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Citizens Insurance defends ‘integrity’ firings, but backtracks from initial statements

Citizens Property Insurance Corp. attempted to play defense Monday, amid growing calls for a probe into the abrupt disbanding of its Office of Corporate Integrity.

On a call with reporters, Citizens CEO Barry Gilway explained that the firings were actually meant to boost fraud detection within the organization.

The hastily arranged call came briefly after two groups held a conference asking Gov. Rick Scott to look into the firings of the four corporate integrity employees responsible for investigating fraud, sexual harassment and other improprieties at the state-run insurer.

“We set up the Office of Corporate Integrity with the best of intentions,” said Gilway. “Unfortunately, the mission of the office was not adequately designed.”

Gilway said the corporate integrity watchdogs—one a former economic crimes investigator with the attorney general’s office and the other a former official with FDLE—were spending their time looking into minor human relations complaints, rather than serious fraud.

Gilway admitted that it was a mistake to abruptly disband the Office of Corporate Integrity in the middle of an Inspector General’s investigation into Citzens’ lavish corporate spending.

But Citizens has also made several mistakes in its attempts to explain the firings. The company has had to backtrack from several parts of its initial account, causing confusion about what actually happened, and producing growing suspicion among good governance groups and lawmakers.

For example, Citizens initially said that it fired the four corporate watchdogs in order to beef up its fraud investigations unit, but later noted that no forensic accountants have been hired.

Scott noted the discrepancy in his letter to Citizens last week.

“…as of today, new personnel have not been hired to handle the increased workload,” he wrote. “An effective compliance system cannot be achieved without an adequate number of independent, highly trained professionals.

Citizens also said that it fired members of the Office of Corporate Integrity because they “lacked the financial forensics expertise to identify and proactively investigate potential fraud and abuses." But just a few sentences later in the same press release, the insurer said of those employees: “all were encouraged to apply for the [newly created] positions and certainly will be considered if they apply." 

On Monday, Gilway clarified that it was actually clear that employees did not have the expertise necessary, so they shouldn’t apply for the new positions.

Citizens also has had to clarify its initial press release in order to make clear that the organization did not actually get official approval from the Audit Committee to conduct the firings.

The initial press release stated that:

“To address these issues, the Board of Governors’ Audit Committee approved a recommendation by the Chief of Internal Audit that the Office of Corporate Integrity be replaced by a staff of four qualified forensic accountants trained and experienced in the management of potential corporate fraud and abuse.”

Citizens has since clarified that no official recommendation was made to the Audit Committee in writing, and the committee never held meetings to discuss the proposal to disband the Office of Corporate Integrity.

Finally, Citizens initially said, “We provided two week’s notice to everyone involved in the separation.”

It has also backtracked from that claim, clarifying that many of the employees were asked to leave Citizens almost immediately and are no longer with the company.