August 18, 2016
After inspecting about three and a half million head of cattle per year, Nebraska's brand inspectors can easily identify the wrong brand on an animal's hide.
The state's audit department, charged this spring with checking for problems within the brand inspection program's management system can also see problems at a glance.
Upon completing a review this spring, the auditor's department reported loose bookkeeping, release of funds with no proof of ownership, misuse of a state vehicle, poor management of committee-owned vehicles, charging inspection fees and brand lease fees that were not within state statute, and more.
A few days before the July 26, 2016, audit was released the assistant director of the brand inspection program resigned.
“(The new technology) will take a lot of the human error things out.” Jerry Kuenning, Nebraska Brand Committee chairman
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"I could see the writing on the wall. Things weren't going to change. Lack of enforcement, lack of organization. If we were going to look at these things seriously and address them, I'd still be an employee of the committee," said former assistant director Paul Beaver.
A 29-year veteran investigator and a committee member also resigned over frustration with the lack of initiative on the part of the committee to resolve problems, Beaver said.
When the five-member governor-appointed state brand committee took up the issues discussed in the audit the director of the program also resigned.
The audit reported cases of then-director Shawn Harvey using the state vehicle for personal use – traveling between home and the office, and out of state, and stopping in between.
According to the audit report, Harvey also released funds before proof of ownership was provided for cattle sold.
A brand inspector had placed a hold on the proceeds of nine head of cattle sold by Nebraska Beef c/o Butch Stanko that were not accompanied by proper documentation to prove ownership.
"The APA (Auditor of Public Accounts) found that the owner of Nebraska Beef had a criminal record involving previous felony convictions…" said the audit.
According to the audit, Harvey said he exchanged several phone calls with the disgruntled Nebraska Beef owner and the local inspector in Gordon who placed the hold on the cattle. Harvey had released the proceeds with the understanding that the paperwork was on its way to the state office. Harvey had instructed the local inspector to release the funds but not to clear the hold until proper documentation was provided.
According to the audit the brand committee has yet to receive proof of ownership.
"The Executive Director was not made aware until June 7, 2016 that the hold had been cleared without proper paperwork and that the paperwork was being sent from the Crawford inspector was never received by the Kearney Brand Office," said the audit.
The committee responded to the auditor's concerns, saying that Nebraska Beef has been a topic of conversation at every committee meeting for the past four years. "…we have received some push back from the county attorneys with cases involving Nebraska Beef. With that being said, it is still the Brand Committee's duty to see that everyone is treated equally and fairly." The committee went on to say that proceeds will not be released with out following committee policy going forward.
"I don't believe it was an 'oops,'" said Beaver regarding the release of the Nebraska Beef proceeds. "The brand inspectors were told what they were to do.
"If we're not going to take proof of ownership – that's the thing that diminishes the effectiveness of the agency," he said.
Regarding the state vehicle usage, the audit report included several points.
A passer-by submitted photos of the vehicle parked at the school where Harvey coaches girls' basketball. According to the audit, the director held a part time job as an assistant girls basketball coach. Use of a state vehicle while traveling to and from a part time job is prohibited, according to the audit, which quotes the Nebraska Brand Committee Policy.
"The APA has received numerous allegations that the Executive Director and other Committee employees use their State vehicles for personal use. According to several individuals, such personal use of State vehicles has occurred for years," said the audit report in its first finding.
The audit revealed an incident in January where the director traveled to Cheyenne with his state vehicle. Upon questioning, Harvey said he was meeting with the Director of the Wyoming Livestock Board. The Wyoming livestock director, Mr. Steve True, denied meeting with Harvey that day. Yet the mileage log indicated Mr. Harvey was in travel status between 5:50 a.m. and 1:15 p.m. that day. The basketball team coached by Mr. Harvey played in Burns, Wyoming, that same day, which is less than 30 miles from Cheyenne. According to the audit, Harvey denies driving the state vehicle to the basketball game that day. He told the auditors that he drove the state vehicle home to Mitchell, Nebraska, got his own vehicle, and traveled to Burns for the game – a round trip of 200 miles. No supporting documentation was provided to back up this claim," said the audit.
Humans make mistakes, even those whose paychecks are paid via the scrutinized government-collected tax dollar.
Harvey made some poor decisions, and mistakes, Nebraska Brand Committee Chairman Jerry Kuenning said, but added that no activities identified in the audit were criminal or fraudulent.
Kuenning confirmed that former executive director Shawn Harvey was indeed hired back in the interim by the committee at nearly exactly the same pay level as before – based on the standard state employment chart.
Harvey, with an annual salary of $107,000 according to a WNAX story, now doesn't have the office responsibilities like before, but is charged with chief investigator duties. He was hired back due to unique skills he possessed including knowledge of inspectors, producers, salebarns and more, said Kuenning.
Kuenning said he hopes the committee fill the position in 45 to 60 days, and that Harvey will be eligible to apply. The committee hopes to make permanent changes to the director position – to cut out the investigative responsibilities and allow the director to focus on office duties.
Himself a rancher/farmer/feedlot operator who lives inside the brand inspection area and pays the inspection fee multiple times throughout the year, Kuenning said that only about five of the audit report's 18 discretionary findings were the fault of Harvey. The rest "were related to bookkeeping and recordkeeping and mileage and things that fell on the assistant director's responsibility."
A new computer-based bookkeeping system being pursued by the board will alleviate the bookkeeping issues for the committee's 48 full time and 52 intermittent inspectors, Kuenning said. A technology company that provides services to state government, Nebraska Interactive, has been hired to develop a computer-based system for the program. The new system is expected to allow inspectors to enter individual inspection tallies on laptops and immediately relay the information to the office to help streamline the "antiquated" system, he said.
"It will take a lot of the human error things out," he said. The new reporting program will make the agency more efficient and accurate, Kuenning believes.
Nebraska Cattlemen's head of membership, Melody Benjamin, Lakeside, has been going to Nebraska Brand Committee meetings for 17 years.
While management problems have existed, she trusts that the proactive committee members currently overseeing the program will clean up any lingering issues.
"All of the committee members are ranchers or feedlot owners, all are upstanding people."
Updating processes that haven't been addressed in decades and implementing more checks and balances will help fix the identified problems, she said.
Her organization has had a policy for "a long time" that the agency needs to modernize its reporting system, so they support the new technology being looked at.
Beaver, though, calls the high-tech system in the works, a "million dollar band-aid," and said it will not address the alleged charges.
Spending producer dollars brings with it a great amount of responsibility, he said, and he doesn't believe a new computer program is a wise use of those limited funds.
Almost $1.5 million worth of strayed cattle were recovered and the rightful owners paid by Nebraska Brand Committee inspectors from July 2015 to June 2016.
According to the Nebraska Brand Committee website, the committee was created by the Legislature in 1941 to inspect cattle and investigate missing and/or stolen cattle. It is a self-supporting cash fund agency whose funds come solely from fees collected for brand recordings, brand inspections and registered feedlots and dairies.