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Commerce Dept. audit debated

Dave Thompson
Prairie Public

The director of North Dakota’s Commerce Department called it an “honest mistake.”

Michelle Kommer talked to the Legislative Audit and Fiscal Review Committee about a state audit finding that $854,000 in spending was improperly charged to the 2017-2019 biennium budget. The money was part of a grant to Grand Sky, the Grand Forks-based home for unmanned aerial vehicles. The money was to go to construction at the Grand Sky site. But because of bad weather, construction was delayed – and the money didn’t go out until July of 2019.

Auditor Josh Gallion said it should have been charged to the current two-year budget. Gallion said because that could technically be against state law, he referred it to the Attorney General’s office for a criminal investigation. That matter was referred to the South Dakota Department of Criminal Investigation.

Kommer told the Committee her department thought it could make the extension, because of the Legislature’s strong support for UAS technology. She said there was no intent to break the law.

"It was an honest mistake, honestly made," Kommer told the Committee. "The money went to the right party, for the right work that was contracted for legally. It went at the wrong time."

Deputy Attorney General Troy Seibel told the Committee when an elected state official asks for an investigation, under state law, the AG has no choice but to investigate.

The committee chairman, Sen. Jerry Klein (R-Fessenden), asked Gallion whether he thought there was an intent by individuals in the Commerce Department to break the law.

"The Auditor's Office does not make any determination of any intent," Gallion replied. "We identified that, based on the contract laws and Office of Management and Budget policy, a payment was made without support, without services received."

"So we're moving it on to the Attorney General's office because of an accounting issue, because you haven't determined intent?" asked Klein.

"The Auditor's Office does not make that determination," Gallion said.

Rep. Mike Nathe (R-Bismarck) questioned whether it should have been referred for a criminal investigation. Nathe told the Committee it appears to him there was no intent on the Commerce employees’ part to break the law. And he said he’s not happy that Gallion referred the matter without checking with the committee first.

"When you're accusing someone of a criminal act, that's a very high bar, and is very, very serious," Nathe told the Committee. "Now we have a Department that has to lawyer up."

Nathe also said he's concerned about this happening "on a whim."

"We're dealing with people's lives, careers and reputations," Nathe said.

Kommer said she worries about how the investigation might be affecting her staff at Commerce.

"I have grave concerns about the message we have heard here today, that a dedicated person who comes to work for the right reasons, cannot make an honest mistake without the threat of a criminal investigation," Kommer said. "I ask you -- who can work productively under these circumstances?"

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