NOBULL: Complaint Regarding Absurd OIG Beef Checkoff Program Report — R-CALF

April 5, 2013

The Honorable Tom Vilsack

Secretary of Agriculture

U.S. Department of Agriculture

1400 Independence Ave., S.W.

Washington, D.C. 20250

The Honorable Phyllis K. Fong

USDA Office of Inspector General

Room 117-W Jamie Whitten Bldg

1400 Independence Ave SW

Washington, DC 20250

Sent via e-mail and U.S. Mail

Re: Complaint Regarding Absurd OIG Beef Checkoff Program Report

Dear Secretary Vilsack and Inspector General Fong:

After taking longer than two years to complete, R-CALF USA could not be more

disappointed in the absurd, incomplete, and trivial report titled Oversight of the Beef Research and

Promotion Board’s Activities dated March 2013, but issued by the U.S. Department of Agriculture’s

(USDA’s) Office of Inspector General (OIG) on April 2, 2013 (hereafter “OIG report”).

The OIG report exemplifies the despicable cronyism that pervades the relationship between

the USDA and the meatpacker lobby, which latter group is represented in the OIG report by the

National Cattlemen’s Beef Association (NCBA). The findings and conclusions contained in the

scant, 17-page OIG report are incongruent and render both USDA and the OIG untrustworthy and

without credibility. The OIG report is a colossal whitewash of monumental proportions.

The incongruent findings and conclusions in the OIG report are blatantly obvious. For

example, on the one hand the OIG report finds that the NCBA admitted to miscoding and submitting

improper expenses to the beef checkoff fund during the same period covered by the OIG audit and

NCBA was subsequently required to reimburse the beef checkoff program a whopping $216,944 for

those miscoded and improperly submitted expenses. See OIG report, p. 3. But on the other hand, the

OIG report disaggregated those findings from its review of only three additional allegations (see e.g.,

id., p. 4) to incredulously conclude in its summations that “we [OIG] determined that assessed funds

were collected, distributed, and expended in accordance with legislation” (OIG report cover page),

and, “[w]e [OIG] found no evidence to support that the board’s activities in those areas did not

comply with legislation, and AMS guidelines and policies.” Ibid. Presumably the phrase “those

areas” refers only to the three additional allegations of fraud and/or wrongdoing the OIG chose to

include in its report. See id., pp. 4, 12, 13.

Only within an agency fraught with corruption and cronyism can a conclusive finding that

the NCBA had improperly charged the beef checkoff fund hundreds of thousands of dollars

nevertheless result in a conclusion by USDA that NCBA is guilty of no wrong doing. The agency’s

pronouncement that such is the case defies any semblance of logic, impartiality and credibility.

As another example of incongruent findings and conclusions, the OIG report emphatically

states on the one hand that the “AMS [Agricultural Marketing Service] is not involved in making

executive decisions: the executive leaders of a board are responsible for overseeing the financial

management of checkoff funds.” OIG report, p. 3. But on the other hand, the OIG report validates

the propriety of the executive decision made and approved by the AMS to refrain from taking any

punitive action against NCBA for improperly charging the checkoff fund hundreds of thousands of

dollars and, instead, to merely require the NCBA to repay the amount it had misappropriated. See

id., p. 3. The OIG report states:

Board and AMS officials met with NCBA officials to review the engagement findings

and develop corrective actions. The final corrective action, reviewed and approved by

AMS in September 2010, resulted in NCBA reimbursing $216,944 to the beef

checkoff program. Ibid.

It is both nonsensical and deceptive for USDA to defend the inactions of USDA’s AMS on

the basis that it is not involved in executive decisions concerning the beef checkoff program while

simultaneously defending the NCBA from any punitive actions for misusing the checkoff program

on the basis that AMS was intimately involved both in making and approving the executive decision

to take no punitive action. There can be no clearer example of a complete lack of accountability by

USDA officials who have and continue to allow the NCBA to misuse beef checkoff funds with

absolute impunity.

And yet another example of incongruent findings and conclusions is that the OIG report

found that the Federation of State Beef Councils (federation) merged with the NCBA many years

after the implementation of the Beef Research and Information Act of 1985 (Act) and the Beef

Research and Promotion Order (Order). See, e.g., OIG report, pp. 1-2. It further found that the Act

and Order required the beef board to contract with organizations in existence in 1988 and required

that “half of the beef promotion operating committee’s (BPOC’s) members be individuals from an

organization that has become a component of the board’s primary contractor, NCBA.” Id., pp. 1, 6.

Despite the fact that the merger between the NCBA and the federation occurred well after the Act

and Order (see id., p. 2), the OIG report nevertheless concludes, without any foundation or legal

analysis, that the NCBA/federation merger that combined two separate and distinct organizations

into a single organization was both envisioned and sanctioned by the Act and Order. See id., p. 6.

The OIG report states:

The Order provides that producers from the successor organization of the Beef

Industry Council, i.e., the federation division within NCBA, will serve on the BPOC.

§1260.112 section 5 (4)(A). OIG report, p. 6, fn. 13,

In direct contradiction to the OIG report’s conclusion, the Order makes clear that a full and

complete separation between the federation and any contracting organization was envisioned:

The prospective Federation representatives shall file with the Secretary a written

agreement to serve on the Committee and to disclose any relationship with any beef

promotion entity or with any organization that has or is being considered for a

contractual relationship with the Board or the Committee. (Emphasis added.) 7 CFR

§ 1260.161 (c)

Contrary to the OIG report’s baseless assertion, neither the Act nor Order sanctions the

inherent conflict of interest that now exists due to the fact that the NCBA, through its ownership of

the federation, now controls half the seats on the BPOC that the Act and Order had reserved for a

separate and distinct organization that was not also the primary contractor of the beef checkoff


As if the foregoing examples of incongruent findings and conclusions were not already

enough to marginalize USDA by relegating the entire OIG report to the lowly stature of political

subterfuge, the OIG report also is woefully incomplete as it fails to address the many allegations of

NCBA wrongdoings that were timely brought to the OIG’s attention. (This is, as shown below, true

despite the OIG’s blatantly false claim that only three allegations were brought to its attention. See

OIG report, p. 12.)

For example, the OIG report fails completely to even address the timely allegation made by

former Cattlemen’s Beef Board (CBB) Chairman Tom Jones, whose allegation continues today to be

maintained on the CBB’s own website. Mr. Jones alleged that in addition to the $216,944 in

misappropriated funds mentioned above, the CBB staff “as of May 15, 2011, have identified an

additional $39,000 improperly billed to CBB during FY 2008, FY 2009, and FY 2010”

(, which means the total amount

of checkoff funds that NCBA improperly billed to the beef checkoff program, during the same

period covered by the OIG report, is in excess of $305,000.

The OIG report’s failure to even mention this widely known allegation that NCBA had

misappropriated an additional tens of thousands of checkoff dollars is classic evidence of agency

capture and agency cronyism.

Also, the OIG report fails completely to address the relevant and timely complaints filed by

R-CALF USA on February 3, 2011 that included but was not limited to: 1) evidence showing that it

was NCBA’s long-term practice to subsidize its officer travel, regardless of whether the travel was

for the purpose of influencing policy, by improperly charging one-half of such officer travel to the

checkoff program; and, 2) evidence that contrary to the prohibition against using checkoff funds to

influence policy, the CBB’s Beef Industry Long Range Plan developed with checkoff funds includes

such policy initiatives as “the permanent elimination of estate taxes;” the recommendation to

“[a]ctively pursue critical policy areas such as environmental regulations, taxes, trade, food safety,

nutrition, product labeling, technology use, cattle marketing, land use and property rights. . .;”

“[p]reserve individuals’ freedom to choose business models and marketing methods by limiting

government involvement in business decisions. . .;” and, to support a national animal identification


If it were not for the serious, irreversible damage this outrageously absurd report has inflicted

on hard working independent U.S. cattlemen, it would be laughable. So outrageous is this report that

R-CALF USA is compelled to put into the record that there is a fast growing sentiment among

independent U.S. cattle producers that the meatpacker lobby, particularly the NCBA, has the best

U.S. Department of Agriculture that money can buy. This report adds considerable credence to that


Based on the foregoing information, R-CALF USA urges both of you to officially denounce

the OIG report as a colossal political sham and whitewash. We further urge USDA to: 1) take

immediate action to permanently suspend the NCBA’s eligibility to contract with the beef checkoff

program due to the NCBA’s documented abuse of producer checkoff dollars; 2) revise the Order to

clarify that the federation must be a stand-alone organization not subservient to or under the

affiliation of any other organization; 3) revise the Order to clarify that no lobbying group is eligible

to contract for beef checkoff funds; and, 4) revise the Order so the CBB can contract directly to carry

out programs consistent with the Act.


Bill Bullard, CEO

Cc: The Honorable Edward Avalos

Select members of Congress

130405 Letter to Secretary Vilsack re Checkoff Audit Whitewash.pdf