Loose and Lax With Big Money

There’s cause for alarm whenever a goodly sum of public money--$3 million in this case--winds up in the personal bank account of the chief financial officer of a public agency. It’s a bad situation whether the money was in that account for only a few hours or a few days. It doesn’t matter that the entire sum was returned intact. It doesn’t matter whether the mistake was found and corrected by the same public official.

That’s why Nancy Schafer, now the former controller and chief financial officer of the $2-billion Alameda Corridor project, was fired recently. That was the correct response, but a few other things still need resolution. Times reporter Dan Weikel, for example, quoted inside sources who said that it was Schafer’s bank that noticed the huge sum of money in her account and raised a warning flag. But Schafer and other Alameda Corridor Transportation Authority officials have said that it was Schafer who found her own mistake, notified her superiors and corrected the error.

For the purposes of this argument, none of that matters. Of more concern is this: Why in blazes was the CFO of one of the nation’s biggest public works projects conducting such big-money business from a hand-held electronic organizer that also contained links to her private bank account? Under what checks and balances or chain of command was she able to move such sums on her own? Where were the internal backstops, the folks who say, “Excuse me, what did you just do?”

The Alameda Corridor is a high-speed rail transport route that will connect the bustling ports of Long Beach and Los Angeles to inland transcontinental railroad connections. It will be a vital upgrade to port operations and to the Southern California economy. But it’s important for a symbolic reason as well. It’s a chance to show that the region can tackle a major construction project and not bollix it.

Corridor officials said that such transactions now require two authorizations and can be made only between project accounts. That’s good, but Los Angeles City Controller Rick Tuttle’s call for an audit is still worthwhile. It might point out other flaws before another seven-figure mistake is made.