Perdido 03

Perdido 03

Wednesday, May 25, 2011

More On The Latest DOE Consultant Scandal

Juan Gonzalez reports some more details in the latest DOE outside consultant scandal:

Another day, another outrageous consultant scandal at the Department of Education.

A group of consultants billed taxpayers for full-time, six-figure salaries while spending big chunks of their time devising - along with their school system boss - plans for a new business enterprise, Special Commissioner of Investigation Richard Condon reported Tuesday.

The boss, George Raab, the DOE's chief financial officer at the time, "engaged in prohibited private business relationships" with the consultants, Condon said.

A former managing director at Bear Stearns, Raab was appointed to the $196,000-a-year school system post in October 2008 by then-Chancellor Joel Klein.

Once he arrived at the agency, Raab arranged for four former Bear Stearns colleagues to be hired as consultants, the report found.

Three of them immediately began using their DOE email accounts to prepare drafts of business plans with Raab for a new department Raab wanted to launch at a private investment firm, Guggenheim Securities LLC.

One of the consultants, William Howatt, received $374,000 for less than a year's work.

Howatt, a new age hypnotherapist, was supposed to boost productivity and morale among mid-level managers by "improving their ability to adapt to change," DOE officials claimed at the time.

Howatt appears to have done much of that morale-boosting remotely - from his home in Nova Scotia.

You can't make this stuff up.

Another consultant told Condon's investigators under oath she "did not have a set schedule at the DOE" and sometimes "worked from home."

A third was found to be billing the DOE even when he went out of the country on vacation.

Raab quit in September 2009, less than a year after Klein appointed him. He then went to work for Guggenheim and hired two of the DOE consultants at his new firm.

Raab did not respond to calls and emails for comment.

DOE brass only began to notice something was wrong after the Bear Stearns group had moved on.

"As soon as we discovered there was improper use of emails, we reported this matter to the Special Commissioner," DOE spokeswoman Marge Feinberg said.

The bigger questions are: Where was Klein while this was happening, and why has financial oversight over private consultants virtually disappeared in the Bloomberg era?

The CityTime scandal, the Judith Hederman scandal, the Willard Lanham scandal, a 2005 scandal involving an outside consultant who stole $1.5 million while receiving improper pay increases approved by three top DOE officials who later resigned - the list is adding up.

Now Bloomberg plans to spend $550 million on tech upgrades to the school system, most of which will be paid to outside consultants and companies that receive no-bid contracts even as he says he has to lay off 4,278 teachers to save $300 million.

How is he getting away with all of this?

Despite these recurring problems, the DOE's discretionary spending on consultants has increased by 331% since 2004, notes Manhattan Borough Scott Stringer.

"It's time we stop this black hole of consultant spending until we have a complete overhaul of the process and better oversight," Stringer said.

Bloomberg wants teachers to be accountable, but apparently not consultants.

And you can add Bloomberg himself, as well as Klein, to the list of non-accountability.

It IS time to stop him.