- Associated Press - Thursday, August 16, 2018

RALEIGH, N.C. (AP) - A commissioner on the panel regulating North Carolina’s alcohol sales has resigned following a state audit that decided it had done a poor job controlling costs by a vendor that manages liquor warehouse space.

But Mike Herring, also the former top administrator of the Alcoholic Beverage Control Commission for nearly 20 years, defended ABC’s actions in his resignation letter Wednesday to Democratic Gov. Roy Cooper while criticizing him for failing to defend the commission in the aftermath.

Herring referred to “fictitious findings” in the performance review of the contract held by Maryland-based LB&B Associates Inc. State Auditor Beth Wood’s office counted close to $14 million in cost overruns and missed savings and revenues covering more than a decade.

Herring, who was the ABC chief administrator when the LB&B contract began in 2004, told Cooper in his resignation letter that “there was and is documentation and justification for each decision made in accordance with the ABC laws.” Herring retired in late 2014, and GOP Gov. Pat McCrory appointed him to the three-member commission in 2015.

Auditors found the commission incurred over $11 million in additional costs by approving contract price increases for LB&B 13 years in a row that exceeded the maximum allowed in the contract. The report also said the state could have saved money by getting rid of unnecessary liquor storage space at a warehouse just outside Raleigh and missed out on fees due to little or no contract monitoring.

Current commission Chairman A.D. “Zander” Guy, a Cooper appointee, said in a letter attached to the audit that the commission accepted the state auditor’s findings. He also said measures would be put in place to strictly administer the LB&B contract, which expires in 2021.

When the audit was released Aug. 9, a Cooper spokesman said “the troubling findings in the audit reflect problems that began well over a decade ago. Since this administration took office last year, we’ve changed leadership at the commission and directed it to be more careful with taxpayer dollars.” Herring’s successor as administrator, Bob Hamilton, left the job earlier this month.

But Herring wrote that the administration’s position is an “injustice to all that served on the commission over the past decade.” In an interview later Thursday, Herring said the commission initially drafted a response to the audit that disagreed with each of the audit’s three main parts. But Cooper’s office rewrote it so the commission would accept the report, he said.

“By accepting it, it makes it seem like the findings were true,” Herring said.

Cooper spokesman Ford Porter acknowledged Herring’s resignation letter and his public service Thursday but didn’t address Herring’s words in it directed at the governor. After Herring’s allegation that the commission’s initial audit response was rewritten, Porter wrote that Cooper’s office “has been clear that the administration respects the auditor’s findings.”

Wood, a Democrat elected separately from the governor, stood by the audit Thursday, pointing out in an email specific findings that little or no contract monitoring was performed by the commission or Hamilton.

LB&B also pushed back against the report last week, in part saying the contract price increases were in line with its increased services and liquor sales growing by nearly double from 2004 to 2017 to over $1 billion.

Liquor from licensed distillers is sent to the state ABC Commission before getting shipped to government-run local ABC stores for sale. State and local governments receive revenues from transactions.

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