Mo. auditor says finance division holds back records

JEFFERSON CITY, Mo. -- Missouri's banking regulatory agency has refused to release some of its records for a state audit, asserting that to do so would violate the law.

Auditor Tom Schweich said Tuesday that his office needs all of the Division of Finance's banking records to determine whether the regulators are doing their job correctly. His office issued subpoenas for the records to be turned over by May 17.

The division has released the records relating to banks it has closed but refuses to release records from banks that are still in operation, Schweich said. From the records that have been released, auditors have found that the division was late in conducting examinations 47 percent of the time and overcharged banks for the costs of the examinations by $1.5 million.

"When we see the problems that we found with what little documentation we were given, it provides even more impetus for us to go ahead and get the rest of the documentation," Schweich said.

In its response to the audit, the Division of Finance said state law bars it from showing anyone the banking records in question. It said employees are "bound under oath to keep secret all facts and information obtained in the course of all examinations and investigations" and could lose their jobs and be fined for turning over the documents.

Travis Ford, a spokesman for the Department of Insurance, Financial Institutions and Professional Registration, said the agency would challenge Schweich's subpoenas before turning over the documents. He said a judge's approval of the subpoena would provide "certainty" that the division would not be prosecuted for releasing the records.

"If and when a final judicial interpretation determines DIFP may provide the requested documents, the department will comply immediately to provide those documents to the state auditor's office," Ford said.

Schweich pledged to conduct another full audit once the documents have been turned over. The current audit was initiated by his predecessor, Susan Montee, in 2010. Schweich said the Finance Division last was audited in 1990 and also had refused to provide the banking documents then.

Although the Finance Division said no law requires it to release the requested information, Schweich's office cited a Missouri law stating "the state auditor shall have free access to all offices of this state for the inspection of such books, accounts and papers as concern any of his duties."

Schweich said his office is not trying to audit the performance of the banks, but instead is trying to verify that the Finance Division is following its own procedures for examining the institutions.

"They're not immune from oversight. No one is immune from oversight," Schweich said. "All they've been doing is trying to obstruct our investigation."

The auditor's office frequently encounters confidential documents when auditing other state and local agencies, Schweich said, adding that confidentiality agreements impose penalties on auditor staffers who wrongly disclose private information.

------

Online:

Audit: http://www.auditor.mo.gov