Auditors Failed to Act on McLaughlin Salary

State auditors going over the Chelsaea Housing Authority’s books in 2005 apparently knew that disgraced former Chelsea Housing Authority executive director Michael McLaughlin was concealing his true salary from state officials. The auditors told him and urged him to seek official approval for more than $40,000 in hidden income, according to interviews and records put together by reporters for the Boston Globe.

According to the Globe, McLaughlin resisted, joking to the auditors that “all my neighbors are rich and I have to keep up with them.”

But after McLaughlin said he would think about reporting his full income, records show the team from former auditor Joe DeNucci’s office dropped the issue.

City Manager Jay Ash said the revelations were disconcerting, more troubling than disconcerting.

“I’m incredibly disappointed,” he said Wednesday afternoon. “They didn’t do what they are supposed to. This controversy would have been resolved long ago if they did what they were supposed to do,” he said.

Ash said that no Chelsea city officials to his knowledge were contacted about the discrepancy and that only the city’s retirement board director chief Dave Pickering was aware of a discrepancy in what McLaughlin was being paid, but that he, too, made no effort to contact higher authorities as his job was to make sure what the CHA reported was correct.

He noted the number and asked the CHA if there was a typo. The CHA apparently reported back that McLaughlin’s pay number was correct. That was the end of the discussion, Ash said Pickering told him after McLaughlin had been forced to resign.

“The very system that was put in place to prevent or catch these items failed to do so,” Ash said. “

Ash said he received from year to year audit reports – which are available on-line at the city website but in all the years he has been city manager, had never received word or been contacted about a discrepancy.

“These audits I received as a courtesy from the state auditors generally arrived without red flags. Material weaknesses noted were like red flags but even if one appeared in the audit report, it was up to the auditors to report them or at least to deal with them,” he added.

“Only the auditors can explain what happened. The city of Chelsea has nothing whatsoever to do with this,” he added.