by Max Brantley
Treasurer Martha Shoffner is having her day with the Legislative Joint Auditing Committee today on her office's bond investment practices, particularly a concentration of business with one Russellville firm and a decision to sell some bonds before maturity that auditors said cost the state several hundred thousand in unrealized earnings. The broker, St. Bernard Financial Services, has disputed the audit findings.
Shoffner said the sale decisions were made on the advice of the broker, though no written record of that advice exists. According to reporting by Channel 4, Shoffner has been a bit hazy in explaining how one firm, St. Bernard's, wound up with so much of the business.
Here's the report today issued by the Audit committee on an expanded look at the treasurer's investment practices, which concludes that the state was deprived of almost a half-million in investment earnings by early sales of bonds and investment of proceeds at low rates while brokers looked for better bond investments. The broker continue to insist that the audit is flawed for failing to recognize gains on sales and fully examine results on subsequent reinvestments of sale proceeds. Shoffner noted that some of the early sales made money for the state, too.
The Audit, which had earlier faulted the office's internal controls, makes a number of findings that the treasurer's office said it would consider.
The recommendations included an independent review of Treasury investments and policies; placing money with outside money managers; new policies for the state Board of Finance and treasurer and expansion of the state Board from various public officials to include private people without investment expertise.
A Twitter from a Republican legislator said the audit would be turned over to state and federal prosecutors, though the copy posted on-line this morning doesn't point toward any suspected law violations. No matter. Deserving as Shoffner is of a tough review by this agency, it has become clear that Republicans plan to use the Audit Committee as a political tool. Here's AP on the meeting, which makes it clear that Republicans seeking referral to prosecutors have nothing to base the referral on. In other words, if Republicans find that a Democrat makes a decision they don't like, they'll sic a prosecutor on them to go searching for a crime, a la Kenneth Starr. This, you can be sure, is how Bryan King's proposed election integrity unit will work. It's expensive and an abuse of the law, but good luck finding a Republican who'll excoriate this kind of wasteful spending.
Sadly, Rep. Tim Summers, an occasionally sane Republican, led the charge for a criminal investigation on the ground that, well, the thing just looks fiishy. There are a lot of bad decisions by elected officials, some of which sometimes favor cronies. But they are often simply no more than that - "crimes" in search of voters who deal punishment at the ballot box. You can't criminalize stupidity and political favoritism, much as the Republicans seem bent on doing it. If they are, I've got a secretary of state they need to look at.