NOBULL: Latest Chapter in Beef Checkoff Saga; USDA OIG Relents

Written on:January 2, 2014

A letter dated November 4, 2013 from USDA Office of Inspector General contained some very welcome news, specifically: “…your FOIA appeal is granted”. For some time OCM’s legitimate request for material relating to a particular OIG audit had met with what could best be described as evasion and stalling. But, unlike previous correspondence from this agency, this letter was signed personally by the Inspector General, Phyllis K. Fong.


Back in July of 2010, an outside independent audit was ordered for the Beef Checkoff by the Cattlemen’s Beef Board (CBB). This was an audit of a very small sampling of transactions. However, it found gross and disturbing mishandling of funds by NCBA, contractor for the Beef Promotion Program, beef checkoff.

Late in 2010, in cooperation with other cattlemen’s organizations, OCM initiated an effort to address the situation. After considering litigation, the group (OCM Beef Checkoff Reform Taskforce) also began an intensive effort to have an in-depth audit conducted by USDA OIG.

The USDA Inspector General was Phyllis Fong who had a reputation for integrity — a straight shooter. (In November 2008, she was elected as the first Chairperson of the Council of Inspectors General on Integrity and Efficiency.)

In February of 2011, an audit of Agricultural Marking Service (AMS) oversight of the Beef Research and Promotion Program was commenced. Members of the Checkoff Reform Taskforce met early on with the audit team, expressing their concerns and pledging their cooperation.

Throughout the course of the investigation, members of the taskforce furnished significant information to the investigation team leader (Don Pfeil). There was periodic contact and a warm but proper and ethical relationship developed.

In a telephone conversation between me and Mr. Pfeil in December of 2011, he stated that the investigating team had finished their work and that things were in the hands of the report writers. He expected that the final report would be made public in March of 2012.

During the ensuing period of more than a year there were rampant rumors and anxious speculation within the NCBA and among other groups as to what the audit report might reveal.

Finally, a scant seventeen page report was released in April of 2013. In essence it stated that all was well, effectively absolving NCBA of any wrongdoing. Cattlemen were shocked and incensed! They had viewed the findings of the former audit ordered by the CBB as but the tip of the iceberg and expected that a full-blown audit would disclose gross misappropriation.

Charges of a whitewash and cover up were immediate. There were suspicions that AMS, which has had a long history of particularly cozy relations with NCBA, would attempt to downplay any wrongdoing by NCBA. Such suspicions were fueled by a report from a respected reporter who overheard a conversation at the February 2012 NCBA/CBB meeting in Nashville in which an AMS representative told NCBA officials that the draft USDA OIG audit included some “bad stuff” but that he had “fixed it.”

After the final audit report was released, OCM promptly filed a request under the Freedom of Information Act (FOIA) for an extensive list of records pertaining to the audit report. The OIG FOIA office responded by releasing 101 heavily redacted pages of printed documents and denied release of the 3,120 pages of report drafts and 125 pages of related emails under a claim of exemption. In a rather lengthy letter, OCM challenged this claim. Almost immediately the “final” audit report was withdrawn.

The OIG FOIA office then continued to stonewall, explaining that the audit was now in a “renewed active work status” and therefore the requested material was not releasable. OCM has continued its pursuit of the requested material. A new “final” audit report is expected to be completed and released by the end of December. Since the Inspector General has granted our appeal, the OIG FOIA office would have twenty days to turn over the requested documents.

However, they continue to insist on giving us the tens of thousands of pages of material in printed form. We suspect this is because it would be much more difficult for us to analyze the printed material as opposed to having it in digital form. Nevertheless, we are determined to find out what went on during the sixteen month period in which thousands of pages of drafts were generated as the basis for a seventeen page report.

In a more complete and comprehensive audit of the AMS supervision of all of the 18 commodity promotion programs, dated March 2012, there were two significant findings:

  • AMS was derelict in its supervisory duties, effectively providing no meaningful oversight.
  • The 18 programs collectively brought in revenues of more than $500 million in 2009.

(There is evidence that most if not all of these promotion programs are less than effective in promoting the interests of agricultural producers who are compelled to pay for the programs. There is strong belief among many producers that these large funds are actually being used to promote the corporate-controlled industrial model of agriculture, and thus the demise of independent family farming and ranching.)

So let me summarize:

  • The USDA OIG audit of the beef checkoff commenced in February, 2011 as a result of producer pressure after the troubling findings of the independent audit ordered by CBB in 2010.
  • The OIG investigators completed their work in December of 2011.
  • While the final report was expected to be released in March of 2012, it was delayed until April of 2013.
  • The final report was a mere seventeen pages and reflected no significant wrongdoing, but did disclose (perhaps unintentionally) that more than 80% of NCBA’s total revenue came from the beef checkoff.
  • After finding in a former audit that all 18 checkoff programs, including beef, were devoid of proper AMS supervision and oversight, this abbreviated report suggested that even in the absence of oversight, all was well.
  • The FOIA request for the thousands of pages of drafts and other materials which were the basis for this seventeen page report met with evasion, stonewalling, stalling and deceitful claims of exemptions.
  • Inspector General Fong has now personally signed a letter granting our appeal of the former decision that withheld the requested information.
  • After the report is again finalized, the OIG FOIA office will have twenty days to handover the requested documents.

I believe that investigating team leader, Mr. Don Pfeil delivered on his promise to “follow the money” and that his investigation discovered gross misconduct and improper accounting. I am also convinced that NCBA is guilty of wrongdoing and that the initial OIG Audit Report was an utter whitewash.

OCM intends to continue its all-out effort to bring daylight to this matter.