The Emergency Manager Lacks The Authority To Order Probe Of City Pension Funds

On June 20th, Kevyn Orr issues Order No 8, which attempts to order the city of Detroit auditor General and Inspector General to investigate the city pension funds for potential fraud, waste, corruption and abuse. These accusations come at the behest of Kevyn Orr, without mention of or proof of any reasonableness that these allegations exist. Kevyn Orr attempts to support his order by using Public Act 436 Section 10(1) which allows the EM to issue orders to local appointed and elected officials that are necessary to accomplish the purposes of the act. Orr’s order then continues to quote the city charter’s varying sections that address the independent offices of Inspector General and Auditor General that describes their powers and duties.

This is in direct violation of the city charter. Orr does not have the authority or power to order these offices. The city charter specifically states that these offices are independent of the mayor and city council and are removed from their influence. Public Act 436 provides the EM with the powers of the mayor and city council. It does not extend to other portions of the city that are not under the authority of these two branches, hence their independence. Once the heads of these departments are made, they are separate from control from their appointing offices.

 

The added commentary from the city charter states;

COMMENTARY TO ARTICLE 7.5: Article 7.5 (Independent Departments and Offices) is new. The departments and offices located in this article have a unique advisory or investigative role to fill in city government. Therefore, such departments and offices should be seen as reasonably removed from the influence of the executive and legislative branches of city government.

Kevyn Orr attempts to use the charter as justification for his order when the charter specifically prohibits such an order. Kevyn Orr must follow the city charter. However Public Act 436 contains a provision to allow Kevyn Orr to engage in his probe.

Section 12(1) p states;

Retain 1 or more persons or firms, which may be an individual or firm selected from a list approved by the state treasurer, to perform the duties of a local inspector or a local auditor as described in this subdivision. The duties of a local inspector are to assure integrity, economy, efficiency, and effectiveness in the operations of the local government by conducting meaningful and accurate investigations and forensic audits, and to detect and deter waste, fraud, and abuse. At least annually, a report of the local inspector shall be submitted to the emergency manager, the state treasurer, the superintendent of public instruction if the local government is a school district, and each state senator and state representative who represents that local government. The annual report of the local inspector shall be posted on the local government’s website within 7 days after the report is submitted. The duties of a local auditor are to assure that internal controls over local government operations are designed and operating effectively to mitigate risks that hamper the achievement of the emergency manager’s financial plan, assure that local government operations are effective and efficient, assure that financial information is accurate, reliable, and timely, comply with policies, regulations, and applicable laws, and assure assets are properly managed. At least annually, a report of the local auditor shall be submitted to the emergency manager, the state treasurer, the superintendent of public instruction if the local government is a school district, and each state senator and state representative who represents that local government. The annual report of the local auditor shall be posted on the local government’s website within 7 days after the report is submitted.

 

This allows Orr to hire the necessary auditors and or inspectors for any probe but would require that those hired and their probe be funded by the state of Michigan. Kevyn Orr is violating the charter and ignoring the specific sections within Public Act 436.

Orr needs to be investigated for abusing his authority, for violating the local and state laws and for any code of conduct violations that he may be violating as a licensed attorney.

 

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