(The Center Square) – Under former Oregon Secretary of State Shemia Fagan, state Auditors failed to maintain public trust amid a scandal involving her side work in the cannabis industry while conducting an audit about a marijuana regulation, a review from the Oregon Department of Justice concluded.
The report released this week recommended the state temporarily remove the audit linked to Fagan’s downfall to conduct a review.
She resigned after a report found that she had a $10,000 per month consulting contract with Veriede Holding LLC; the company is a La Mota cannabis dispensary chain affiliate.
The review found that Fagan urged the state auditors to interview La Mota representatives during an audit of marijuana regulations of the Oregon Liquor and Cannabis Commission.
The state Justice Department hired California-based Sjoberg Evashenk Consulting to conduct an outside review after Governor Tina Kotek requested one.
In a letter to Kotek, Oregon Attorney General Ellen Rosenblum said the Secretary of State’s office must review the audit to regain public trust.
Secretary of State LaVonne Griffin-Valade, who was appointed to replace Fagan, said she would review the audit and may take additional action based on the results.
“The report reaffirms what we all know to be true: former Secretary Shemia Fagan’s actions compromised public trust in the audit,” Griffin-Valade told the Oregon Capital Chronicle. “In auditing, we call this a ‘threat to independence in appearance.’”
The audit urged the Oregon Liquor and Cannabis Commission to modernize its marijuana regulations to make growth a priority and to make opportunities to get into the industry more equitable.
Kotek has confidence that Griffin-Valade will review the case and restore public trust.
“I expect that this report will inform her ongoing efforts to make certain that Oregon’s audits are objective, independent, and meet professional standards,” Kotek told Oregon Capital Chronicle.
The review found no evidence that Fagan’s consulting work impacted the findings of her audit. However, it said the auditors did not take the potential conflict seriously enough, something that is problematic for restoring public trust.
Fagan recused herself from the audit, but the review said that was insufficient.
“When the circumstances surrounding former Secretary Fagan’s recusal and resignation became known to the Division of Audits, it did not take sufficient steps to identify and assess threats to (its) independence,” the review said.
The review said the audit team should have taken more steps to ensure the public that no conflicts of interest would impact the results.
“The SOS Division of Audits did not fully vet the situation to evaluate whether the independence threat at the organization level was acceptable or not,” the review said.
The Justice Department paid $88,000 for the review. Hourly rates ranged from $130 to $255.
The Oregon Government Ethics Commission still has two pending cases regarding this issue. One involves Fagan’s consulting contract and another regarding whether or not she used campaign funds to bring family members on trips.
