Vote asking to oust DED director fizzles

WINDOW ROCK, June 19, 2008

S

ickened by the loss of up to $5 million in tribally back funds, the Budget & Finance Committee on Tuesday toyed with asking for the removal of the tribal official it holds most directly responsible for allowing the disaster to go unchecked - Division of Economic Development Director Allan Begay.

However, cooler minds prevailed and the committee then rescinded two directives regarding BCDS Manufacturing Inc. - the Shiprock metal and fiber glass fabrication plant now deeply mired in financial and legal troubles.

The company is $4.7 million in debt, according to a tribal audit, which blames the now-vanished former CEO Hak Ghun for "massive misspending."

The first directive would have dissolved the corporation, in which the tribe holds 51 percent ownership. The second was a request to President Joe Shirley Jr. to consider firing Begay, who continued to profess confidence in Ghun even as plant operations slowed to a standstill and the money from a $2.2 million tribally backed loan seemed to evaporate.

The committee voted 4-3 to accept a report from the tribe's Department of Justice, which was not made public. On May 20, the committee had asked DOJ to research what the tribe could do to avoid default on the loan and recoup its losses on BCDS.

The two directives were attached by the committee before it voted to accept the DOJ report and forward it to President Joe Shirley Jr.

By dissolving BCDS, the tribe could begin to recoup some expenses by liquidating its property, the committee said. This would be similar to filing for bankruptcy, but would keep the BCDS building under tribal ownership.

The second directive was sponsored by committee vice chair Leonard Chee (Birdsprings/Leupp/Tolani Lake), who has never minced words on the importance of holding the responsible parties accountable.

In addition to being the tribe's top economic development manager, Begay sat on the BCDS board of directors.

"In the memo (to the president) it should state that we have no confidence in Mr. Begay," Chee said.

"The due diligence, he didn't do that," he said, referring in part to Ghun's record, which included serving three years in prison for securities fraud during the 1980s.

In May, the Office of the Auditor General released a report detailing the Shiprock company's financial collapse. It began with a proposal by Ghun, who presented himself to the Navajo Nation DED as a seasoned military contractor with particular expertise in decommissioning biological WMD such as those the Bush administration claimed were in Iraq.

BCDS Manufacturing was established as a joint venture between the tribe, Ghun, and a couple of people he knew.

It opened in 2003 with a $300,000 start-up grant from the tribe. In 2006, at Ghun's request, tribal leaders also authorized the use of $2.2 million from the Navajo Dam Escrow Account as collateral for an "expansion" loan.

The report included details on how Ghun spent more than $3 million of the company's money for his personal use, eventually running up a debt of nearly $5 million for which the tribe likely will be responsible as majority owner of BCDS.

The tribe is now making payments on the $2.2 million loan, and is said to be in talks with the lender, JPMorgan Chase Bank, on how to resolve the debt.

In addition, the BCDS loan encumbered almost all of the money available in the dam escrow account, which is set aside to fund economic development on the reservation.

The auditors' report cited several tribal departments, offices and committees for failure to properly research the company and its CEO before approving the venture. The report specifically cited Begay, who oversaw the original agreement between Ghun and the tribe.

According to the report, Begay said he did not conduct a thorough interview with Ghun because he did not want to "offend" a potential reservation employer. At its height, BCDS employed about 30 Navajos at the Shiprock facility.

On Tuesday the B&F committee met for over an hour with tribal attorneys in executive session. Although they declined to discuss details of that meeting, the delegates were clearly upset afterward.

"The nation was taken for a ride from every possible angle," said committee chairman LoRenzo Bates (Upper Fruitland). "Unfortunately, this situation could be seen as a reference on the nation, on how we conduct business."

After voting to liquidate BCDS and seek sanctions against Begay, however, the delegates mulled things over and decided to recall the matter for further review.

"I was so upset, I voted for it," said Nelson Begaye (Lukachukai/Tsaile/Wheatfields). "Then I went outside."

In the end, Begaye decided that placing blame on one person was unfair, and switched his position.

The committee then voted again, and this time the vote was 4-3 against accepting the DOJ report and the directives.

"(Allan Begay) is not the only one to blame, there are so many other people and programs to blame," Begaye said in explaining his reversal. "It's the whole Navajo Nation's fault."

"I think what we wanted to do was send a strong message across to people that we really need to look at these things, it can't be rushed," Begaye said. "I can't blame just one person and ask for his resignation."

Bates was at a loss to explain the committee's ultimate decision not to take action regarding BCDS.

"I was surprised by what took place," he said. "It was the total opposite of the first vote."

The tribe's attorney general still could act to dissolve BCDS on his own, Bates said. Shirley could also choose to hold Allan Begay, a presidential appointee, responsible for what happened on his watch.

However, the Budget & Finance Committee cannot officially make these suggestions, Bates said.

Even if B&F had stuck to its original position, it could only recommend, he said. The authority to act on either directive would rest with the attorney general and president.

Allan Begay, who was reached Tuesday before the committee reversed itself on sanctions, said he had no comment.

"It's their prerogative," Begay said. "I work for the president and as far as I know, that is where the decision would come from."

Begay said the Division of Economic Development is currently working to resolve the BCDS issue, but he would not elaborate.