Shiprock votes down move against prez

SHIPROCK, June 26, 2008

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small group of Shiprock Chapter members on June 8 defeated another member's resolution calling for independent criminal and civil investigations into the failure of BCDS Manufacturing Inc.

And then chapter officials went a step further and physically destroyed copies of the resolution - which chapter president Duane "Chili" Yazzie said was politically motivated against him.

The business failure has put the Navajo Nation at risk for up to $4.7 million in debt, imperiled economic development funds held in the Navajo Dam Escrow Trust Fund, and left approximately 30 tribal members out of work here.

Yazzie was listed in business filings in 2003 as being on the BCDS board of directors, but he said he turned down Ghun's offer to be on the board and that previous news accounts have been in error, he said in an interview late Wednesday.

The resolution asked for the Navajo Nation and outside entities to conduct the investigations. It also called for Allan Begay, the director of the Division of Economic Development and also member of the BCDS board, to be fired.

Yazzie, who acknowledges that he served as a paid consultant to now-ousted BCDS CEO Hak Ghun, said Ghun promised to pay him $55,000 in return for helping to land a $2.2 million loan that was backed by the Navajo Dam Escrow account.

Ghun said the money was needed to expand the Shiprock facility in anticipation of new contracts, but the expansion never took place, the contracts never materialized, and the money disappeared.

A tribal audit of the company's finances accused Ghun of "massive misspending."

Motive was jobs

Yazzie said Sunday his primary goal in helping Ghun was to create good paying jobs in Shiprock.

"There is a suggestion that there was conspiracy and that I was a part of that conspiracy to jilt the Navajo Nation out of this ($2.2 million)," Yazzie said. "There was no such conspiracy. Hak may have had other intentions, but never on my part."

The resolution was sponsored by chapter member MacDonald Lee.

"We would like to have the overall investigation on the incident and not let it go," Lee said, according to the June 8 chapter meeting minutes. "They need to get the money back."

"I'm in favor of voting down the item," Yazzie said according to the chapter's minutes. "The resolution is questionable."

Chapter member Arnold Harrison motioned to table Lee's resolution until the next chapter meeting, due to low attendance at the June 8 meeting, but those present voted it down 33 to 1. The group then defeated the resolution itself 35-2.

Yazzie said in an interview Sunday that the Navajo Nation is already looking into hiring a special prosecutor and that there was no reason for his chapter to reaffirm that action with a new resolution.

"(Lee's resolution) was viewed as being redundant," Yazzie said. "It was the Shiprock Chapter's (original) resolution that brought about the (BCDS) audit (by the auditor general) in the first place.

"We asked at that time for there to be appropriate follow through on the findings of the (BCDS) audit," he said. "Why are we basically reaffirming something that is already happening based on our initiative?"

Yazzie, whose involvement with BCDS was widely known in Shiprock, offered to step aside as chapter president when the chapter voted to seek an audit. Those in attendance at that meeting urged him to stay on.

'Political' move

On Sunday Yazzie called the new resolution "political," and said, "What it comes down to is an active effort to criticize me, to keep me in a bad light. The people who spoke ... basically defended me."

Several chapter members had spoken out against the resolution before the vote, according to the meeting minutes.

"I am not in favor of people talking against a leader," said chapter member Bessie Phillips. "What is mentioned is going on in Window Rock ... the issue is with Mr. Ghun and the incidents happen over there. You include Mr. Yazzie in the issue and I don't like it."

Chapter member Mary Clark questioned the timing of Lee's resolution since Yazzie is running for reelection.

"I'm not comfortable with people talking negative in here," added chapter member Sam Sandoval.

In a striking departure from usual procedure, however, the defeated resolution was expunged from the chapter's official records. Copies of it were packed away in boxes of paper for recycling, Yazzie said Sunday, adding that the chapter should have kept a copy.

Yazzie said he had charged Ghun a 2.5 percent consulting fee - $55,000 - for helping arrange the $2.2 million loan.

Yazzie said he personally guided and vouched for Ghun as he navigated the Navajo bureaucracy to obtain tribal backing for the loan, which included a joint appearance before the previous council's Budget and Finance Committee.

Yazzie agreed that because he was a trusted Navajo leader, and Ghun - a Durango, Colo. resident whose record included prison time served for securities fraud - was unknown to most tribal members, that he played an instrumental role in persuading the Navajo Nation to approve use of the Navajo Dam trust fund as collateral for the loan, which Ghun arranged with JPMorgan Chase Bank.

The loan was so large that it obligated almost all cash in the dam fund, which is earmarked to finance economic development initiatives.

Unless the tribe is able to work out another arrangement with the bank, that money will have to be used to repay the $2.2 million loan, which began going into default within a couple of months after it was issued.

'Credible' operation

"The BCDS trailer manufacturing seemed to be a very credible operation," Yazzie said, referring to the planned expansion into trailers. "At one point there were 50 people working.

"Visiting the plant, now and then, you saw production," he said. "It was very neat. You saw trailers going out the door and trailers getting hauled out on semis. ... People were employed and getting good pay. So, my interest and my effort was to do all that I could to increase that."

The loan was intended to construct a 100,000-square-foot building to expand operations and provide more employment, he added.

Yazzie said he was not aware of stories in local newspapers that discussed Ghun's criminal record before the loan was made, and said he first suspected a problem when he began to hear complaints from vendors who said they were not being paid, or were not being paid on time.

"Before I went in to do any kind of work, I submitted a letter to the Ethics and Rules Office and asked if I would be in conflict doing this work and being a chapter president," Yazzie said. "The answer I finally got back was 'there did not appear to be any conflict.'"

The Ethics and Rules Office advised him to go to the council's Ethics and Rules Committee to be sure. "I didn't do that," Yazzie said.

Yazzie said he was initially given a check from Ghun for $20,000 once the loan had gone through. He also received approximately $10,000, mostly in cash, over a period of time.

In an effort to collect the remaining $25,000, Yazzie said he went to a Farmington mansion Ghun had purchased, but was never able to get paid and finally gave up trying.

The Navajo Nation - through the Diné Development Corp. - owns 51 percent of BCDS, whose debt grew to $4.7 million before Ghun's removal as CEO in October. He has since disappeared.

Yazzie, who said he has been doing consulting work since 1996, could only speculate Sunday on Ghun's whereabouts, adding that he might have returned to South Korea, his birthplace.

The chapter's handling of its own finances recently was questioned by the Navajo Nation auditor general's office, which conducted a detailed review of chapter finances as part of a performance audit.

The audit report cited numerous accounting deficiencies. It said chapter accounting records were unreliable, the chapter spent money without community approval and could not account for all of the items it purchased, and had not keep an accurate account of the balance in its checking account.

The chapter also has not implemented the policies and procedures of the five-management system required under the tribe's Local Governance Act, according to the audit findings.

"The chapter audit result is good," Yazzie told chapter members, according to the June 8 minutes.