Oklahoma AG calls for Secretary Zumwalt's resignation after release of investigative audit
An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission
An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission
An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission
Oklahoma's attorney general called for the resignation of Secretary of Tourism Shelley Zumwalt after the findings of an investigative audit were released Tuesday.
Attorney General Gentner Drummond said the findings from State Auditor and Inspector Cindy Byrd revealed troubling patterns of mismanagement that is costing taxpayers millions of dollars each year.
“One of the most egregious findings is the wholly inappropriate and potentially unlawful actions of Secretary Shelley Zumwalt, who used her position as executive director of OESC to approve millions of dollars in contracts for a software company where her husband was a vice president, " Drummond said in a statement. "This level of self-dealing represents an unforgiveable breach of trust that disqualifies Ms. Zumwalt from overseeing the expenditure of our tax dollars. She should resign immediately and cooperate fully with my office as I seek to determine whether any Oklahoma statutes were violated."
On Tuesday, Byrd released the findings of the fiscal year 2022 audit of the Office of Management and Enterprise Services. In that audit, Byrd accused Zumwalt of failing to disclose that her husband was employed as the vice president of Phase 2 Development, which is a software company contracted to update and stabilize the Oklahoma Employment Security Commission's computer network mainframe.
The audit said $7 million was paid to the software company to stabilize and update the OESC mainframe.
"Subsequent contracting and payments were transacted by OESC and signed by Shelley Zumwalt, who was appointed as the Executive Director of OESC in May 2020. By April 2022, Zumwalt had approved additional contracts and change orders to P2 totaling $8.5 Million," said a release detailing Byrd's findings. "During this period, Zumwalt failed to disclose the fact that her husband, John Zumwalt, was employed as the Vice-President of P2. As the Director of OESC, Zumwalt was required to complete annual forms attesting that no related party transactions existed in the performance of her duties regarding the expenditure of funds. In three separate instances, Zumwalt checked ‘No’ on these forms."
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Federal law requires any entity receiving federal grant money to disclose any conflict of interests in writing, according to Byrd. Zumwalt finally disclosed her husband's employment with Phase 2 Development after she was named the executive director of tourism in 2022.
Byrd's audit also highlights systemic problems within OMES, as well as millions of dollars in questionable costs. Fiscal year 2022 also saw disregard for the competitive bidding requirements and the systemic lack of oversight and accountability, according to the findings.
The majority of the problems are within the $1.2 billion in federal Coronavirus relief funds that Oklahoma received in March 2020, as well as the $276 million Oklahoma received for the Emergency Rental Assistance program during fiscal year 2021 and fiscal year 2022.
The findings highlight millions of dollars earmarked for these programs were spent on questionable costs.
"The Office of State Auditor has learned through its audit that questionable conduct has led to an abuse of taxpayer dollars and I am sounding the alarm," Byrd said in the release.
The full audit can be found here.
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