When government is in business
A few too many hiccups in Liquor Board's accounting - After $421 million unaccounted for, now auditor discovers $839,706.90 in unauthorized payments

from Evergreen Freedom Foundation

August 15, 2002

Washington State - Remember when State Auditor Brian Sonntag discovered last February that the State Liquor Board couldn't account for $421 million in sales?

That wasn't the end of the Liquor Board's little (hic) accounting problems.

An audit report released today has uncovered $839,706.90 in unauthorized
payments to a vendor who submitted false billing records to the Board. This
vendor inflated delivery weights on 600 shipments by 5,000 pounds each,
billed for 1,370 deliveries that were never made, and double-billed for 273
orders.

How in the world did someone get away with such a massive fraud?

Here's how. The Board does not have meaningful oversight measures for the
taxpayer dollars it manages. Staff are not required to verify reported
deliveries and weights prior to payment and the guilty vendor was not
required to provide original copies of invoices. Furthermore, the Board
staff member who reviewed the vendor's billings and personally delivered
payments has a relationship with this vendor that creates a conflict of
interest.

Our state officials have a bad habit of retaining the people who oversee,
contribute, or even solicit this kind of gross fraud and mismanagement. The
Liquor Board is obviously in need of a serious house-cleaning.

In this day and age, why is the state even in the liquor business at all?
Selling liquor is not a core function of government.

Further, it seems impossible that state officials are blind to the obvious
conflict of interest in allowing the state to be both the regulator and
distributor of liquor. Even British Columbia has recognized this fact and is
moving to privatize its liquor sales.

At the very least, Washington taxpayers have a right to expect-and
demand-that state officials will act swiftly to bring the wrongdoers
involved in this case to justice. Even then, it will be difficult to
eliminate the problem so long as the state has conflicting interests that
expose it to this kind of fraud.