The resignation of Dennis Kellen was asked for and received Wednesday morning by Gov. Gary Herbert, who was alerted to possible procurement law violations in the Department of Alcoholic Beverage Control.
"On their face, the findings are troubling," Herbert said. "Even more troubling is the apparent pattern of mismanagement that is serious enough to warrant further investigation. I have lost confidence in DABC leadership."
Although the governor didn't detail the exact charges, the violations potentially stem from multiple contracts given to Salt Lake City-based Flexpak, which is owned by Dennis Kellen's son Brian. Neither of the men returned phone calls from The Associated Press.
The contracts were under $1,000, which is the threshold required by state law to seek competitive bids. Most of the contracts were for building and grounds maintenance or supplies. But, according to the company website, Flexpak specializes in packaging materials.
Since July 1, the company has been given five $989 contracts for building and grounds maintenance and five other contracts under $1,000, according to state financial records. Between July 1, 2010, and June 30, 2011, the company secured $172,000 in contracts from the DABC, with about 175 of those for under $1,000.
Herbert's spokeswoman, Ally Isom, said there was a pattern of contracts being "manipulated to circumvent a certain level of review." But she wouldn't specify which contracts raised concerns, and she said Dennis Kellen told the governor he wasn't aware of any manipulations.
Because of the questions raised, Herbert ordered an audit of the DABC Wednesday.
Dennis Kellen has come under fire in recent months from lawmakers after an audit revealed the loss of more than $300,000 in product at a privately owned store that contracted with the state to sell liquor. Although that audit didn't allege any criminal violations, lawmakers have said it underscored the management problems at the DABC.
Following a legislative committee hearing in July, state Sen. John Valentine, R-Orem, called for the immediate resignation of Dennis Kellen. Instead, the DABC director said he planned to retire by the end of the year.
Valentine said Wednesday that the resignation was welcome, but the new executive director should ideally come from outside of the agency.
"There was a strong case for a change in leadership last month," Valentine said. "The latest allegations emphasize that need. ... I'd like a fresh face. We shouldn't be looking for a replacement internally."
Francine Giani, the executive director of the Department of Commerce, will oversee the DABC until a replacement is named. She will retain her duties at Commerce during that time.
SALT LAKE CITY -- The executive director of Utah's liquor agency resigned Wednesday after allegations that contracts were structured to avoid bids and that some of the contracts might have involved a family member.