Former Oregon Secretary of State Shemia Fagan shared a draft audit plan description for an Oregon marijuana program with an executive of the cannabis company that later hired her, the secretary of state’s office confirmed Friday. And that executive reportedly sent it back with edits.
The details, first reported by The Oregonian and Willamette Week, come days after Fagan resigned under pressure from both Democrats and Republicans for moonlighting as a consultant for a subsidiary of the company. Willamette Week was first to report about Fagan’s side gig last week, which paid her $10,000 per month, with bonuses three times that amount if she helped the company get licensed in other states.
Fagan worked for two months as a paid consultant for the marijuana business, which has a sketchy financial record, while her office was wrapping up an audit of the Oregon Liquor and Cannabis Commission (OLCC).
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The new reports Thursday about the sharing of the draft audit plan involve correspondence between Fagan and La Mota co-owner Rosa Cazares.
“We have no records of the Secretary sharing the draft plan outside the agency,” Secretary of State spokesman Ben Morris said in a statement. “However, based on the emails with Rosa Cazares it appears as though Secretary Fagan did share the draft 2021-22 audit plan with Ms. Cazares for feedback in January 2021. The Secretary then included an updated summary and title of the OLCC audit in her audit plan.”
Morris said there’s no indication audit staff knew about it.
“No agency staff, including (Audits) Director (Kip) Memmott or the Deputy Secretary, were aware that the Secretary sought input from Ms. Cazares,” Morris continued. “We will note that government auditing standards acknowledge the appearance of an impairment of independence can be just as detrimental as an actual impairment.”
Morris emphasized that Fagan’s actions relate to her own audit plan, not the final audit.
“The audit itself is an entirely separate thing. After the Secretary approves the plan, the Oregon Audits division worked independently to audit the OLCC,” Morris said.
Morris continued, saying that the final scope of the audit was “substantially” different from the summary that appears in the audit plan.
“The audits division conducted their work with high standards and professionalism. Every conclusion, finding and recommendation in the audit is backed up by evidence,” Morris said.
Morris shared the synopsis below of the reported draft audit, Cazares’ edits and the final audit language.
Fagan OLCC draft audit plan correspondence
Fagan noted this week that ethics guidelines allow outside employment. She said the consultancy for an affiliate of marijuana retailer La Mota didn’t represent a conflict of interest because any action taken as a result of the audit would be by the governor, Legislature or cannabis commission; and because a wide range of businesses would be affected by any regulation changes, not just her client.
Fagan had recused herself from the audit, according to her office, but it was too much for politicians across the political spectrum to swallow.
La Mota’s co-owner has hosted fundraisers for top Democratic Oregon politicians, including Fagan, while the co-owner, her partner and their business allegedly owed $1.7 million in unpaid bills and more in state and federal taxes, according to Willamette Week.
The Associated Press contributed to this report.