News: Quick Takes

N.C. ABC commission member resigns in wake of state audit

The fallout continues over an audit that found a lack of oversight by the N.C. Alcoholic Beverage Control commission has cost the state about $13.5 million.

Michael Herring, one of three members on the state ABC commission, resigned Wednesday, Aug. 15, according to a letter obtained by the Triangle Business Journal.

In the poorly worded letter, Herring called findings by the Office of State Auditor Beth Wood “fictitious” and calls out the administration of Gov. Roy Cooper for failing to defend the state ABC, saying it’s “an injustice to all that served on the Commission over the past decade.”

“There was and is documentation and justification for each decision made in accordance with ABC Laws.”

ABC administrator Bob Hamilton left the agency late last month, a couple of weeks before the state released the audit. The reasons for Hamilton’s abrupt departure remain unclear, and the ABC, citing state personnel laws, refuses to comment.

The audit released Aug. 9, in short, found that poor contract administration cost North Carolina taxpayers at least $11.3 million over 13 years. Unused warehouse space potentially cost the state $2.1 million over seven years, and a lack of monitoring left the state underpaid by at least $297,537 over two years.

The state contracted with LB&B, a North Carolina corporation headquartered in Maryland, to manage the warehouse.

Herring told the TBJ the LB&B contract was “a good deal for the state,” the paper reported, and the findings amount to “typical politics.”

The N.C. ABC has removed Herring’s profile from its website. The commission now consists of chair A.D. “Zander” Guy Jr. and Norman A. Mitchell Sr., who Cooper appointed in July.

Herring was a long-time ABC administrator and appointed to the board by former Gov. Pat McCrory in 2015.

The ABC, the audit found, failed to administer the warehouse contract in the best interests of the state.

The General Assembly, said Wood, asked her for an audit the state’s six largest agencies, including Public Safety, where ABC resides.

“My staff said, ‘When we looked at the ABC commission, there’s something not right there,” Wood told Carolina Journal. “They’ve got a contract that’s not been put out for bid since 2004, they can’t answer questions about how the contract’s being administered, this is not tied to a financial statement audit, but it’s info they’ve gleaned about that division of DPS.”

In his response to the audit report, ABC chairman A.D. Zander Guy says he was appointed only last year and “the majority, if not all of your review period, was before my tenure as chair.”

Yet Guy has a history with the state ABC during the period LB&B was reportedly overcharging state taxpayers. In 2009, he was first appointed to the commission and served until 2013. He was chairman from February 2012 to February 2013.