When Jeff Hewitson joined the Hamilton Township Board of Education in 2010, he noticed the district paid its health insurance broker a hefty, seven-figure sum annually.
Hewitson asked the other board members why they didn’t bid out the broker contract, convinced the district could find a better deal.
“Because we don’t have to,” he said he was told.
That broker, Marliese Ljuba, wound up being the centerpiece of the November court case against former Hamilton mayor John Bencivengo. Testimony painted Hamilton Township as the broker’s playground, where she could easily find officials within the municipal government or on the school board to bribe. In exchange, the officials gave Ljuba their help to ensure she would not lose the lucrative Hamilton contract.
More often than not, officials would simply exploit the lax rules regulating how contracts are awarded to ensure Ljuba’s deal. In other cases, as the Bencivengo trial testimony showed, it required officials to overstep not only ethical lines, but legal ones, too. Ljuba’s revelations led a U.S. district court jury to find Bencivengo guilty of five counts of extortion and related offenses, as well as to the downfall of two municipal government directors and the school district’s business administrator.
But the scandal and the subsequent fallout has led to another development in 2013: officials—elected and not—from the school district and municipal government eager to prove they weren’t part of the problem. In the span of three weeks, the municipal government, school district and BOE made fundamental changes in the way they do business. They changed their rules or procedures to make it more difficult for officials to drift into ethically murky waters.
Township council got in on the act, too, introducing an ordinance at its Feb. 5 meeting that would formalize the panel’s practice of requiring multiple bids for professional contracts, like those hiring an engineering firm.
“It doesn’t happen because they thought of it,” said Hamilton resident Steve Cook, a member of citizens’ empowerment group The Citizens Campaign. “The Citizens Campaign has given us the tools, and we presented the tools to the boards. Both the school board and council turned us down at first. After the case of the mayor, both were eager to show they had a teaching moment.”
Cook and fellow Citizens Campaign activist Connie Silakoski have long pushed for reform. They were often met with resistance, forced to file a Freedom of Information Act request to simply find out the name of the school district’s insurance broker and the amount the district paid for brokerage services. Such inquiries were viewed by Ljuba’s allies as more than annoyances. The prosecution in Bencivengo’s trial played a tape of a recorded conversation between the former mayor and Ljuba where Bencivengo threatened to send a bunch of heavies called “the Screw Guys” after Cook.
Thugs never visited Cook, and the activists kept after the school board. On May 24, 2012, a month after the federal government charged Bencivengo of misdeeds, the Hamilton school district cut ties with Ljuba. The district later hired a consultant, at a cost of $39,000, to obtain a new insurance provider for the district. District officials said the move cut costs by $800,000, savings realized primarily by the elimination of Ljuba’s $1.2-million brokerage contract. The scandal—and the savings—triggered plenty of people to wonder what would have happened had the district sought bids for the brokerage contract all along.
Pending a vote at the school board’s Feb. 20 meeting, those people will not have to wonder again. The BOE planned to adopt a policy that requires the school district to issue a Request For Proposal for all contracts regarding insurance coverage and insurance brokers or consultants. The policy also states any insurance brokers or consultants hired by the district must be paid on a flat-fee basis. This provision should eliminate the million dollar commissions brokers, like Ljuba, had received in the past.
That wasn’t the beginning, though. On Jan. 31, the administration officially launched its BoardDocs system, a place where the public can view documents like school board agendas and district policies online. The system, in theory, could eliminate one of the largest complaints about the school district: it was hard to keep track of the school board’s actions, even for those attending BOE meetings.
The moves were the sudden culmination of a nearly three-year-long battle for the Citizens Campaign, board members like Hewitson and Stephanie Pratico, and others in the community. Cook said they were also a departure from how the school board used to do business, a change that seemed to occur once Hewitson assumed the role of board president. Both Hewitson and school board vice president Joe Malagrino even were quoted in a press release from The Citizens Campaign, lending their support to the activists’ reforms.
Some on the board never opposed The Citizens Campaign, Hewitson said, but it came down to numbers. The reformers belonged to the minority.
“It was tough sledding for awhile … It all seemed to come together at the same time,” Hewitson said.
It came together for the municipal government, too, within weeks of the school district’s changes. Hamilton Mayor Kelly Yaede announced, on Jan. 28, the township would go ahead with an expanded forensic audit first proposed by councilman Kevin Meara in November.
Then, on Feb. 4, she unveiled a new, three-part ethics program that included mandatory annual ethics training for all managers and supervisors, the strengthening of the township’s gift policy to include all government employees and members of all township boards and commissions, the elimination of the township’s ethics board and reassignment of the township’s ethics complaints to the state Local Finance Board. All the measures will cost the taxpayers nothing, Yaede said.
The audit will require investigators to analyze transactions for evidence of tampering, as well as conduct employee interviews to determine whether township officials attempted to circumvent the township’s internal control policies. Yaede said state Division of Local Government Services director Thomas Neff approved the plan.
Meara, while pleased Yaede moved forward with his idea, thought the process could have been done more transparently. The township did not issue a RFP for the audit, instead selecting the same firm who has completed audits for the township in the past.
Yaede said “time constraints” made a bidding process impossible this year, but any future audit would most likely be put out to bid. She added that the auditor, Bob Morrison, is “beyond reproach.”
Yaede said her first duty as mayor is to restore the people’s trust in government, and she wasn’t surprised the school district had taken similar action with a similar aim.
“Questions have been raised concerning ethics in government,” Yaede said. “It’s the responsibility of any governing body to address those concerns.”
There’s plenty more that could be done, though, Meara said.
Meara said he thought an effort should be made to improve communication between council and the administration, including providing council members all materials administration officials review during the bidding process. He wants the municipal government to review campaign contribution reports to see if any school or government elected official has received donations from firms applying for township contracts. And he proposed prohibiting township officials and employees from reviewing contract proposals with firms they previously worked for or have a connection to, as well as a 5-year moratorium on doing business with a firm after it hires a person who previously worked for the township.
Meara also wants council to put an end to “scope creep,” where a firm—knowing the real cost of a project—submits an artifically low bid to secure a contract and then charges more to complete the services. Meara proposed instituting an overage cap, so a contract would come back to the municipal government and have to go out to bid again should a project’s cost swell to a certain percentage over the original bid.
“We have to tighten up the administration procedures so there’s more transparency and oversight and so the council can provide better checks and balances,” Meara said.
Activist Cook agreed more reforms could be made, but credited the council for going “above and beyond” its legal obligation.
“The council has a pretty good record of bidding everything out,” he said.
In the past month, other governmental entities have tried to follow that example, but Cook isn’t resting simply because momentum seems to be going in the right direction.
“Transparency is the key to weeding out corruption,” Cook said. “You’ll never completely stop things like pay-to-play. But if the processes are transparent, you just can’t hide someone doing a bad job.”
