New audit slams Atlanta Watershed for lax controls, missing meters

Atlanta’s auditor released a damning investigation of the Department of Watershed Management on Tuesday, reporting that security problems are so bad that it’s impossible to know how much equipment is missing or has been stolen.

But what’s clear, auditor Leslie Ward said, is the department can’t account for at least 10,000 water meters. That’s in addition to hundreds of thousands of dollars in missing equipment, including an $80,000 backhoe.

The auditor found that despite years of warnings to tighten up controls, the department has failed to correct pervasive security problems. For example, Ward’s office found keys left in locks, unmanned facilities and even a sign hung in a warehouse warning employees: “Do not cut chain and lock again!!!”

"It was worse than I thought because it was so widespread," Ward said of her findings.

Watershed has been under fire in recent years following accusations of mismanagement and reports of missing or stolen equipment. In addition to the 10,000 water meters, missing or stolen items include 28, 700-pound industrial water meters worth $5,210 apiece, copper, pipes and more. A backhoe worth about $80,000 has also gone missing in recent months but has not yet been reported stolen to police. The backhoe was outside the scope of Ward’s report, she said.

The auditor said it’s hard to track just how much equipment is missing because of unreliable data and poor record-keeping. She left open the possibility that more equipment is missing or stolen, and condemned the department for lax security and inventory controls at each of its 10 facilities.

District 7 Councilman Howard Shook called the report “shattering.”

“With all due respect to the audit, the audit committee and the work they did, I now no longer believe these are software problems, hardware problems, lock problems, camera problems — they are people problems,” he said.

Ward agreed: “I think most everything we reported is a management failing.”

Chief Operating Officer Michael Geisler said Mayor Kasim Reed’s administration is well aware of the problems at the beleaguered agency and has already begun taking corrective measures.

Just last month, the city fired 14 employees after its law department concluded its own investigation into theft and mismanagement. Among those terminated was Yafet Bekele, Watershed's director of safety and security, Ben Kuku, director of the Office of Customer and Business Services and a half dozen managers in security and inventory.

Kuku was the head of an office charged with managing inventory and loss prevention. Though his office had 37 budgeted positions, only 25 were filled, according to the audit. Watershed Commissioner Jo Ann Macrina awarded both Bekele and Kuku significant pay raises earlier this year, salary bumps that Reed later ordered reversed.

“We have made changes and we’re confident in the people in place right now,” Geisler said.

No charges have been filed against any employee related to theft, and Geisler wouldn’t say if charges are pending. The Atlanta Police Department has yet to conclude its own investigation of theft inside the department.

The COO sought to downplay the theft concerns by placing it in the larger context of Watershed’s work. The stolen or missing equipment accounts for a small fraction of Watershed’s overall inventory, he said. And while the department has worked to fix the problem, it has achieved success in other areas including complying with its federal consent decree to repair an aging water and sewer infrastructure.

Watershed spent $21 million on equipment each year between 2009 and 2013, according to Ward’s report. The missing meters represent 7 percent of those purchased between 2006 and last year, according to the report. The value of the missing items wasn’t immediately available.

District 9 Councilwoman Felicia Moore, who initially called for the audit several months ago, pointed out the city doesn't really know how much has been taken.

Moore said she’s “devastated” by the amount potentially lost, and noted the department has spent millions on security cameras that later have malfunctioned. She said the repeated headlines of theft and mismanagement have damaged public confidence.

“When [residents] pay their water bill, they know we’re paying the highest in the country and now they’re seeing we have this leakage of equipment and controls,” she said. “The public trust is at an all-time low with this.”

Atlantans are paying some of the highest rates in the country to finance $4 billion in water and sewer upgrades required by federal regulators.

Macrina, the Watershed commissioner, was not present at Tuesday’s city utilities committee hearing in which Ward presented her findings. The commissioner is speaking to Congress this week on water issues, spokeswoman Scheree Rawles said.

But Oz Hill, a Watershed asset accountability manager who was hired in April, said the department has accepted each of Ward’s 13 recommendations to improve the department. Ward called for Watershed to streamline its inventory operations to one software system, limit employee access to the systems, purchase a barcode system and more.

District 8 Councilwoman Yolanda Adrean said many have “zero confidence” in the agency and called for legislation to oversee the department’s progress.

“It’s going to take a long time for the public’s trust to be restored,” she said.

Ward's report comes just weeks after a separate audit found that the Department of Public Works can't account for at least $2.2 million in materials such as asphalt, lacks critical inventory management controls and is vulnerable to undetected theft.

Reed called for “a complete and robust investigation” into the public works department, and said his office would then take “decisive action that is clear” that could include staffing changes.