ESD’s actions were unlike anything McCarthy had come across from any other state agency since she became auditor in 2017, she told The Times.

According to the report, on multiple occasions ESD has been slow to respond to certain requests for vital information. One example cited took place in August when the Auditor’s Office asked for documentation on how much money taken in the cybercrimes had been recovered as of the close of the fiscal year, June 30 — a straightforward request. Documentation didn’t arrive until Nov. 20, despite ESD publicizing the dollar amount of the recoveries in August and September.

In addition, shortly before McCarthy’s memo to LeVine, the ESD leader emailed the director of special investigations at the Auditor’s Office, complaining that auditors were not following “protocols” for requests to go through ESD’s own internal audit division. LeVine also wanted an ESD liaison to sit in on auditor interviews. LeVine, who was hired by Gov. Inslee and answers to him, copied aides to the governor on her message. Her actions were necessary for protecting her top staffers “in a maximally stressful environment from being negatively impacted” by multiple audits, the email said.

McCarthy’s Oct. 20 response: It’s not LeVine’s call. Audits follow standards issued by the U.S. Government Accountability Office. “Those are the only protocols we follow,” McCarthy told LeVine.

“Our position and the work we do is established in state law,” McCarthy told The Times.

In other words: We’ll do our job. You do yours. And part of our job is to determine how you are doing your job. Cooperation is needed. Hindrance is inexcusable. Keeping secrets or hiding data is pointless. Lack of transparency at ESD or any other public agency will come back to haunt, as it should.

When McCarthy spoke with our editorial board, she explained that her office had expanded the scope of its 2019 audits of ESD. Already underway were audits examining accountability, financial aspects and federal grant spending. Added to the list in light of the fraud were audits to examine IT systems and overall performance.

“We will hopefully have at least some initial reports probably by the end of the year,” she said. “But the performance audit and, really, what people are going to want to find out about what really happened, that won’t come until April.”

“But we’re going to examine this large-scale fraud, we’re going to look at the delay in the benefit payments, and we’re going to look at the responsiveness to the people’s inquiries about their benefits,” she continued. “We’ve gathered a whole task force to really look at the Employment Security Department because of the nature of how huge of a fraud this was for the state of Washington.”

The expanded auditing process at ESD only makes sense after its series of major blunders. It makes no sense whatsoever to hinder those audits. Hundreds of millions of dollars have been lost (about $356 million has been recovered thus far) and Washingtonians who are suffering from joblessness are not getting the services they need and deserve.

LeVine said in a statement that ESD welcomes the audits and that there are procedures now in place to get information to auditors more quickly. “We remain firmly committed to full transparency and are collaborating closely with the state auditor and her staff, as we have all along,” the statement said.

Hopefully, that means we can look forward to more pointed examples of full transparency and collaboration from ESD in the coming days instead of more chapters of ineptitude, hurt feelings and utter mishandling of tax dollars.