Big grant from Kentucky's tobacco-settlement fund was spent with little accountability, auditor says

Kentucky's state auditor "released a highly critical report Friday on nearly $5 million in agriculture marketing grants from Kentucky's tobacco settlement money," Janet Patton reports for the Lexington Herald-Leader. The audit says "oversight of the grants to Louisville-based Allied Food Marketers West was so lax that the results can't be measured. ... Allied was supposed to help Kentucky farmers get their products into more markets." The grant, which expired June 30 and was not renewed, is one of the largest from state tobacco-settlement funds.

"It is deeply troubling that these tobacco settlement funds, intended to help transition our agriculture economy, were spent with such a disregard for accountability," Luallen said in a press release. Patton notes, "The grants were awarded by the Agricultural Development Board in 2005 and 2006, under former Gov. Ernie Fletcher, who chaired the board. The vice chairman of the board was, and still is, Agriculture Commissioner Richie Farmer." They are Republicans; Luallen and Gov. Steve Beshear are Democrats. Farmer told Patton that the board probably should have had greater oversight.

The recently appointed head of the Governor's Office of Agricultural Policy, former state Rep. Roger Thomas, said in a release that he asked for the audit because "It became apparent that several financial-control and contract-management issues had been overlooked" by the previous administration. The office serves as staff to the board. The owner of Allied declined to comment until he had read the audit.

"There were multiple conflicts of interest, including a $500,000 earmark for Rebekah Grace Food Supplements to market natural and organic products. The general manager of Rebekah Grace was an employee of Allied, which already had a deal to steer products to Rebekah Grace," Patton reports. "Luallen said the results have not been referred to a law enforcement agency because the contract was so weakly written that it would be difficult to hold Allied to any criminal conduct." (Read more)

For a 2006 report from the Institute for Rural Journalism and Community Issues about Kentucky's tobacco-settlement spending, and a comparison with North Carolina's, click here.