I won’t go through all of the findings of several state and legislative audits. The major audit of DABC is here.
It says, among other things, that there was “bid rigging, falsifying financial documentation, and artificially splitting invoices in violation of state statute.”
The former director, now retired, was overseeing a purchasing process where material supply contracts were split up into smaller buys to apparently avoid competitive bidding and those supply contracts were given to a firm run by his son.
In another instance, a top compliance officer accepted gifts from a liquor licensee who was also a friend, what appears to be a state ethics violation.
Those are just two of the instances in a troubled department that has now been purged of its top managers with new bosses coming in.
Upon hearing that no criminal charges would be filed, “I was disappointed. But not surprised,” said Francine Giani, the head of the Commerce Department who was temporarily assigned by Gov. Gary Herbert to oversee DABC and fix many of the problems at the division.
Giani has had a well-publicized running battle with Mark Shurtleff’s AG office over the years, with Giani often complaining that Shurtleff won’t file charges against folks she believes have violated consumer protection ordinances.
Before becoming executive director of the Commerce Department, Giani headed the Division of Consumer Protection, which was under that department.
“It appears this is now going to continue,” said Giani.
She is referring to the November election of Shurtleff’s top legal appointee, John Swallow, to fill the office Shurtleff is retiring from.
Sen. John Valentine, R-Orem, has been a leader in recent years in liquor law reform.
He told me this week that he has asked the Legislature’s legal and research staff to look into the situation around the non-filing of criminal complaints.
Valentine isn’t jumping to conclusions. An attorney in private life, Valentine wants to see exactly why no charges were filed, and if state law needs to be changed so that in the future they can be filed in similar instances.
Meanwhile, House Speaker Becky Lockhart, R-Provo, said she, too, wondered about why no charges were filed.
“I’m not an attorney,” she said. “And the Attorney General is the chief law enforcement officer in the state.” It’s up to him to make those decisions, she added.
Valentine said he’s talked to Swallow and been given a verbal update on the non-filing process.
He said that the AG’s office didn’t file criminal charges because while some state laws may have been violated, those laws didn’t have any criminal penalties.
“We’re looking at that,” said Valentine.
Neither Valentine nor Lockhart wished to be too critical of Swallow, who is a former Utah State House member and, as Shurtleff’s top aide, for several years has been a go-between with GOP legislative leaders and Shurtleff’s office.
UtahPolicy couldn’t reach Swallow for comment.
Kirk Torgensen, chief deputy Attorney General, told UtahPolicy that while there may be some merit in Valentine looking at criminal violations in splitting purchasing contracts, overall the evidence just wasn’t there in a number of the allegations made in the audits.
“The eye witnesses weren’t there in proving (a crime) beyond as reasonable doubt,” said Torgensen.
“There were shoddy business practices down there” at the DABC. “I was astounded at those practices,” Torgensen added. But to some extent the audit dealt with incidents “where they said it looks like” something is criminal, when in fact when examined closely by the AG “we just couldn’t get there” as far as filing and pursuing a case, Torgensen added.
Giani doesn’t have the qualms of Valentine and Lockhart.
While saying she is not an attorney, it did appear to her that laws were broken.
“For Heaven’s sake,” she said, the top compliance officer wrote a letter to his bosses admitted that he took gifts inappropriately.
“We thought there was one incidence,” she said. “It turned out (via the letter) that there were numerous incidents” where the compliance officer accepted such gifts.
It looked like there was fraud and all kinds of things going on, she said.
Valentine said, depending on what he’s inquiry finds, he may introduce a bill, or several bills, in an attempt to provide criminal penalties in such cases.
“There did appear to be fraud there,” as found in the auditor’s reports, said Valentine.
“We’re saying, OK, there is a problem there. Now what options do we have to solve it,” he added.
A reworking of DABC governance law that Valentine put through the 2012 Legislature has started to see real change, the senator said.
The reconstructed alcohol board now has an independent auditor that reports just to the board, and that internal auditor is working through all kinds of issues, Valentine said.
“There will be a lot better oversight,” that’s for sure.
While the problems of DABC could happen in any state agency, liquor is a touchy issue in Utah.
There are conservative Republicans, some in the Legislature, who want the state out of the alcohol business.
But it brings in serious revenue. And most GOP policymakers believe it is better to control the evil drink from importing to shot glass than to privatize it and then try to control it.
One thing is clear. It seems nearly every legislative session has some kind of new liquor bill to be considered.
And the 2013 Legislature, which starts next month, looks to be no different.