Today The Washington Post reported that the D.C. Office of the Chief Financial Officer tightened background screening procedures due to a history of bad hires leading to theft, embezzlement, and falsified credentials. Internal reports recently discovered by the Post provide new insight into the city’s fabled history of internal fraud, embezzlement and cronyism.
The problems in the spotlight today actually date back to 2001, when the city learned that the General Counsel to the Office of the Chief Financial Officer, Saamir Kaiser, was not actually a lawyer. Kaiser’s primary responsibility was to provide legal advice and counsel to the city’s CFO, Natwar M. Gandhi. Instead, he embezzled $250,000 in city funds to pay for a lavish wedding, honeymoon, and a Mercedes-Benz. His falsification of credentials would have been exposed with a thorough background check.
The headaches continued in 2008, when the DC tax office was hit by a $48 million tax refund embezzlement scandal. According to the Post, Stephen Cordi was hired by Gandhi at that time to restructure the tax office and tighten up then-lax background screening process. An internal report recently obtained by The Washington Post stated that “Cordi felt that without some pre-employment screening, bad hiring decisions are made. Hiring an unqualified, ill equipped or morally corrupt employee can be even more costly before they are fereted [sic] out and terminated.”
A report from the city auditor revealed that background checks are not being done pre-hire, but in fact despite recommendations to the contrary, are being conducted in-house, and only after employees are hired. Tax office chief Cordi defended the office’s practices in a written statement, saying past problems “have long-since been addressed to the satisfaction of internal and external auditors, although, like all other internal controls, they are constantly reviewed and improved.”
The hiring issues in D.C. are shared by employers in the private sector. We have recently seen top level executives caught falsifying credentials–Scott Thompson (Former CEO of Yahoo.inc) lied about a computer science degree, and RadioShack CEO David Edmondson resigned in 2006 after falsifying two degrees and after news surfaced that he had been charged and was facing trial for drunk driving. What is clear from the Post’s report is that background screening, when done right, can prevent crime in the workplace. Failure to conduct thorough screenings can result in bad hires– at the expense of employers, government, consumers and taxpayers alike.
