Undercover cash is the lubricant that keeps the city's drug
investigations working and its network of streetwise informants
chatting, a few $20 or $50 conversations at a time.

For almost five years, though, those confidential-informant payments
poured from the Memphis Police Department Organized Crime Unit, and
thousands of dollars' worth have effectively vanished through its
porous accounting system.

The state's audit of the drug unit found $43,529 went to confidential
informants who were ``apparently nonexistent.'' And when auditors
tried to match the payments to the required files on each informant,
the auditors discovered that ``46 of the CI files referenced did not
exist.''

It's not supposed to work that way, according to OCU's current
commander, who was installed after the state began its financial
investigation.

In fact, signing on to be a CI, like most any job, now requires plenty
of introductory paperwork, said OCU Insp. Mary Wright.

Some informants approach the department on their own; some are sought
by the police. Others are tangled up in criminal charges already and
try to help themselves by cooperating with police.

When someone decides to become an informant, he must first meet with
two OCU officers, said Wright.

One of the officers will have already compiled a criminal-history
sheet on the would-be informant, and when the meeting takes place, the
other officer serves as a witness.

The informant must sign an agreement with the police.

``It basically says that they won't violate the law while they're
working for us; otherwise, they will be arrested and charged,'' said
Wright.

The informants must also consent to be taped, and they must
acknowledge that they can be called to testify in court. Then come
several samples of their signatures, including those for any aliases
the informant wants to use.

Thumbprints are made. Polaroids are taken. Numbers are assigned. And
it all goes into a file. And that file is supposed to reflect every
payment made to every informant.

Money, said Wright, isn't supposed to change hands until the
informant's information can be corroborated or until he successfully
walks away from a controlled drug buy.

``We search them before they make a buy, and we search them afterward
too,'' said Wright. ``It's to make sure they don't walk out - or in -
with anything they shouldn't have.''

The confidential-informant funds make it all work, she said. ``That's
the way we receive information when we're trying to find the drugs,''
she said.

But for five years, that's not the way the system worked, according to
the state audit.

Not only were 46 files simply not there, but a sample of existing CI
files revealed that several didn't contain the necessary fingerprints,
photos and Social Security numbers.

The auditors urge that an OCU supervisor begin verifying that the cash
payments went to actual informants and to document those transactions.
Another OCU officer should also periodically trace the CI payments to
the corresponding CI files.

The department concedes that its procedures were lacking: ``I concur
that there is a lack of documentation to support the expenditure of
$43,529,'' reads Police Director Bill Oldham's response in the audit.

He outlines how the department has instructed its OCU supervisors to
verify CI payments, to maintain and secure the files, to find any
missing files and to limit file access.

Oldham also promises to determine whether any further investigation is
needed to recover the thousands in missing money.