So what was the DABC drinking, anyway?


If recent media reports surrounding the performance of the state’s Department of Alcoholic Beverage Control (DABC) have left you scratching your head, you’re not alone.

Information from the media over the past few months has ranged from singing the DABC’s praises as one of the state’s greatest sources of revenue to calling for governmental investigations into the management and solvency of the department.

In the last two months the director of the DABC has been forced to resign; ethics probes have called into question the business dealings of its commissioners; and the governor has been forced to get personally involved.

Tuesday the Office of the Legislative Auditor General presented its most recent findings of unethical and potentially criminal conduct at the DABC. Aside from concluding that the DABC “has been incompetently managed,” investigations by the auditor general found that:

  • Contracts with suppliers have been falsified
  • The bidding process for various supplies has been rigged
  • The director and deputy director have willfully overspent their yearly budget and threatened to close down stores while their personal purchases (with taxpayer money) have included:
    • New iMac computers for themselves and one for the IT Department (so the ITs could show them how to use the computers)
    • New iPads that they subsequently gave away as improper gifts
    • A Jeep Liberty (and only the director and deputy director had keys to the vehicle)
    • Furniture and other office purchases that they tried to conceal from auditors

[pullquote]These improprieties have been the norm in the DABC for more than TWENTY YEARS![/pullquote]One would think that these current problems have just recently developed. However, the most frightening aspect to all of this is that the auditor general found that these improprieties have been the norm in the DABC for more than TWENTY YEARS!

How does behavior like this go on for so long without being recognized and changed? Who does the general public hold accountable for these deplorable actions?

The department directors and commissioners? Auditors for not catching these things earlier? The Legislature for not providing enough oversight? Or the media for continuously running to the defense of the DABC whenever budget cuts and other legislation aimed at the DABC come along?

The sad part is that poor performance audits of the DABC have become the norm over the past few years, not the exception. Just last November a performance audit of the DABC found that it was in constant violation of Utah’s Open Meeting Laws, that two commissioners failed to disclose that they personally do business with entities that are licensed by the DABC, and that the DABC was one of the most inefficiently run departments in the state.

Pivotal to the success of any corporation or business entity is the formation and adherence to a proven business model. This business model – or plan – gives clear direction to management and employees as to how the business should be run to maximize efficiency and give benchmarks from which performance can be measured.

The DABC doesn’t have one.

During this year’s Legislative session, it was proposed that the DABC close a few stores (one that was less than a few blocks away from another store) and use that money to create an efficient and effective business plan. The resulting plan, according to the auditor general, would eliminate inefficiencies in how the DABC is run and make the department even more profitable than it already is.

The Office of the Legislative Fiscal Analyst concluded that closing a few stores would have no impact on revenue garnered through alcohol sales in state liquor stores. The state would close a few stores while preserving precious revenue, and the DABC would create a business plan to make itself more profitable than ever before.

Rather than take a step toward efficiency and accountability, the DABC contacted the media and claimed that closing those stores would hamper the department’s ability to do business and make money for the state. The resulting public upheaval, which in one instance found fliers posted on stores with legislators’ home addresses and phone numbers on them, preserved the inefficient status quo for the DABC.

The troubles for the DABC don’t end there. A more recent legislative audit confirms the concerns that state auditors expressed nearly a year ago. In May the public was made aware of a few dollars – a mere $298,177 worth of state funds and inventory – unaccounted for, with the public left holding the bill. This money has yet to be accounted for.

To give better perspective, according to data from the Utah State Office of Education – to which revenue from the DABC is to be directed – the amount mismanaged and lost by the DABC at just one packaging plant could have paid the salaries for an additional six teachers, helped educate an additional 50 students, or covered the cost of nearly 125,000 lunches for students in severe need.

Too many stores (or stores found in inefficient locations), no business plan, criminal conduct that was not reported to authorities, rampant violations of open meeting laws, and shady business dealings that benefit the department’s own commissioners and directors. Sounds like a perfect model of government efficiency.

At a time when state revenue has been shrinking, state agency budgets have been slashed, and school buildings are found to be uninhabitable because of poor conditions, the DABC has clamored for more funding and refused to take full responsibility for its actions.

One wonders if the DABC could pass a sobriety test …