Oregon Cities

Oregon liquor board audit that came amid Fagan resignation should be re-examined, investigator says

Sanders, Arkansas

An outside investigator recommended that an audit of the Oregon Liquor and Cannabis Commission be pulled from the Secretary of State’s website and re-examined.

The investigation comes after it was revealed former Secretary of State Shemia Fagan, who at the time oversaw state audits, had accepted an outside job as a cannabis industry consultant while her office worked on an audit arguing for more lax regulation of the industry.

FILE: Shemia Fagan gives her acceptance speech to unmanned camera after winning the race for Oregon's secretary of state, Nov. 3, 2020.

FILE: Shemia Fagan gives her acceptance speech to unmanned camera after winning the race for Oregon’s secretary of state, Nov. 3, 2020.

Kristyna Wentz-Graff / OPB

The investigators recommended pulling the audit despite finding no evidence it was compromised or that Fagan or others exerted influence over the final product. But they noted there were warning signs that Fagan could compromise the integrity of the audit and they could have done more to respond to those concerns.

“Given the known threat to independence introduced by former Secretary Fagan’s actions and the impact the perception of this threat had on the OLCC audit report, we recommend that the SOS pull the audit report from the publicly accessible website and reassess its issuance, including augmenting audit evidence to counteract the increase in audit risk,” the investigators wrote.

Gov. Tina Kotek asked the Attorney General Ellen Rosenblum to conduct an examination of the audit in April. The state’s justice department worked with the California-based group Sjoberg Evashenk Consulting to do the work.

The audit was entitled “Oregon Liquor and Cannabis Commission (OLCC): Oregon Needs to Modernize Cannabis Laws to Help Grow the State’s Economy and to Ensure Equitable Opportunities and Benefits for all Communities.” Fagan’s side contract was first reported by Willamette Week.

The governor said in a statement Wednesday that performance audits are essential to ensuring “public resources are being well managed and that our government is held accountable for providing the best possible customer service.”

The new Secretary of State LaVonne Griffin-Valade said the report, while showing the audit was not compromised, reaffirms what is known: that Fagan’s actions compromised public trust.

“In auditing we call this a ‘threat to independence in appearance,’” Griffin-Valade said in a statement.

“As a result, the report concludes that auditors should have gone further to reduce that risk by pausing their work and seeking stronger evidence for their conclusions.”

Griffin-Valade said would personally oversee the audit’s re-examination.

“Depending on the results of that examination, I may take additional action and will inform the public as appropriate,” she wrote.

Gov. Kotek also requested an investigation into Fagan’s actions by the Oregon Government of Ethics Commission, which is ongoing.

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