Council refuses to accept Navajo Oil and Gas audit By Kathy Helms (Nov. 28, 2014) WINDOW ROCK — The Navajo Nation Council voted 5-11 Wednesday not to accept what the majority of delegates deemed to be a one-sided forensic audit report from McGladrey LLP regarding Navajo Nation Oil and Gas Co. Bruce V. Bush of Dallas, director for McGladrey’s Forensic and Accounting Investigations practice, presented the findings of what Lennard Eltsosie, chairman of the board of directors of Navajo Oil and Gas, said was a “confidential” report. However, because the NNOGC presenters did not request an executive session, the report was heard in open session. Bush said McGladrey initially met with NNOGC representatives Aug. 20-21. “The purpose of that meeting was to understand the issues that they had identified in the areas that may need to be investigated,” he said. They prepared their investigation work plan and began the offsite work Aug. 22. The work was completed Oct. 31. The period covered in the review extended from April 1, 2010, to June 30, 2014, or approximately four years. Findings Among the high-level findings, Bush said, “We looked for various items of spend that were not properly NNOGC business. We looked for items of spend that were not properly authorized within the framework of NNGOC. We looked for spend that did not have appropriate or adequate support,” he said. “We also looked for spend that may have been under conflicts of interest. The total amount of spend that we found that met this criteria was $1,781,106.” Not-related business spend totaled approximately $813,000. “This is spend that is not on business interests that directly support the NNOGC operations. It’s primarily spend for outside parties,” he said. “We identified unauthorized spend of $1,083,816. This is spend by the company that wasn’t authorized in accordance with the company policies.” Additionally, he said, missing and inadequate spend totaled $871,000; questionable spend, $123,000 and conflicts of interest spend, $415,000. “These amounts don’t add back to the $1,781,000 because various items of spend may have been counted in one or more of those categories,” Bush said. The findings all centered around when Robert Joe served as chief executive officer and expenditures pertaining to when some of the shareholder representatives filed suit in federal court regarding the current board of directors. There was no mention of findings during the appointment of Louis Denetsosie, who replaced Joe, or from when Wilson Groen led NNOGC. Nothing but the truth Delegate Mel Begay, a NNOGC shareholder representative who has been under fire since he participated in the federal lawsuit, asked to have presenters sworn in. “In our experience as we deal with the finances, and having received an audit report that is requested for the body ... our typical practice is that a lot of the information is provided under oath, so I would like to have the presenter and also the Oil and Gas who present this, under that framework,” he said. Speaker Pro Tem LoRenzo Bates said, however, that it was not an official hearing. “It’s a report made to the Council, so your request at this time would be denied unless we go into a hearing status,” he said. Delegate Lorenzo Curley disagreed. “I think an oath is necessary. I believe the purpose of this forensic audit was to influence this body, the decision of this body,” he said. “There was no other purpose other than to persuade this body to go in a particular direction with respect to the question of charter and with respect to the question of the board. So in a sense, we are a hearing body.” He said the report is evidence, so they needed to administer the oath. Skewed findings? Delegate Leonard Pete said a couple of things in the report that they were hearing didn’t go well with him. Although he couldn’t recall the exact words used by Bush, Pete told him, “The issues to be audited were pointed out to you. You were told, ‘Just audit this, audit this, audit this, audit this.’ “How am I to supposed to believe that this thing is not biased?” Pete asked. Delegate Begay said the audit was very much focused into one area. “As far as I remember, that is not what was requested,” he said. Council requested an audit of the overall financial activity and operation of NNOGC through a certain period of time. “But this seems to be a narrowing to one period of time,” he said. Before Robert Joe came on board, there was an office in Denver, and Begay alleged that some funds were misused. “Those are some of the areas that were requested. What happened to that era in time and why wasn’t that part of this discussion as well?” he asked. Without knowing the full picture, Council cannot remedy the situation, and there will be further chaos, not only with the Council but throughout the Navajo Nation, Begay said. “I appreciate the report that has been provided, however, I am not satisfied,” Delegate Alton Shepherd said. “I don’t call this a forensic audit — and I’m not on either side.” “I question the development of this report. I don’t know the company, we don’t know the credibility, I don’t know if Oil and Gas paid you directly,” Shepherd said. “What we were wanting to look at was the overall. I only see this more as a witch hunt, just to identify certain things to be brought out.”
Posted on: Mon, 01 Dec 2014 05:30:27 +0000
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