Reminder Assistant Editor
SPRINGFIELD Last week City Council President Bud Williams announced the formation of a special council subcommittee in response to the financial fallout of a former Merrill Lynch employee's illegal investment of millions in city monies.
Councilors William Foley, Jose Tosado and Kateri Walsh were appointed to the newly formed Performance Review Committee. According to Walsh, the committee has been established to review the duties and responsibilities of City Auditor Mark Ianello and the role of the position's financial practices.
"The bottom line is this is not a witch-hunt," Walsh said. "We're not looking to have the city auditor lose his job. It's [the committee's function] not the review of our city auditor [the person] but of the position."
Ianello declined to comment about the formation of the new committee or its purposes.
Williams explained that the Performance Review Committee will be evaluating Ianello, who was part of a four-person committee composed of Salvatore Calvanese, the city treasurer, Stephen Lisaukas, executive director of the Finance Control Board and Mary Tzambazakis, former Chief Financial Officer assigned to oversee the city's investment of surplus funds.
On Monday, Mayor Domenic Sarno announed that Calvanese was granted a personal family/medical leave and appointed Deputy Auditor Patrick S. Burns Acting City Collector/Treasurer.
The appointment is required for the continued operation of government for a period of 90 days, subject to reappointments, not to exceed a total of one year.
Foley explained that periodically the city invests a portion of its approximately $40 million in surplus funds to gain interest. He said the investments with Merrill Lynch, totaling approximately $12.9 million, showed a rapid loss of approximately $11.7 million by September 2007.
Williams noted that since the investigations conducted by City Solicitor Edward Pikula and Attorney General Martha Coakley, Merrill Lynch has reimbursed the city's total investment and legal fees, as well as terminated the employee in question.
"The loss was due primarily to an employee at Merrill Lynch who purposely deceived and misled the city," Foley said, adding that he believes city officials were misled into signing documents appropriating funds for "higher risk activities."
He added that the committee will be meeting with Ianello to discuss the timeline of events from last September to December. Foley explained that the committee is concerned about why city officials were not contacted until December, approximately three months after the substantial financial loss in the investments.
He explained that the second goal of the committee will be to "evaluate what the auditor does and work with him [or her] to make sure that in the future the process of investments the city makes are always on sound ground."
Walsh said "practices of good government," guidelines for city investments and increased communication between city officials must be implemented as the Finance Control Board transitions it's authority to the City Council.
Walsh said she is anticipating that within six weeks the committee will have a report to share with the City Council and Finance Control Board.
Williams said the report and suggestions formulated by the committee will help to ensure that the city "does not make the same mistakes again."