The report confirms what we already know: the actions of former Secretary Shemia Faga compromised public confidence in the audit.
Ben Botkin, Oregon Capital Chronicle
An Oregon Department of Justice report concluded that auditors under the former Oregon Secretary of state Shemia Fagan, (D), failed to maintain public trust when their boss moonlighted as a cannabis firm during an audit on marijuana regulation.
The report released on Wednesday recommends the state remove temporarily the audit related to Fagan’s rapid fall from its website, and review it. Fagan resigned from her position in May, after Willamette Week revealed that she was under a $10,000 per month consulting contract with Veriede Holding LLC. This is an affiliate of La Mota Cannabis Dispensary Chain.
The review stated that Fagan had asked auditors to interview La Mota representatives during an audit of Oregon Liquor and Cannabis Commission marijuana regulations. After Gov. Fagan requested an outside review, the Oregon Department of Justice contracted with Sjoberg Evashenk Consulting in California, a company that specializes in audits. Tina Kotek, a Democrat, requested that an external examination be conducted.
In a letter sent to Kotek on Wednesday, Oregon Attorney General Ellen Rosenblum stated that the Secretary of State’s Office should review the audit in order to regain public trust.
In a declaration, LaVonne Griffin Valade, the new secretary of state, who will replace Fagan, stated that she would reevaluate evidence from the audit, and, based on the results, take any additional actions.
Griffin-Valade stated that “the report confirms what we know to be true, namely the former secretary Shemia Fagan’s actions compromised trust in audit by the public.” In auditing, we call this “a threat to independence in appearance.”
The audit recommended that the Oregon Liquor and Cannabis Commission update its marijuana regulations in order to promote growth and provide equal opportunities to various communities.
Laura Kerns said that Griffin-Valade would not remove the audit until the review was complete.
The Secretary of State earns $77,000 per year. With a staff of over 200 employees, she oversees Oregonians’ elections, audits, and business filings.
Kotek, in a statement said that she had confidence in Griffin Valade, the former Multnomah County Auditor, and in her plans to review this case and restore the trust in the office.
Kotek stated, “I am expecting that this report will inform the ongoing efforts of her to ensure that Oregon’s auditors are independent, objective and meet professional standards.”
Report’s findings
The review did not find any evidence that Fagan’s consulting work or the audit outcome were influenced by her. It did, however, find that the auditors failed to take her conflict of interest seriously or to consider its impact on their perception of independence. This is crucial for public trust.
Fagan recused herself, but the review concluded that this was not enough.
The review stated that “when the circumstances surrounding the former Secretary Fagan’s resignation and recusal became known to Division of Audits it failed to take adequate steps to identify and evaluate threats to [its] independent”.
The review stated that the audits team could have taken more steps to increase public confidence in the audit. For example, adding audit reviewers, or gathering additional evidence to support the findings, and demonstrate the work is accurate and balanced.
The audit team took into account the impact of Fagan’s consulting on the individual auditors as well as the team but did not consider the reputational damage it could cause. The review stated that “the SOS Division of Audits failed to fully vet the situation in order to assess whether or not the threat of independence at the organizational level was acceptable.”
A spokesperson for the Oregon Department of Justice said that the company was paid $88,000 by the department, with rates ranging from $130 up to $255 per hour.
The political saga hasn’t ended yet. Oregon Government Ethics Commission is currently investigating two cases. One concerns Fagan’s contract as a consultant, and the other her travel and if she brought her family on trips improperly or dipped twice into her campaign and state funds.
Originally published by Oregon Capital Chronicle.
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Photo by Chris Wallis // Side Pocket Images.
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