Audit report finds several potential breaches of Arkansas law in governor’s $19K lectern purchase

Arkansas Legislative Audit’s report on the $19,000 purchase of a lectern for Gov. Sarah Huckabee Sanders’ office found several instances of “potential noncompliance” with state law and has been sent to the state attorney general and Pulaski County’s prosecuting attorney.

Members of Sanders’ staff used a state-issued credit card to buy the lectern and a carrying case in June 2023 from a Virginia-based event design and management firm with political ties to Sanders. The Republican Party of Arkansas reimbursed the governor’s office three months later, just before the purchase became public and brought scrutiny on Sanders and her staff.

Arkansas Legislative Audit, a nonpartisan entity that investigates government spending, began the audit at lawmakers’ direction in October and released the report Monday afternoon. The report is critical of actions taken by the governor’s office and recommends adherence to state purchasing and property disposal laws in the future.

Alexa Henning, Sanders’ communications director, said Monday that the report “demonstrate[s] what the governor’s office said all along: we followed the law, and the state was fully reimbursed with private funds for the podium, at no cost to the taxpayers.”

The report said several actions by Sanders’ office potentially ran afoul of state law including:

• Paying for the lectern before it was delivered.
• Failing to notify the state Department of Transformation and Shared Services of the delivery, which prevented the purchase from being properly recorded as belonging to state government.
• Characterizing the purchase as an operating expense instead of a capital asset, a category for property that costs more than $5,000.
• Seeking reimbursement for the lectern from the Republican Party of Arkansas instead of asking the State Procurement Director for an exemption from state purchasing and property disposal laws.
• Shredding a document that included details about the lectern necessary to properly record the purchase. Sanders’ office’s staff told auditors this was done in error.
• Failing to create a business justification statement for the purchase.

The report noted that the governor’s office had three copies of the invoice for the lectern, two of which had handwritten notes on them, indicating that staff altered public records.

Auditors also found that the Department of Transformation and Shared Services excluded several requested documents from its responses to state Freedom of Information Act queries related to the lectern purchase. The report recommended that DTSS comply with FOIA in the future.

The report recommended that the governor’s office ensure purchases are paid for after delivery, “retain all original documentation” related to purchases and deliveries, follow state law when disposing of property and ensure documentation is completed in a timely manner.

The state Legislature could add language to state law that would restrict the governor’s office’s use of funds appropriated to it in the state budget, the report recommended.

The Legislature could also create language “defining the disbursing officer and business office of the Governor’s Office, especially regarding responsibility of delivery of goods prior to payment” and “clarifying the custodian of record for the governor’s for purposes of FOIA,” the report states.

Last year, Sanders repeatedly called criticism of the purchase a “manufactured controversy” and said she welcomed the audit. The report states that she “declined the opportunity to speak with ALA staff or provide a statement.”

Sanders’ office had the chance to review the report before it was made public, as is standard operating procedure for Legislative Audit. The response, dated March 29, called the report “deeply flawed,” “a waste of taxpayer resources and time” and proof that “no laws were broken” and “no fraud was committed.”

The state Republican Party could not be reached for comment Monday.

In a statement after the report’s release, Democratic Party of Arkansas Chair Grant Tennille called for Attorney General Tim Griffin and Sixth Judicial District Prosecuting Attorney Will Jones to “swiftly deliver justice to any government official found to have committed an act of corruption.”

“This is not and never was a partisan matter, but a very serious investigation of wrongdoing by government officials who may have broken as many as seven state laws,” Tennille said.

‘Reasonableness’ unclear

The customized lectern’s base cost was $11,575, the carrying case cost $2,200 and shipping and handling of both items also cost $2,200, according to the report. The governor’s office also paid a $2,500 “consulting fee” to Beckett Events, a business in the Washington D.C. area run by Virginia Beckett, a consultant and lobbyist who worked on Sanders’ 2022 gubernatorial campaign.

The 3% credit card processing fee of $554 brought the $18,475 lectern purchase to a total of $19,029. New York-based Miller’s Presentation Furniture manufactured the lectern, and D.C.-area Salem Strategies and its owner, Hannah Stone, gave Sanders’ office information about portable lecterns upon request, the report states.

Similar non-customized lecterns are available online for as low as $7,000, the report notes. Legislative Audit “could not determine the reasonableness” of both the podium’s base cost and the consulting fee because Beckett Events, Salem Strategies and Miller’s Presentation Furniture all did not respond to auditors’ attempts to contact them.

Sanders’ office “sent one additional email to Hannah Stone and Virginia Beckett in January 2024 but failed to attach ALA’s list of proposed questions regarding the podium,” according to the report.

State Sen. Jimmy Hickey, R-Texarkana, requested the audit in September. His request also included looking into “significant expenditures involving the governor’s office” that were shielded from public accessibility by Act 7 of 2023. The law exempted records related to the governor’s security from the FOIA.

Hickey said Monday that the second portion of the audit is still in progress, and the released report’s findings specifically pertained to the lectern purchase.

The Legislative Joint Auditing Committee will meet Tuesday to discuss the report. Hickey said Monday afternoon that he had not yet read it and likely would not comment on it before Tuesday’s meeting regardless.

Legislative Joint Auditing Committee co-chairs Sen. David Wallace of Leachville and Rep. Jimmy Gazaway of Paragould, both Republicans, first read the report last week, and the rest of the committee read it Monday afternoon, Wallace said later on Monday.

Gazaway and Wallace could not be reached for comment after the report was released.

Timeline of purchase and controversy

The audit was necessary in light of “everything with the timeline” of events regarding the signing of Act 7 and the way the lectern purchase became public knowledge, Hickey said in September.

The Republican Party of Arkansas reimbursed Sanders’ office for the full $19,209 cost on Sept. 14. Attorney and blogger Matt Campbell posted the document, which he had previously requested via the FOIA, on X (formerly Twitter) on Sept. 15.

“Prior to a FOIA request related to the podium purchase, made on September 11, 2023, there was no indication that the Governor’s Office was seeking reimbursement for the cost of the podium and the road case,” the audit report states.

Also on Sept. 14, Sanders signed Act 7 after a special legislative session in which she had supported additional exemptions to the FOIA that met bipartisan opposition in the Legislature and from the public. Campbell, who is now an Arkansas Times reporter, had been using the FOIA for several weeks to request and report on Sanders’ office’s spending.

Worries over secrecy grow as state officials shield records from the public

After Hickey’s request for an audit later that month, Rogers-based attorney Tom Mars contacted Hickey to offer an anonymous client’s aid during the requested audit. Mars said his client could “provide clear and convincing evidence” to the Legislative Joint Auditing Committee that Sanders’ office had recently altered and withheld FOIA-accessible records.

On Oct. 10, Campbell posted an email on X that indicated Laura Hamilton, Sanders’ executive assistant, was instructed to alter the invoice for the lectern by writing “to be reimbursed” on it by hand, shortly before Campbell received it via FOIA request.

Lawmakers approved Hickey’s audit request three days after Campbell posted the email.

Auditors found three different versions of the invoice during the audit. One “appears to be a copy of the original invoice” and does not include the handwritten addition of “to be reimbursed” along with Hamilton’s initials. Two others include the addition — one was attached to the check from the state GOP that was deposited into the state Treasury — and were both sent to Campbell in response to his FOIA requests, the report states.

“ALA maintains this handwritten notation, which altered the public record, potentially conflicts with [state law],” the report states.

Sanders’ office’s formal response to auditors claimed “a handwritten note on an invoice, absent a false alteration, is not a violation of law.”

Mars said Monday on X that his anonymous client “gave sworn testimony to the legislative auditors before a court reporter based on first-hand knowledge of the alteration and concealment of highly relevant records.”

In a prepared statement, Mars said the information in the report made Monday “a sad day for Arkansans who care about truth and integrity in government.”

“The report just confirms people’s worst fears about the dishonesty of the Governor and members of her staff who appear to have participated in a transaction that any intelligent, objective observer would call ‘fraud,’” Mars wrote.

Purchasing laws and property ownership

Hickey said in October that one question he hoped the audit would answer was who owns the lectern, since it was apparently purchased with state funds despite the eventual reimbursement.

The audit report asserts that since the podium and carrying case “were initially paid for with funds appropriated by the General Assembly to the Governor’s Office,” both continued to be state property after the state GOP reimbursed Sanders’ office.

Griffin published an opinion last week, at Sanders’ request, declaring that certain executive branch officials such as the governor are not subject to certain laws that regulate purchases by government entities.

Arkansas AG claims purchasing laws do not apply to governor, days before release of lectern audit

The opinion states that elected constitutional offices are not state “agencies” under the General Accounting and Budgetary Procedures Law, which regulates the financial behavior of the state’s “agencies, boards, commissions, departments, and institutions.” The list included in the law does not specifically contain “offices” or “officers” and therefore does not apply to them “unless otherwise necessary,” a phrase taken directly from the law, Griffin wrote.

But Arkansas Legislative Audit considers the governor’s office an agency under the GABPL, which requires the state and its subsidiaries to “provide adequate accounting for all fiscal transactions.”

The report also states that the governor’s office is subject to marketing-and-redistribution (M&R) law, which regulates “effective utilization of surplus state property.” Griffin disputed this in last week’s opinion.

Auditors found during the investigation that Sanders’ office had disposed of other state property, including a storage cabinet and a tabletop podium, in compliance with M&R law, according to the report.

Griffin said in a statement Monday that he was “perplexed” at Arkansas Legislative Audit’s “mistaken conclusion that the Governor’s office is a ‘state agency’ for the purposes of certain statutes.”

“I am continuing to review the report, which was transmitted to my office in accordance with state law,” Griffin said.

Sanders’ office’s response to auditors reiterated Griffin’s opinion from last week. Legislative Audit’s response, also included in the report, defended its interpretation of the laws in question.

“A cardinal rule in dealing with a statutory provision is to give it a consistent and uniform interpretation,” the auditing body wrote.