Monessen will be docked state pension aid after a routine audit uncovered “an abuse of public trust,” Pennsylvania Auditor General Eugene DePasquale announced Thursday.
The audit of police and firemen’s pension plans revealed that Monessen did not follow state law and city procurement procedures when selecting a new investment firm to manage the pension plans last year, said DePasquale, who announced on Jan. 31 that his office was conducting the audit.
In a news conference on Thursday, DePasquale repeatedly said it is not his job to tell the city which firm to pick; however, he must enforce the rules.
“The contract bidding process was fatally flawed,” DePasquale said. “The city provided no documents, minutes or records explaining why one firm was selected over another, as required by law.”
The selection process started in July 2017. A bid was awarded in December 2017 to a new firm, replacing the firm that had been working with the city for more than 20 years, according to the audit.
Monessen received $166,236 in state pension aid in 2016 and $160,589 in 2017, according to DePasquale’s office.
The routine audit examined police and firemen’s pension funds from Jan. 1, 2015, to Dec. 31, 2016.
Withholding state aid will not have an immediate impact on retirees, DePasquale said.
Also among the issues related to the bidding process was the potential for conflict of interest.
A managing director at the investment firm is the brother of a partner in the law firm that serves as city solicitor, according to the audit. The city solicitor is responsible for making sure the pension board and city officials follow state and local laws during the bidding process.
The city’s questionable process for selecting a new firm and lack of documentation of the process is new territory for his office, DePasquale said.
Canonsburg-based law firm Dodaro, Matta and Cambest served as solicitor during the bidding process and continues to advise the city, said Attorney Krisha DiMascio.
She said files related to the bidding process were kept in her office and that there was a “stone wall” between herself and boss Gary Matta, a firm partner and brother of George Matta, a managing director at Fusion Investment Group, the Canonsburg company that won the bid.
“We took every precaution that we’re required to under our legal ethics code,” DiMascio said.
DiMascio said that she had contacted the Auditor General’s Office in December to express concerns about the city’s pension system and management of state funds, but that many of those concerns were not addressed in the audit.
“They seem to have latched on to political banter,” she said.
Though a separate and more common issue, DePasquale said that pension aid also will be withheld until the city returns $54,390 to the police pension fund that was used for an unauthorized pension benefit awarded to a retired police officer. The officer received $3,399 in monthly benefits from April 2016 until July 2017, when the benefits were suspended. The officer was not eligible for benefits until 2023.
The city agreed with that finding and will repay the benefits, according to the audit.
Mayor Matthew Shorraw requested an audit upon taking office in January but one was already scheduled, DePasquale said, adding that all city offices have been cooperative throughout the auditing process.
“This is alarming news for the City of Monessen and its residents that, unfortunately, I’ve tried to raise to the public for sometime; however, I’m pleased that this will likely push Monessen in the right direction and is an example of good government oversight,” Shorraw said in a statement. “I’d like to thank Auditor General Depasquale for looking out for Pennsylvania’s small communities and their residents, as they are integral to the commonwealth.”
The audit has been referred to the Westmoreland County District Attorney, the Pennsylvania Attorney General’s Office, the U.S. Attorney’s Office and the Pennsylvania Ethics Commission.
Jamie Martines is a Tribune-Review staff writer. Reach her at 724-850-2867, [email protected] or via Twitter