Audit Finds Oregon Paid for Questionable Projects

(CN) - One in four Oregon renewable energy projects that received tax credits showed signs of suspicious or illegal activity, an independent audit found, and the state's Energy Department was ill-equipped to handle many of the projects.

The Portland-based financial crime consultant Marsh Minick PC issued a report last week on its findings on Oregon's Business Energy Tax Credit program. The report was ordered by Secretary of State Jeanne Atkins earlier this year.

Oregon's Department of Energy spent around $1 billion in renewable energy projects between 2006 and 2014 through the program, and more than a quarter of the large projects that cost more than $1 million were concerning to investigators, the audit found.

The investigation did not turn up any outright fraud, but the report said the program faced "administrative problems" and 79 of the projects will be referred to the state's Justice Department.

"It lacked formal training, employee turnover caused a loss of institutional knowledge, there had been cultural clashes between employees, the work volume and sometimes the complexity overwhelmed staffs' abilities, and there was missing quality and compliance oversight," the 76-page report says of the tax-credit program.

The tax program did not have the needed oversights or risk management strategies to run effectively, according to the report, which analyzed around a quarter of the 14,000-plus projects.

The plan was to stimulate job growth in Oregon through renewable energy, but the state's Department of Energy did not have the tools and resources needed to take on the expansion of the tax program, the audit found.

Mike Kaplan, director of the Oregon Energy Department, responded to the audit by admitting to many of the problems outlined in the report, and had previously noted that the tax credit program was "besieged by problems."

"It is not enough for a state agency to merely flag problems and expect solutions," Kaplan wrote in a letter to the secretary of state. "ODOE also had the responsibility to solve those problems using a variety of tools, including better in-house oversight and management."

He added, "Requesting fixes in the legislature is a resource to address policy issues and not a mechanism to correct systemic management challenges."

The tax-credit program, which started in 1979, was expanded in 2007 but ended in 2014. The expanded program allowed tax credits to cover up to half of a project, up from the previous limit of only 35 percent.

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