Nov 3, 2017Report: Washington Apple Commission overpaid contractor
According to an Oct. 28 story in the Yakima Herald, the Washington Apple Commission overpaid $573,182 to a contractor that submitted invoices with “significant discrepancies” over five years, according to a Washington state investigation.
The story reported the apparent overpayments were made to a company in India hired to promote apple sales and were discovered after a tip from a subcontractor that something was amiss with the billings, according to Apple Commission President Todd Fryhover.
Fryhover in April contacted the state Auditor’s Office, which released its investigation report Nov. 2.
According to the Yakima Herald:
The state Auditor’s Office identified the contractor as The SCS Group of New Delhi and confirmed that it has contracts with other commodity commissions in the state. The audit dealt solely with the Apple Commission. SCS could not be reached to comment Friday. “That contractor has been replaced,” Fryhover said.
The Apple Commission, headquartered in Wenatchee, promotes Washington apples to 30 countries under the federal Market Access Program. Growers pay 3.5 cents per 42-pound box assessment to the commission, creating an annual budget of about $10.4 million.
The commission contracts with 11 international businesses to market and sell Washington apples. Most of those main contractors hire subcontractors.
Fryhover said staff members received a tip from a subcontractor in March that something was wrong with the invoices the contractor was submitting to the Apple Commission.
“Our first reaction was disbelief. We pride ourselves in our representatives,” he said.
The commission hired an outside accounting firm, which compared one month’s worth of original invoices from the subcontractor with those submitted by the main contractor. It found that in that one month, the contractor billed the commission for 118 promotional events the subcontractor did not perform and 46 invoices submitted were for amounts more than the subcontractor’s original invoice.
The commission stopped making payments to the contractor and contacted the state Auditor’s Office to conduct a larger investigation, looking at invoices from Aug. 3, 2011 to May 3, 2017.
Working directly with two subcontractors, investigators found that $573,182 of the $1.07 million the contractor billed the commission was over and above what the subcontractors’ invoices had billed.
According to the report, the contractor said that some of the discrepancies were from off-the-books cash payments, which account for about 25 percent of business operations and that, in some cases, the contractor paid the subcontractors directly, which then showed up as invoices to the commission under the subcontractor’s name.