How do we stop government graft?

By SHAD WHITE,

“Is Mississippi the most corrupt state in the country?”

It’s one of the most common questions I’m asked as your state auditor.

Most folks who ask have read a ranking or article based on a study at the University of Illinois-Chicago. The study found Mississippi has one of the highest numbers of convictions for public corruption in federal courts, per capita.

That ranking, of course, focuses on convictions, and we certainly would prefer to actually be convicting corrupt officials rather than letting them run free. A measure of the number of corrupt acts, whether caught or not, would be preferable, but I’ve never seen such a study, and it probably would be impossible.

 

So is there something to learn from the information we do have, that Mississippi seems to need to convict more people per capita for public corruption than other states? Does that suggest we’re more corrupt?

The short answer—based on my time in office, my review of our cases, and discussions with law enforcement from around the country—is “yes,” potentially.

Mississippi is probably more corrupt, per capita, than your average state, but it’s not because there’s something special in the water. We have more corruption because of two concepts: need and opportunity.

The importance of need and opportunity in white-collar crime was described in a device called the Fraud Triangle. The Fraud Triangle was invented by a professor at the University of California-Santa Barbara, and it suggests that, if we want to predict where we’ll find theft of public funds, we look for suspects who have 1) the need for money, 2) the opportunity to steal that money, and 3) the capacity to rationalize the theft.

Mississippi has a lot of the first two parts of the triangle. We live in a poor state where financial pressure on families is high. That can create the need to steal.

We also live in a state with hundreds of small, tucked-away government entities: rural local governments; small state boards and commissions; small schools in far-flung places; obscure public boards, like drainage districts; etc. And being small and hidden creates the opportunity.

Take, for example, our case last year involving the theft of nearly $1 million from a community college in the Delta. Some were surprised that that sort of theft happened at a community college instead of one of our bigger universities. After all, the big universities have more money flowing through them.

 

Theft is harder at a university, though, because there is more oversight—more lawyers, accountants, and auditors running around—to be sure the rules are followed. There are fewer trained eyeballs looking at financial transactions in small institutions.

Statistics from the Association of Certified Fraud Examiners confirms the dangers of small government offices. Fraud is more common in small offices and actually costs more per case. Worldwide, 31 percent of fraud happens at the local government level compared to 26 percent at the state/province level. The median loss per instance of fraud in small offices (less than 100 employees) is $200,000. The median loss at places with more than 100 employees is actually smaller, $104,000.

How then can we address the corruption problem in Mississippi? We can’t change the fact that we’re a rural state. And waiting for poverty to abate is not an option either.

Our only option is to make the best of the situation, knowing that we are more vulnerable to public integrity problems than average.

Transparency is the first and best preventative measure. We need vigorous enforcement of our public records and open meetings laws.

Personnel to prevent theft is also important. For instance, while all our universities have internal auditors, those auditors are hard to find at our fifteen community colleges. They should have them.

Also, all small government offices should have policies requiring separation of duties (rules that say no one person does too many of the tasks involving the handling of money).

As for our small state boards and commissions, many should have their back office functions consolidated, both to save money and to bring those functions under an experienced group of procurement officers and auditors.

Finally, the onus is on me to do my job well and to constantly send the message that I have zero tolerance for stealing public money. Such a message discourages anyone who reads a newspaper from attempting embezzlement of taxpayer dollars in the first place.

Shad White is the 42nd State Auditor of Mississippi.

 

 

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The University of Mississippi recently released the Fall 2018 Dean’s List. Students must earn a semester GPA of 3.50 to 3.74 to be listed on the Dean’s List.