By ANN HINCH
Assistant Editor

ST. LOUIS, Mo. — A federal investigation may soon examine how U.S. soybean checkoff collections are being spent, and if the funds are being used legally and properly.

At one of its regular board meetings last week, the American Soybean Assoc. (ASA) board of directors unanimously voted to ask the USDA’s Office of Inspector General (OIG) to audit 17 years of financial and other records of the United Soybean Board (USB) – which is the lifetime of the checkoff.

Paul Feeney, deputy counsel with the OIG, said the office doesn’t generally comment on requests or active investigations, only actual audits. “OIG officials will assess (the request) and respond to the ASA,” he added, though he said it would likely take several days.
ASA President John Hoffman of Waterloo, Iowa, said problems first came to the ASA’s attention six months ago during a closed-session meeting of the U.S. Soybean Export Council (USSEC) board of directors. Both the ASA and the USB help oversee USSEC activities, which include implementing international marketing development programs for American soybeans.

During the meeting, Hoffman said some directors brought up concerns about checkoff spending.

“We fully expected there’d be an investigation carried out” internally, he said of the USSEC. Later, he said the ASA was “shocked” to find out the investigation was only partially done, and noted the USSEC’s legal firm was the same one retained by the USB.

USB Chairman Chuck Myers of Lyons, Neb., said the USSEC board did investigate many of the allegations and found them unsubstantiated. He added if USDA deems it necessary, the USB will investigate the USSEC in the same fashion as it would any other contractor.

“The issue of personnel at USSEC, all those issues have been investigated,” added USB Secretary Terry Ecker of Elmo, Mo., “and we made a board decision at USSEC to move forward, and that’s all I’ll say on that. USSEC is working; it’s a very successful program.”
According to a USB financial summary, for the fiscal year ending Sept. 30, 2007, income from the national checkoff was almost $53 million; Hoffman said for fiscal year 2008, it was closer to $70 million. (According to the USB, the checkoff collection is 0.5 percent of market price per bushel sold. The USB receives half these funds and the other half go to the states where the soybeans were grown.) The ASA’s allegations encompass various ethical, legal and financial management issues (see sidebar article), and Hoffman said it is trying to restore transparency and confidence in the national checkoff.

He noted the USB has “a ways to go in accountability in spending checkoff dollars,” compared to state checkoff agencies, which he noted are not included in this investigation request.

“The state checkoffs … they’re run in a very accountable way, a very responsible way,” he said.

“Farmers have a right to expect that that money is being managed in a proper way. We felt it was the best course of action,” he said of the request to the OIG.

He does not believe the average soybean farmer was aware of these allegations prior to the Dec. 10 request.

Hoffman said to his knowledge, this is the first request for a federal audit of the USB’s records in 17 years. “There’s a lot of money involved here,” he said, explaining perhaps it’s time for an independent, thorough audit.

“Maybe we could do just as much with less money.”

In a Dec. 12 article about the issue, DTN News Ag Policy Editor Chris Clayton quoted attorney Wayne Watkinson of McLeod, Watkinson & Miller (legal counsel of the USB and the USSEC) as questioning the timing of the ASA’s OIG request, since a petition for a referendum will be held on the soybean checkoff in the spring.

Should enough producers sign the petition, there will be a vote on the merits of keeping the checkoff, according to the article.

USB’s response

As it happened, the ASA’s St. Louis board meeting coincided with the USB’s St. Louis board meeting. Several USB directors held a press conference Dec. 11.

“The specific allegations that have been made are anonymous and without apparent or visible substantiation, so USB will not make any attempts to respond to each and every individual anonymous allegation,” Myers began. “As far as I know, USB was not aware that these allegations were going to be made, ahead of time.”

Ike Boudreaux, past chairman from Lebeau, La., noted he received a heads-up in the form of a BlackBerry message from Hoffman early the morning before the ASA’s allegations went public; that was the USB’s only warning.

“USDA has oversight of the soybean checkoff program,” Myers said. “They approve our communications, they approve our projects.” A USB statement added if the USDA “deems it necessary, USB welcomes a USDA OIG audit of any and all of its operations, contractor operations and projects.”

Myers said the USB provided over $3 million in direct and in-kind of support for the ASA in 2008, and offered $1.2 million in communication support last year, which ASA declined. “We’ve worked well together in the past. We still hope to work well together in the future,” he said.