(The Center Square) – Testimony detailing financial inconsistencies and a “very favorable” contract toward Swadley’s Foggy Bottom Kitchen were heard by members of the Special Investigative Committee Thursday in the first hearing looking into possible mishandling of taxpayer money by the Oklahoma Tourism and Recreation Department.
One of the people subpoenaed to give testimony, Office of Management and Enterprise Services Director Steven Harpe, was not present. Chairman Rep. Ryan Martinez, R-Edmond, said they would do “everything we can” to compel Harpe’s testimony.
Most of Thursday’s hearing revolved around questions directed to Mike Jackson, executive director of the Legislative Office of Fiscal Transparency, who was also subpoenaed. Jackson detailed findings in LOFT’s report on Oklahoma’s state parks, which first made public the possible mishandling of taxpayer money.
He said his office quickly discovered the amount of money spent by OTRD on food and beverage shot up to $5.97 million in fiscal year 2021, compared to the average annual expense of $58,000 the department spent in that category the entire decade prior.
Jackson also said the contract between OTRD and Swadley’s appeared “very favorable toward the vendor.”
“LOFT has been unable to find another contract that is structured in this way,” said Jackson.
When asked for examples of where the contract appeared to favor Swadley’s, Jackson said the contract afforded the restaurant chain a profit loss of $1 million and, through a later amendment, ratified expenses that the restaurant had already incurred, which he said was “very unique in a contractual setting.”
He said his office has been unable to determine who drew up the original contract in March 2020, but the first and second amendments made to the contract in 2021 both had the OTRD’s legal stamp.
Other items that raised red flags, according to Jackson, were inconsistent management and consulting fees that ranged from 5% to 35%.
“There is no rhyme or reason or pattern for how they actually charged,” Jackson said of the fees.
There were also multiple instances where items purchased by the restaurant chain were expensed far higher than LOFT could account for, according to Jackson. In one example, a cheese melter was expensed for over $11,000. The highest cost for a cheese melter that Jackson’s team could find from that same manufacturer was around $5,500.
Jackson said travel expenses in September 2020 were “very, very unique.” That month, 164,903 miles were reported. To put that mileage into perspective, Jackson said 93,000 miles is equivalent to going around the globe about four times. He said another unique factor that arose in the analysis was September 2020 was the only month where Swadley’s reported a profit, excluding travel expenses. All the other months showed a loss, Jackson said.
When asked if there were any safeguards or oversight procedures in place that should have caught the inconsistencies, Jackson said there were only controls in place to notify whether the department went over its total allocation, adding there should have been controls internally and externally from the state purchasing director.
“If they would have just specifically had controls in place, it would have saved Oklahoma taxpayers $12.4 million,” Jackson said.
via Oklahoma's Center Square News