Costly Lapse in Oversight

Public agencies should have learned from the Orange County bankruptcy and a series of thefts and embezzlements in recent years the importance of financial oversight. Apparently no one passed the message on to the Irvine Ranch Water District.

Last week, Irvine police said a former water district employee has been accused of approving payments to three contractors for rebates on water conservation equipment that was never installed. The contractors allegedly kicked back to the employee about half of the more than $2 million in payments.

As disturbing as the amount is the time it took to detect the payments: more than 2 1/2 years. Officials at other special districts around the county said the most basic checks and balances would have detected problems sooner.

Orange County’s 1994 bankruptcy did not result from theft but from investments that were too risky. Still, appointed and elected officials did not keep as close an eye on the treasurer’s office as they should have.

Seven years ago, a maintenance officer in the city of Orange was convicted of misappropriating public funds. The next year, a top official of the Newport-Mesa Unified School District was convicted of stealing $3.5 million over seven years. After the Orange and Newport-Mesa incidents and the county’s bankruptcy, agencies that lost money instituted stronger controls.

Irvine Ranch Water District lost $70 million in the county’s bankruptcy. It should have taken a closer look at its operations then. The district says it now has imposed stricter controls to guard against theft. It is not asking too much to demand that public agencies check and double-check expenditures in order to catch embezzlements before they go on for 2 1/2 years.