Herbert awaits audit of liquor agency

Aug 25 2011 - 1:33pm

SALT LAKE CITY -- A broader management shake-up at Utah's liquor agency will likely happen after an operational audit is completed, Gov. Gary Herbert said Thursday.

"I have lost confidence in the leadership" of the Department of Alcoholic Beverage Control, Herbert said during the taping of a monthly televised news conference on public television station KUED.

The agency's executive director Dennis Kellen resigned last week after it was discovered that Flexpak, a company owned by Kellen's son, had been paid more than $270,000 for maintenance supplies and services. The majority of the payments were under $1,000, which is the threshold for seeking competitive bids under state law.

An Associated Press review of invoices shows the supplies included garbage bags, packaging tape and gloves.

Herbert asked for the audit at the same time he asked Kellen to resign. Herbert said Thursday he prefers to wait until that audit is completed before jumping to conclusions about other problems.

"I don't want to be speculative. Let's do the audit, get the facts and then see what can be done," Herbert said.

Legislative auditors have completed three recent audits of the department that focused on liquor store operations, a review of proposed agency budget cuts and the mismanagement of a privately-owned store that contracted with the state to sell liquor.

A preliminary audit of the department's procurement practices began at the request of Senate President Michael Waddoups, R-Taylorsville, a few days before Kellen resigned, Legislative Auditor General John Schaff said. After the resignation, the audit has intensified with multiple things being reviewed.

Waddoups said he began "hearing rumblings about improprieties" and asked legislative auditors to follow up. While he is concerned there might be other issues in the agency, he didn't think the abuses were widespread or that similar problems were likely to be found in other state agencies.

"You find every organization has an occasional bad apple, but almost all of the state employees are good people," Waddoups said.

Also Thursday, the state liquor board confirmed Francine Gianni as the interim director of the alcoholic beverage department. Gianni is currently the director of the Department of Commerce and will hold both positions until a new alcoholic beverage director is appointed.


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