Eyes wide shut

The Treasury scandal shows why the state must do a far better job of watching those who keep track of the money

More than anything, the still-unfolding scandal in the State Treasurer's Office -- including the lottery, which the treasurer oversees -- speaks to a stunning lack of oversight.

Since taking office last January, Treasurer Shannon O'Brien has been on full-time scandal patrol, cleaning up the messes left behind by her predecessor, Joe Malone. Two of Malone's managers have been accused of stealing $8.9 million from the Unpaid Check Fund, and Attorney General Tom Reilly's investigation continues. Several weeks ago O'Brien fired a lottery employee, and suspended two others, in connection with the theft of $24,000 worth of scratch tickets.

Now Auditor Joe DeNucci has weighed in with a report showing lax financial accountability and nonexistent security at the lottery. Unfortunately, DeNucci's credibility was shattered when the Springfield Union News and the Boston Herald debunked the most widely publicized part of his report. It turns out that a number of people whom DeNucci identified as possibly using fake names in order to avoid taxes, such as "Chris Mis" and "Nu Bank," are, in fact, real.

Despite that embarrassment, the problems DeNucci's office unearthed should not be ignored. Among other things, the audit found that 1800 people who gave the lottery undeliverable addresses owe $7 million in withholding taxes; lottery sales agents owe the state $15 million; internal records for 29,000 winning instant-game tickets are incomplete; and unsecured mounds of scratch tickets were left at lottery headquarters in Braintree, where employees could easily grab a handful or two.

The lottery takes in $3.2 billion in revenue each year -- an enormous chunk of money that's equivalent to 15 percent of the entire state budget. Given such numbers, it's distressing, to say the least, that the lottery has not been subjected to regular, ongoing audits. Indeed, O'Brien has been complaining about slack oversight at the lottery since she first ran for treasurer, unsuccessfully, in 1994. But it wasn't until last year that DeNucci turned his attention to what has clearly been a cesspool of corruption.

DeNucci's blunder points to the problems inherent in having elected officials investigate other elected officials. (Political insiders say that DeNucci would love to be named the state's inspector general. But his department's sloppy and too-long-delayed performance on at least one aspect of the lottery audit doesn't inspire confidence.) O'Brien has commissioned an outside, independent audit of the lottery, but that's not sufficient, given her office's enormous responsibility in handling taxpayers' and lottery players' money. Governor Paul Cellucci and legislative leaders should push for the creation of a bipartisan, blue-ribbon commission to get to the bottom of the Treasury scandal, not just to learn what happened, but to recommend systemic changes. The model: the Ward Commission, formed in response to a massive state construction scandal in the 1970s.

As lawmakers and other elected officials consider how to fix the Treasurer's Office, they should be encouraged to think big. Perhaps they should even consider making the treasurer a gubernatorial appointee. There's a strong argument to be made that the treasurer should be a financial professional whose performance the governor should be held accountable for -- just as he is for the performance of, say, his secretaries of public safety, social services, and transportation. Malone, after all, was elected on a reform platform in 1990, promising to clean up the office after Bob Crane's controversial 26-year tenure. It's now obvious that, somewhere along the way, Malone fell down on the job, and fell down hard. O'Brien has been making the right moves, but she, like her predecessors, lacks experience as a financial executive. It's time to depoliticize the state's money-management operations.

Whether the treasurer is elected or appointed, the Malone-era scandals are proof that far greater scrutiny must be given to those charged with keeping track of the money. Cleaning out the stables once every few decades simply isn't enough. The Treasury -- and the lottery, in particular -- must be subjected to permanent, outside, independent scrutiny.

What do you think? Send an e-mail to letters[a]phx.com.