Raw Politics and the Office of State Auditor

Most of the media has concluded that this last legislative session was a failure largely due to the usual Republican – Democrat refusal to compromise. But that is not quite accurate. After all, the Senate is controlled by the Democrats and they passed the same provisions as the Republican House that a Democrat Governor finds offensive. That would seem to suggest poor legislative management on the part of the Governor or a host of significant policy differences between the Governor and his own party in the Legislature.

One example of this not-to-subtle intra-party war is the provision in the State Departments Omnibus bill that effectively renders the office of State Auditor an empty shell. Its powers of auditing local governments is essentially eliminated and its staff unemployed.

This major policy was contained in a House bill that received a public hearing and was ultimately passed. However, in the Senate there were no comparable public hearings or a vote. Instead, it emerged from a late night conference committee in the closing hours with Democrat leaders in support.

Now, why would Senate Democrat leadership accept a Republican proposal to virtually eliminate the office of the State Auditor which is held by a Democrat incumbent?

The answer likely has little to do with the issue of privatizing the office by permitting local government to contract out their audits and all to do with the incumbent’s stance on mining leases and, particularly, the proposed copper mine located in the Iron Range of northern Minnesota. It should be remembered that in addition to an audit responsibility which charges the State Auditor with oversight of the more than 20 billion dollars spent by local governments, the State Auditor also serves as a constitutional officer elected by the people of Minnesota. As such, she serves on the State Executive Council, the State Board of Investment (pension investments), Land Exchange Board, and a variety of other state boards. One major issue that regularly arises is the management of state lands including the issuances of mining leases.

For the past several years, there has been a heated controversy involving Polymet Mining Corporation of Canada’s proposal to open pit mine near Babbitt on the eastern edge of Minnesota’s Iron Range.  There is believed to be a large copper, nickel, and other valuable mineral deposits beneath a wide stretch of forests and lakes in the area.

Understandably, it pits jobs (around 350) against the protection of the environment including the flow of harmful mining residue into the waters that flow into Lake Superior.

Rebecca Otto, as State Auditor and as a member of the Executive Council publicly announced her opposition to the project and instantly became a political target for the Iron Range legislators.

She was challenged in the Democratic Party primary and mining was a dominant issue. Otto won an easy victory and that should have been the end of this matter.

However, it appears that it resurfaced in the fading hours of this legislative session when the Republican House bill was accepted by the Democratic leadership in the Senate. All indicators are that this was largely the handiwork of two Iron Range legislators with power and long memories; Senate Majority leader, Tom Bakk of Cook County and Senator Tom Sauxhaug of Grand Rapids.

This episode represents a most dangerous threat to our state’s constitution in that it constitutes an effort to intimidate an elected official. What’s next? If the Attorney General disagrees on a policy matter with a segment of the legislature is it acceptable for the legislature then to privatize her office and render her powerless?

We, the people, created these offices and we fully expect them to be treated with respect and fairness by our other elected branches of government. There is no reason in a democratic society for such a gross abuse of power.  In this matter, the people have spoken via an election and the legislature has the obligation to honor the will of the people.

May I add that the same goes for the House Republicans and their continuing battle to privatize the office of State Auditor. In this case, the Republican candidate for State Auditor had the full opportunity to make the case for privatizing the office and changing the responsibilities of the office. Discussing policy differences is what elections should be about.    At the polls, the people spoke and spoke loudly in support of the incumbent and the preservation of the powers and responsibilities of that office.

Now, if the legislature wants to study the office and review concerns about the management, costs, competition, timeliness, etc. that is entirely proper. Apparently, that is what both houses of the legislature intended until the raw power play occurred in the closing moments of the session.

As a former State Auditor, I am deeply upset by this flippant and mean-spirited approach to an office that belongs to the people. The value of the office lies in the fact that it provides not just a financial audit but also a strong compliance review as well.  This means matching financial transactions against the law. That is a real strength of that office. It is designed to prevent financial scandals.

Private firms do an excellent job on the financial and management review front. But compliance work is where the office of State Auditor excels and that is where the taxpayers’ interests are protected.

Overall, Minnesota has a well-respected system of local government. I doubt that there is any better in our nation. Part of the reason for this success is that we take the oversight function seriously. We want it to be independent and professional. The office of State Auditor was designed with that goal in mind. And overall, it has worked well.

If the legislature has concerns about the office, then a study and public hearings are entirely appropriate. But what the legislature did is wholly unacceptable and the Governor should flatly refuse to close the special session until this matter is properly resolved.

It may also be well for the legislature to take a hard look at itself. They may find some room for improvement.

LEADERSHIP: A Choice – You Decide

The Star Tribune (May 17) recently ran a review of a book by Fred Kiel with the headline:

FRED KIEL HAS TAPPED STATISTICAL RESEARCH TO SHOW THAT COMPANIES LED BY CEOS OF HIGH INTEGRITY GENERATE SUPERIOR FINANCIAL RETURNS.

This same theme was the central message delivered by David Brooks, the lead columnist for the New York Times, when he gave a superb talk at the Westminster Presbyterian Church forum in mid-May.  He noted how we have moved from a society more focused on values of character to one that celebrates what he terms “resume building”.  We are all too focused on personal achievement and recognition as opposed to the more productive leadership of character rooted in a value system that truly understands the greater good.

To this point, a friend sent me an email after my op-ed was published this past April calling for the dismissal of President Eric Kaler and others (see Arne Carlson Star Tribune Commentary).

He took note of a tragedy that occurred at Fairview Hospital while the late Carl Platou was in charge. By way of background, Carl Platou was a World War II hero who went on to distinguish himself as one of the nation’s foremost leaders in hospital administration and the improvement of medicine. Walter Mondale referred to him as a “genius”. Simply put, Carl Platou transformed medicine not only in Minnesota but nationally as well.

His final project was the creation of the biomedical research park that appropriately bears his name and that of Win Wallin, another Minnesota great. They formed a Board of Visitors with a mission to raise some $300 million from state and private gifts to make that park a reality.

However, by all standards, Carl Platou’s resume, particularly in the academic area, was most unimpressive. His was achievement by doing and working extraordinarily well with others toward a very pragmatic vision. He mastered team building.

Getting back to the tragedy, a child died after being given an overdose of anesthesia due to an incorrect reading. The attorney for Fairview advised Platou to stay away and allow them to handle it in court.

According to my friend’s account:  Instead, Carl sought out the parents, told them exactly what happened, and then, we all cried together.

All the Fairview upper management went to the funeral including the individual who made the mistake. The parents never sued. I am sure Carl worked out an appropriate settlement. As my friend noted:  He clearly accepted responsibility.

Now let’s go to May of 2004 when Dan Markingson ended his life in a most gruesome suicide. At the time, he was in a drug trial financed by a large pharmaceutical company at the University.  His mother, Mary Weiss, made every effort to get him out because she noted that his behavior was increasingly erratic. In one message she pleaded for her son’s release and declared:  Do we have to wait until he kills himself or someone else before anyone does anything.   Her plea was rebuffed and within a month Markingson violently ended his life.

The efforts by Ms. Weiss and her friend, Mike Howard, to find out the how and why of her son’s death were met with administrative stonewalling. At one point, they were escorted by security out of President Brunick’s office.  Finally, Ms. Weiss sued only to have the District Court rule that the University’s Review Board was “statutorily immune from liability”. Due to the technical nature of the dismissal, the Court did not hear or rule on the full substance of the case.

The President and his attorneys then turned around and sued Mary Weiss for legal fees.

As more people including members of the faculty and scientists around the globe joined the chorus calling for a truly independent investigation, the Bruinicks’ and later the Kaler administrations continued to stonewall requests for data and kept repeating a fiction of numerous investigations that were “exhaustive” and found no fault.

Now Eric Kaler, the new President, who has a most impressive academic resume, did not create the stonewalling or the untruths of multiple investigations that were “exhaustive” and “found no fault”.  However, he had a choice when he arrived in 2011.  He could meet with the Professors who were waving the red flags and who had fully informed him as to what was transpiring in drug testing which brought millions of dollars to the University and its researchers but was also rift with financial conflicts of interests, false claims about investigations, and abuse of enrollees. Or he could take the road of least resistance and continue the cover-up. He knowingly chose the latter.

Currently, President Kaler is under siege from some of his faculty and others for his lack of truthfulness and participation in a cover-up that protected serious misconduct.  Their claims are fully supported by a recent report by the Legislative Auditor. Yet, there is no acceptance of responsibility.

And then in a Star Tribune (May 17) opinion column entitled “WHAT DID THEY DO TO MY U?” the University’s former chief of clinical cardiology, Robert F. Wilson, wrote: The administration is plagued by cronyism and conflicts of interest. There are legitimate questions about the transparency and truthfulness of its leaders. Poor leadership is how we got where we are, not lack of money.

And it shows on the bottom line.  In the national rankings of medical schools, we continue to drop.

This has been a story of leadership. Both men were clearly talented but they did not bring the same vision of leadership nor the same elements of character. Nor did they bring about the same results.

Who would you follow?

David Koch – A Legacy Worth Passing On

Yesterday’s (January 5, 2015) Star Tribune (Koch Article ) carried a story on the passing of David Koch. Now that may not mean much to a lot of people. (No, he was not in anyway related to the Koch brothers.) But the reality is that he affected us all, as he was an early pioneer in defining corporate responsibility. Here is what the Star Tribune said:

He believed that if you made a good product, treated your workers fairly and were generous in the community, the business would prosper. And he railed against executive and Wall Street excesses of the last generation, as he and his wife, Barbara, quietly donated much of their wealth to charitable educational causes.

Although these words sound more like Senator Elizabeth Warren, the fact is that David Koch was an old fashioned traditional Republican. Deeply religious, he understood that Christianity was about love and service and he lived his life accordingly. And contrary to the greed merchants of today, he knew that good business practices lead to profit and more opportunity for employees, shareholders and community alike. He took Grayco from a small manufacturer with sales of $33 million and turned it into a publicly-owned giant that today employs some 2,700 people around the world and has revenues in excess of $1 billion.

On a personal level, David was always welcoming, kind, generous, and humble. Simply put, he was truly a “nice guy” in the best sense.

We in Minnesota have been blessed with an endless array of giants in business who were committed to the service of community while successfully growing their companies. I wonder what Minnesota would be like without the Dayton brothers, Elmer Andersen, Edson Spencer, the Pillsbury’s, Curt Carlson, Win Wallin, Carl Platou, and others now gone who truly built our community.

Perhaps it would be appropriate for the Carlson School of Management to do two things:

1 – Establish a Business Hall of Fame to honor those who have advanced the values of business success and community well being. It will serve as a beacon for the future leaders coming through our excellent business school.

2  - Seek advice from those largely retired who have and continue to excel in this area. The goal would be to integrate values of service with excellence in business. Perhaps the best phrase would be “stewardship”, the title of John Taft’s superb book on this subject.

The Star Tribune cited comments by such likely outstanding participants, Dick McFarland and Chuck Denny. However, there are others who would be honored to be considered and their input would be invaluable.

Perhaps the finest gift we can give to honor those who have provided outstanding business-community leadership is to have their legacy passed on as an integral part of the future.

I think David Koch would be honored.  And we all would be better off.