The case for oversight and transparency

May 11, 2012

Whatever the outcome of the embezzlement case brought by prosecutors this week against former Councilman John Drayman, one take-away is sure: There's no substitute for transparency and oversight.

In the 28-count grand jury indictment unsealed in Los Angeles County Superior Court on Tuesday, prosecutors allege that Drayman committed perjury when he excluded earnings sources on Fair Political Practices forms, submitted a bogus credit application in 2010 to a mortgage lender, and falsified tax returns to hide embezzling up to $880,000 from the Harvest Market, which is put on by the Montrose Shopping Park Assn.

Prosecutors allege that the embezzlement occurred between January 2004 and April 2011. That's a long time to miss that amount of money, even in an operation that's mostly cash. As the event languished and continued to see depressed revenues, where was the audit? Did the board ask for a review of operations to determine how to boost income?

It's difficult to know, when merchant- or community-controlled organizations operate mostly out of public view, making decisions about how to spend thousands of dollars with little more to track than summary financial statements.

In this paper's initial reporting of the revenue problems at the Montrose Shopping Park Assn., obtaining detailed financial information, board minutes and other records was an exercise in persistence bordering on badgering, especially since these community organizations are not beholden to the level of oversight and record-keeping of, say, city government.

As the city moves to expand the role of community benefit organizations into non-business districts, it's more important than ever to look at the alleged embezzlement that occurred in Montrose as a cautionary tale of what could happen in the absence of an out-of-the-gate commitment to strict oversight and transparency.

We urge the City Council to consider additional requirements for these organizations, as sunshine has long proven the best disinfectant against shady deals and corruption.

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