SALT LAKE CITY (ABC 4 News) - For the first time, the new director of Utah's DABC is saying that the law was violated.
In an exclusive, one-on-one interview with ABC 4, Francine Giani also says that more than one person was involved in the DABC's recent scandal.
The scandal all started with questions about why the DABC was paying hundreds of thousands of dollars to a company called Flexpak.
Flexpak is owned by the son of DABC's former director.
Thursday marked the first DABC Commission meeting since former DABC director Dennis Kellen resigned last week.
First, the commission chairman thanked Kellen for his service.
Then, the new DABC director, Giani, dropped this booze bombshell on ABC 4,
“This was not done in a vacuum. It wasn't just one person, more people had to know. And that tells me that someone and many others were violating the law."
Giani also told me that 3 legislative auditors are working around the clock on a full scale investigation of the DABC.
She added they are being led in the field by John Schaff, Utah's Auditor General himself.
Giani described this as unusual,
"He is down here, I have seen him often. He is doing interviews."
ABC 4 is now also being told that auditors are also taking a very close look at how DABC gets its booze and sells it.
This is, reportedly, because so much DABC money flows from its alcohol products.
But because this was the most serious conversation we’we have had with Giani about this DABC scandal, we asked her again if she believed laws had been violated?
Giani confirmed what she had told us earlier,
“It appears that there have been some violations of the law."
She also said,
"Given the nature of what we're seeing and the kinds of abuses that have gone on, it wasn't one person. It couldn't have been one person."
Now, early Thursday evening, ABC 4 received this statement from Brian Kellen, the CEO of Flexpak and the son of former DABC
Director Dennis Kellen:
"Statement from Brian Kellen, CEO of Flexpak – Aug. 25, 2011
Flexpak has been a competitive provider of shipping, packaging and janitorial supplies to the Utah Department of Alcoholic Beverage Control for several years. In fact, Flexpak’s business relationship with the DABC is a matter of public record, with all transactions open to public scrutiny. Recent reports suggesting possible impropriety due to family connections between Flexpak and the DABC are based on speculation and are erroneous.
Flexpak treated the DABC like any of its 1,300 other valued customers, providing the best products and services for the lowest price possible. To my knowledge, the DABC treated Flexpak like any of its vendors, with business decisions made based on price, service and quality. The business relationship was between Flexpak and the DABC, not between Brian and Dennis Kellen. Neither of us was directly involved in the day-to-day interaction between the organizations.
It is not improper for Flexpak to do business with the DABC – regardless of who works there. It is our understanding that Flexpak’s relationship with the DABC was treated no differently than any other supplier or vendor, including other packaging and janitorial suppliers.
All business between Flexpak and the DABC is documented with signed proof of delivery receipts. In fact, Flexpak transacted business according to the DABC’s preferred method of invoicing and accounting. The customer-vendor relationship between Flexpak and the DABC was not unusual in the business world, and we relied on the DABC to operate according to its own internal policies.
Flexpak has conducted an internal review of all transactions with the DABC and found that all was handled properly – legally and ethically. We welcome and fully support the State of Utah’s audit of the DABC and are confident they will reach the same conclusion as it relates to the products and services provided by Flexpak."
