Ethical cloud hovers over Citizens Property Insurance

November 20, 2012 

Gov. Rick Scott has stated repeatedly how important accountability is to his administration -- that government must perform to the highest ethical standards. An alarming report about violations of the public trust at Citizens Property Insurance gives the governor ample opportunity to follow through with his previous concern about the internal operations of the state-run company.

When Citizens abruptly fired the all four company watchdogs in its Office of Corporate Integrity last month, Scott stated his apprehension in a letter to Citizens' chief executive, Barry Gilway: "While I understand your desire to reduce redundancy and create efficiencies within Citizens, such efficiencies cannot be achieved at the expense of accountability, transparency and compliance. To ensure that all safeguards are in place, I urge you to use greater caution with future modifications affecting internal investigations, audits and compliance."

Floridians are now learning that those terminated watchdogs discovered evidence of high-ranking abuses -- favoritism and lax investigations into allegations of sexual harassment, falsified paperwork and oversized severance pay. The report reviewed Friday by the Citizens' Audit Committee also cited drunken disrobing at a bar by a human resources executive.

In dismissing the four watchdogs, Citizens extracted confidentiality agreements to silence any talk of company excesses. The governor should step in and abrogate those contracts.

The company had already come under an ethics cloud in August after Scott ordered an investigation into lavish corporate spending on business trips for executives. All of this comes at a time when Citizens is increasing homeowner policy rates and cutting coverage to shrink risk. The company is also considering a sweetheart deal to loan more than $350 million to private insurers at low interest rates.

While the governor's chief inspector general was digging into improper corporate spending, the company fired its watchdogs and insisted on confidentiality. This does not pass the smell test not one bit. Citizens maintains that terminations had nothing to do with silencing the watchdogs, but the timing is more than highly suspicious. And why the confidentiality agreements?

The company's insistence that the firings were all about cutting redundancy and creating efficiencies is ludicrous. At the same time Citizens argues that firings were aimed at "avoiding unnecessary redundancies," the company is seeking to hire new fraud detectors. That simply does not compute.

Citizens is holding on to more than $6 billion in cash after seven years without a hurricane. Manatee County property owners have a considerable investment in that bank account through the 27,500 policies for both residential and commercial buildings.

Citizens must undergo a thorough house-cleaning and answer to the public with complete transparency and accountability. Late Monday afternoon, the governor ensured that would occur by directing the state inspector general to investigate the watchdog dismissals in light of Friday’s scathing report “to determine whether any of them were retaliatory in nature.”

As Scott also stated in that letter, Floridians are indeed entitled to accountability. We expect nothing less.

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