Following the Money

Gregory Sullivan’s first term
as IG ends in August, and he’s
making it known that he is
available for another.

phil johnston thought all hell was going to break loose at the State House. It was 1977, and two state legislators had just been sentenced to a year in federal prison for soliciting $40,000 in bribes from a consulting firm involved with construction at the new University of Massachusetts-Boston harbor campus. Johnston, then a state representative from Marshfield (and more recently chairman of the state Democratic Party), says he was certain that the scandal would lead to big changes in government. But when he co-sponsored legislation to establish a state inspector general, House Speaker Thomas McGee nixed the idea. “We’ll do that over my dead body,” McGee declared, according to Johnston.

McGee’s opposition notwithstanding, in 1980 the Legislature passed, and Gov. Ed King signed, a law making Massachusetts the first state to set up an independent watchdog “to act to prevent and detect fraud, waste, and abuse in the expenditure of public funds.” The office opened for business the following year, and nearly three decades later, more than 40 inspectors general monitor state governments across the U.S.

The Ward Commission, an outside panel named by the Legislature, concluded after a nearly three-year investigation that the MBM scandal (named after McKee, Berger, and Mansueto, the New York company that paid the bribes) was only one example of the “unholy alliance between private money and public power” that pervaded a decade’s worth of public construction projects, many of them plagued with costly defects. Panel members called for a state inspector general who would be “neutral, impartial and independent.”

Affordable housing
consultant Bob Engler
says that Sullivan is
giving “ammunition” to
critics of Chapter 40B.
Government is political, says Roland Malan, a former IG for the New York Metropolitan Transportation Authority, “[but] it’s not the nature of an inspector general to be political.” The current Massachusetts inspector general says the office has remained true to that creed. “We don’t have political realities, we have reality,” says Gregory Sullivan, a former Democratic state representative from Norwood and one of Johnston’s supporters during the legislative battle to establish the IG’s office. Appointed by a majority vote among the governor, the attorney general, and the state auditor, the inspector general serves a five-year term and can be reappointed to a second. Sullivan’s first term ends in August, and he is making it known that he is available for another.

Sullivan, 55, has weighed in on some high-profile issues: dismantling the western tolls on the Massachusetts Turnpike; Chapter 40B, the state law designed to stimulate the creation of affordable housing; and the uncompensated-care pool that reimburses hospitals and community health centers for medical care given to people with little or no health insurance.

In 2005, he oversaw an investigation that prompted MassDevelopment to recalculate the interest on a loan financing the renovation of the former Saltonstall building in Boston, a move that saved the state $800 million-a good chunk of the $1.9 billion in total state savings that the IG’s office claims credit for since being established 26 years ago. Although the state auditor and attorney general can conduct their own inquiries with annual budgets several times larger than the IG’s $2.7 million, the Ward Commission found that neither office is “endowed with the resources to uncover complex, carefully concealed patterns of white-collar crime and political corruption.”

The IG is able to uncover these patterns, but few of its investigations prompt headlines as big as those of the MBM scandal. That may be in large part because the office has no formal enforcement powers. Cases for civil or criminal prosecution get referred to state and federal law enforcement officials; allegations of conflicts of interest go to the State Ethics Commission.

And though inspectors general adopt a posture of detached neutrality, they need to understand the give-and-take on Beacon Hill and possess an eye for marketing a message. “It’s not enough to issue a report, have one story in the Globe or Herald, and then just go on to the next report,” says Nick Littlefield, who was the chief counsel of the Ward Commission. IGs “absolutely” must market their reports on important subjects such as the Big Dig, he says, not only by contacting the press, but also by holding public meetings and advocating with legislators.

The political landscape has also included a succession of governors, all Republicans, who tried to do away with the office. Survival has rested on the good graces of the Legislature, which in recent years been the backstop protecting the IG from elimination. (Perhaps not coincidentally, the lawmaking body, along with the Department of Veterans’ Services, is specifically exempt from IG oversight.) With all those pressures, can the inspector general be what Littlefield called “a sort of an ongoing Ward Commission”?

GETTING DOWN TO CASES

The IG’s caseload is growing: Last year the office closed 134 cases but opened 280 new ones. Fewer than 40 employees keep up—or try to—with the inquiries the office receives about billions of dollars in public spending.

Though the IG adopts a posture of neutrality, he needs to understand the give-and-take of politics.
Subjects for investigation can come up unexpectedly. Sometimes there’s even a call for the IG to intervene in a case that’s already been publicized. For example, before she became Senate president, Therese Murray, a Plymouth Democrat, asked that Sullivan look into the questionable finances of Massachusetts International Marketing Partnership/Tourism Massachusetts, a now-defunct tourism agency. This request followed a February Boston Phoenix report alleging that the Legislature, with Murray’s support, appropriated an excessive $11 million in state funds to the vendor.

Sullivan has no qualms about this political hot potato. He says he’ll follow the transactions and report objectively. “Fortunately for me, we don’t investigate the Legislature,” says Sullivan, who would have to consider handing off the case to other investigators if the paths lead back to Beacon Hill.

Other times, ticked-off residents can send the IG into areas where no state investigator has gone before. One individual pointed the IG’s office to an affordable housing lottery that he alleged had been rigged, with the lottery winner exceeding the income requirements. The charge led to the state’s first major probe into fraud related to Chapter 40B. That law allows residential developers in most communities to bypass local zoning laws if they make 20 to 25 percent of the project affordable over the long term to low- to moderate-income residents. Any profits a developer makes above a 20 percent limit, however, are supposed to be returned to the town.

After discovering that the town of Boxborough had reached a $1.2 million settlement in 2004 with a developer who exceeded the 20 percent threshold, the IG’s office started looking into the cost certifications that are supposed to make sure developers are not exceeding the profit ceiling. The IG zeroed in on Citizens’ Housing and Planning Association, a nonprofit affordable housing organization that was working under state contract to review 40B audits. According to a Boston Globe report, Sullivan found that in five of the 10 reviews completed by CHAPA, developers hid close to $4 million in profits by inflating land values, among other devices. “The big lesson with 40B is that there has to be improved oversight of the program,” Sullivan says. He claims his work has led to two improvements: CHAPA has relinquished its role reviewing audits and MassHousing, the state’s affordable housing bank, is working to institute a tighter control system. (Neither CHAPA executive director Aaron Gornstein nor the Home Builders Association of Massachusetts chose to comment.)

But not everyone was happy with Sullivan’s investigation. Bob Engler, whose affordable housing consulting firm, Stockard Engler Brigham, has represented more than 100 developers and two dozen municipalities, says the IG applied standards that didn’t exist when the projects were approved. And by using the tax assessor’s land values prior to a 40B development, instead of the parcel’s appraised value or what the developer paid for it, Sullivan was using a measure that no one has used in 35 years of looking at Chapter 40B land values, says Engler.

Engler adds that Sullivan’s investigation “gives ammunition to [40B] opponents to say, ‘Look at this program, it’s not being controlled very well. We’re going to come down on it pretty hard and make up some more onerous regulations.’” While he concedes that there probably have been abuses, Engler doesn’t see the same huge dollar amounts owed to towns that Sullivan does. For his part, Sullivan says he stands by his findings.

Sullivan also raised hackles several years ago when he waded into the issue of municipal boat moorings. In 2003, someone complained that the town of Harwich was allowing a private boatyard to control town moorings and rent them to preferred customers. More boats than moorings means long waits in some communities for town slots—about 15 years in one Harwich harbor. After finding that the boatyard lacked proper permits and treated certain moorings holders unfairly, Sullivan recommended that the “town exercise control of all moorings in municipal waters.”

Sullivan also raised hackles in 2003 when he waded into the issue of municipal boat moorings.

But according to the Department of Environmental Protection, its regulations do not prevent private boating facilities from assigning permits to patrons or members. Jamy Buchanan Madeja, a former environmental affairs general counsel during the Weld administration, says this is the first time an inspector general has expressed an interest in how boat moorings are assigned. Madeja, an attorney who now represents public waterways service providers, argues that the DEP authorizes marinas, boat clubs, and other recreational facilities to receive moorings permits and, in turn, rent, or assign them as they see fit. The IG has “wrecked havoc on the very thought-out system that DEP had held statewide public hearings on for decades,” she says.

Greg Beeman, representing builders
and contractors, worked with Sullivan
to reform public construction laws and
praises the IG’s impartiality (see sidebar).

Trawling for cases of waste, fraud, and abuse can yield mixed results, but Sullivan insists that most agency officials do respond to his findings, pointing to a 2003 probe of the DEP’s auto emissions testing program that resulted in the removal of faulty equipment. But Kyla Bennett, New England director of the advocacy group Public Employees for Environmental Responsibility, says that the state’s auto emissions test is still flawed, raising concerns about the IG’s ability to follow through fully on issues. Meanwhile, although several municipalities—including Boston, Quincy, and Chatham—have changed or are reconsidering their moorings policies as a result of the Harwich case, DEP has not modified its regulations to match the IG’s recommendations.

Jack McCarthy, the senior assistant inspector general, says that trying to dig up information is not as frustrating as “when we complete an investigation and people don’t have to follow our advice.” He adds, “Sometimes we feel like Cassandra.”

MUSCLE BOUND?

The Big Dig has been an especially frustrating example of the Cassandra syndrome. The largest public works project in U.S. history has generated reams of advice from the inspector general’s office, some of it ignored by management authorities. Exhibit A for unheeded counsel is a now-infamous report, released in 1998, on anchor bolts in the Ted Williams Tunnel. The study was issued by Sullivan’s predecessor, Robert Cerasoli, and it threw up a number of red flags, including allegations of unclear testing procedures for the anchor bolts and poor design specifications that cost nearly $800,000 to fix. Cerasoli argues he tried to interest the media in his findings, but found few takers.

The attitude of then-Gov. Paul Cellucci and joint project managers Bechtel/Parsons Brinckerhoff was, “Who are you guys?” according to McCarthy. “Everybody, including most of the media, was a cheerleader for the Big Dig at that time,” he says, and didn’t want to jeopardize federal funding with bad news. Indeed, a February 1999 State House News Service article about the study noted that it “generated little public interest.” (In July of last year, Boston resident Milena del Valle was killed and her husband injured when a ceiling panel crushed their car in a connector to the Ted Williams Tunnel.)

Currently, 10 percent of the IG’s resources go toward investigating the Big Dig, and the office sent four Big Dig cost recovery cases to the attorney general in 2005, the last year for which complete data are available. Still, it’s clear that Sullivan’s office cannot provide complete oversight of the $14.6 billion project.

In 1995, the Legislature directed the IG, the state auditor, and the attorney general to set up the Central Artery/Third Harbor Tunnel Project Oversight Coordination Commission in order to monitor the project. Four years later, commission member Wendy Haynes wrote in a case study of Big Dig oversight for the journal Public Works Management & Policy, “Without additional funds now and in the future…state oversight agencies will be able to scrutinize the CA/T Project only at the expense of their other legislatively and constitutionally mandated responsibilities and priorities.”

“I think if people wanted oversight, they would have given us a lot of money to oversight the Big Dig,” says Cerasoli.” Otherwise, “it’s good-government talk.” But keeping tabs on the Big Dig has confounded dozens of Massachusetts officials, not just inspectors general (“Learning from the Big Dig,” CW, Fall ’06). And given the complexities of the project’s management structure, more comprehensive oversight by the IG would not necessarily have prevented catastrophe. As a remedy, Sullivan supports a bill that would require a professional engineer to oversee any public highway, tunnel, or infrastructure project valued at least $50 million. (At press time, Gov. Deval Patrick had not yet decided whether a special commission or a special inspector general should look into the Big Dig, according to a spokesperson in his office.)

Even without a megaproject like the Big Dig to deal with, the IG’s office would be worrying about its tight budget. “The state government is huge and it has all sorts of pockets,” says senior analyst Ellen Silberman, who formerly covered City Hall for the Boston Herald. “Unless our staff is 10 times the size it is, you’re never going to hit every single pocket.” State Auditor Joe DeNucci doesn’t mince words. “How can you run an inspector general’s office with under $3 million?” he asks.

Even without the Big Dig to deal with, the IG’s office would be worrying about its tight budget.

Sullivan requested a $500,000 increase in fiscal 2008. But Patrick, facing a $1.3 billion deficit in the state budget, level-funded the agency at $2.7 million. As a way of finding more funds, House Majority Leader John Rogers has raised the idea of an independent revenue source for the office—modeled on the inspector general’s 2004 audit of the uncompensated care pool, which was requested by the Legislature but financed through the surcharges that hospitals and insurers pay into the pool. Sen. Bruce Tarr, a Gloucester Republican, has also suggested that in cases where money is recovered, a portion of those funds go to the IG’s operating budget.

As another way to beef up state oversight across the board, some have suggested putting more boots on the ground. Johnston, the co-author of the IG statute, says the Massachusetts law is “modest,” and he argues for a version of the federal model, installing inspectors general in every secretariat and authority that does private-sector contracting. Florida uses such an approach, with 48 inspectors general in cabinet offices, state agencies, and the state university system.

Others say that Massachusetts is too small to merit that level of scrutiny. Rogers, who started his career as a legislative intern for Sullivan and ultimately inherited his state representative’s seat, says one advantage of the current set-up is that a department can’t cozy up to an in-house investigator. “This is a watchdog that roams all different premises,” he says of the IG’s office. “People are never sure when that dog is on the premises.”

PERSONAL POLITICS

A self-described “missionary of the government,” Sullivan took the plunge into the Legislature earlier than most. When he was a senior at Harvard, his mother, Patricia, suggested that he run for the open House seat representing Norwood. “If you really want to do something to make a difference, you have to be in office,” he remembers her saying. He won the seat in 1975 and served until 1992.

His mother’s advice was understandable, given Sullivan’s family background. The third oldest of 10 children, he came from a household attuned to politics and not worried about taking strong stands. After the death of a friend’s child in Vietnam, his mother became an antiwar activist and was once escorted by the police from a Norwood park for trying to plant a “peace tree.”

His father, George Sullivan, a retired Stoughton District Court presiding judge and former state senator, participated in a 1971 antiwar protest in Boston while serving on the bench. “I want to be disassociated from a war being waged without constitutional authority,” he told the Globe.

“I knew he would speak out even if it threatened his position,” Greg Sullivan wrote in a published letter to the editor about the incident. “He just couldn’t keep his mouth shut… I’m very proud he stepped forward.” (The Supreme Judicial Court did end up reprimanding the elder Sullivan.)

Despite these liberal bearings, Sullivan, a married father of four who still lives in his hometown, says he grew disaffected in the Legislature with what he terms “sloppy government” that spent money but didn’t solve problems. He morphed into a fiscal conservative, stepping into the spotlight on taxes and welfare reform.

“He had a mind of his own,” says former House Speaker George Keverian, who found out the hard way. Sullivan helped to short-circuit a 1989 capital gains tax increase, and as well as a 1990 package of tax increases being pushed by Keverian and then-Gov. Michael Dukakis.

Despite their political differences, Dukakis praises Sullivan’s work as IG. “I don’t think the administrations that he has worked with have been anywhere near as responsive as they should be, frankly, because a lot of the stuff is right on target,” says Dukakis. Like other observers, however, Dukakis is leery of the lawmaker-to-IG pathway that has emerged. “It should not become a tradition that only a legislator can hold that job,” he says.

A year after leaving the Legislature, Sullivan joined the IG’s staff, where he worked for nearly a decade under Cerasoli until being named acting inspector general when Cerasoli stepped down in 2001.

Belying the talk of the office floating above the political fray, Cerasoli, himself a former Democratic House member from Quincy, says that a record in elected office convinced him that Sullivan could navigate the tricky landscape on Beacon Hill. “I did know that this guy would help the office survive because he would have the political instincts from having been in the Legislature,” says Cerasoli.

POWER PLAYS

Sullivan says his office doesn’t play politics. “We play it down the middle….We follow the facts and that’s as far as we go,” he says. Even so, the inspector general hasn’t quite attained nonpartisan nirvana.

Govs. Cellucci and Romney both made attempts to eliminate the IG’s office entirely.

“There’s only so much independence you can build in while keeping it in the political sphere,” says Pam Wilmot, executive director of Common Cause Massachusetts.

Beacon Hill politics loom over the selection of the inspector general. A former head of the Boston Municipal Research Bureau, Joseph Barresi, the first inspector general who served from 1981 to 1991, came from the government watchdog world. But both of his successors, Cerasoli and Sullivan, served in the Legislature.

In 2001, during the year-long run-up to Sullivan’s selection, the only out-of-state candidate, Donald Mullinax, the Los Angeles school system inspector general, dropped out of the search, dismayed at the jockeying to replace Cerasoli among Bay State insiders. (Candidates included two House loyalists of then-Speaker Tom Finneran and the head of the state Office of Campaign and Political Finance.) Mullinax told the Globe that inspectors general “were supposed to be watchdogs, not house pets.” In the end, acting Gov. Jane Swift and DeNucci, a former legislative colleague of Sullivan’s, backed Sullivan for a five-year term over Attorney General Thomas Reilly’s preferred candidate, the head of his Medicaid fraud unit.

Charging a small group of people with the inspector general’s appointment increases the political susceptibility of the office, says PEER’s Bennett. Malan, the former IG for New York City’s transit authority, argues that selection by an independent body would cut out the politics altogether, calling the Ward Commission’s original plan—majority vote by the state’s law school deans—“not a bad idea.”

Republican governors have had their own ideas. Cellucci proposed eliminating the agency to save money in 2001. Sullivan, who at the time was the first assistant IG for financial investigations, says that attempt followed a 2000 IG report that a Big Dig cost-recovery program had netted only $30,000 from nearly $83.5 million in cost recovery-related change orders. But facing opposition by lawmakers, Swift dropped Cellucci’s proposal when she came into office.

Former Gov. Mitt Romney made several unsuccessful runs at the office, arguing that its functions could be transferred to the auditor or state comptroller. In 2004, Eric Kriss, then the secretary of administration and finance, claimed the office had a political agenda after Sullivan issued a letter recommending that the state recoup $1.2 million in economic development tax credits given to Affiliated Managers Group, a company headed by the husband of then-Lt. Gov. Kerry Healey. (Sean Healey later reimbursed the state for the credits.)

Swift argues today a robust inspector general function could be invested in the attorney general’s office. “If you gave them the resources to do it, they actually have many of the competencies, such as administrative services, that would allow them to do it effectively,” she says. But Malan warns that spreading out an inspector general’s responsibilities means “there would be no coordinated effort to find—either through investigation or audit or through legal analysis or financial analysis—where the problems are.”

The IG may not have major financial or manpower resources, but it does wield a powerful investigative tool in the subpoena. In the course of an investigation, Sullivan can issue subpoenas for documents as well as individuals, though most people choose to answer the IG’s questions voluntarily.

In order to subpoena an individual, the office must get six votes on the eight-member Inspector General Council, an advisory group that serves to check and balance the IG’s powers. The council “won’t support fishing expeditions” or allow the IG to become a “second attorney general,” says James Morris, an attorney and council member since 1984. Sullivan has only requested one such subpoena for an individual since 2002, for a case involving fraudulent public safety inspections, which the council granted. Nevertheless, says Barresi, “The subpoena power is what makes the office.”

That authority makes people think twice, agrees Bennett. “I think people are afraid of the IG’s office,” she says.

So does the office of the inspector general have all the tools necessary to make headway against fraud, waste, and abuse? Despite its first-in-the-nation status, the power of the Massachusetts inspector general is eclipsed by some inspectors generals in other states. In Indiana, for example, the IG can prosecute limited criminal actions though the grand jury process under certain specified conditions.

Giving the IG more powers is a toss-up, according to Wilmot, the Common Cause director. “The problem with the agency is you want to give them power, but you don’t want to give them too much power,” she says. “You can’t really give one person or one agency the powers of being the czar.”

For the first time in 16 years, all the appointers who will assess the current IG’s tenure, Patrick, DeNucci, and Attorney General Martha Coakley, are Democrats. DeNucci, by most accounts, has a collegial working relationship with Sullivan. “I’m confident that the governor and the attorney general after looking at his record…will join me hopefully and vote him [in] again,” says DeNucci.

Neither Patrick nor Coakley would comment on Sullivan’s record, but unlike his recent predecessors, the governor hasn’t moved to eliminate the office.

Meet the Author

Gabrielle Gurley

Senior Associate Editor, CommonWealth

About Gabrielle Gurley

Gabrielle covers several beats, including mass transit, municipal government, child welfare, and energy and the environment. Her recent articles have explored municipal hiring practices in Pittsfield, public defender pay, and medical marijuana, and she has won several national journalism awards for her work. Prior to coming to CommonWealth in 2005, Gabrielle wrote for the State House News Service, The Boston Globe, and other publications. She launched her media career in broadcast journalism with C-SPAN in Washington, DC. The Philadelphia native holds degrees from Boston College and Georgetown University.

About Gabrielle Gurley

Gabrielle covers several beats, including mass transit, municipal government, child welfare, and energy and the environment. Her recent articles have explored municipal hiring practices in Pittsfield, public defender pay, and medical marijuana, and she has won several national journalism awards for her work. Prior to coming to CommonWealth in 2005, Gabrielle wrote for the State House News Service, The Boston Globe, and other publications. She launched her media career in broadcast journalism with C-SPAN in Washington, DC. The Philadelphia native holds degrees from Boston College and Georgetown University.

Expecting the IG to be omniscient would be “an exercise in futility,” says House Post Audit and Oversight Bureau director James Tansey. “You can’t possibly know everything that’s going on.”

Yet compared to the pre-MBM era, when scores of Massachusetts officials made dubious deals, state government has cleaned up its act due, in part, to the inspector general’s scrutiny. “It’s certainly an office the Commonwealth needs and needs to maintain,” says Wilmot.