Bates: 'Gross negligence' in OnSat dealings
Budget, & Finance member: 'How did all this escape scrutiny?'

By John Christian Hopkins
Diné Bureau

WINDOW ROCK — The financial quaqmire that the Navajo Nation finds itself in with OnSat Network Communications, the Nation's satellite and wireless provider, is because of "gross negligence," said Budget & Finance Chairman LoRenzo C. Bates Tuesday.

A special audit shows that the tribe was billed for more than $650,000 in questionable and improper payments.

Mess
The audit requested by the Office of the Prosecutor was supposed to be secret, but after a copy was leaked to the Independent, it was decided to go public with the information, said Acting Auditor General Elizabeth Begay.

B & F member Nelson Begaye was upset that it took a leak for the finance committee to be told of this probe.

In its summary of findings, the Auditor General found that established controls were circumvented in processing payments to OnSat, the company double-billed for services or equipment and also billed the Nation for services or equipment never provided.

OnSat overcharged the Head Start program $147,000 erroneously billing for Internet installations at 98 sites that couldn't be accounted for, Begay said.

In another instance, Head Start was charged twice for service during the same period one bill was for the correct amount due, $319,000, and a second bill for $123,000 were paid.

Head Start Director Francis Becenti said within a month of taking over the troubled Head Start program he became concerned with problems involving the contract with OnSat.

"When I tried to end it, I got into considerable trouble," Becenti said.

Becenti declined to say what trouble he found himself in, or from whom.

The contract between OnSat and the Department of Community Development to provide Internet to all 100 chapters calls for the company to give the Nation credit if its service is down for six or more hours at a time, Begay said. Though that has happened numerous times, the Nation has yet to receive a credit, she added.

The company has said it would provide credit if the Nation provides documentation regarding interrupted service, Begay said.

OnSat also billed the chapters $13,000 for using equipment that belonged to the DCD, Begay noted.

Quick payments
Begay said the Office of the Controller did not follow proper procedures in validating and paying invoices for OnSat.

OnSat representatives are known to have hand-delivered invoices to the OOC and then wait while a check was immediately cut, Begay said. This practice did not allow for the invoices to be verified, she said.

"Pressure was put on the controller's office to process a payment," said Controller Mark Grant. He said his office sometimes finds itself facing "political influence" when it comes to cutting checks.

"This is a recurring problem, not just with OnSat. Many people walk back to accounts payable and ask for payments even some looking for stipends," said Grant, alluding to council delegates pushing to get their stipends quickly.

"How did all this escape scrutiny?" demanded delegate Lorenzo Curley. "How do you justify that?"

"There are things that can be hidden in a contract," Grant said.

OnSat's original contract was with DCD for $1.9 million but through "modifications" it is now worth $32 million, Begay said.

Navajo Nation procurement laws were ignored as OnSat's contract kept being modified with any competitiveness or bidding involved, Bates charged.

Political pressure
An audit done by KPMG was "one of the cleanest" in the whole country as far as reimbursing the Nation for E-rate credits, Navajo Telecommunications Regulatory Commission Executive Director Ernest Franklin told the Independent last month.

However, Begay's audit shows that the Navajo Nation has yet to receive a $389,130 credit from the E-rate reimbursed to OnSat for funding year 2003

Franklin is also is the Navajo E-rate representative and that's a clear conflict of interest, Begay said.

Becenti and Grant both hinted at being pressured in their dealings with OnSat but pressured by who?

"I hope it's not from the Office of the President and Vice President," Bates said. "Because, if I had to point a finger right now, that's where I'd look."

President Joe Shirley has been an OnSat backer, and entered into a contract with the company for Internet capability that his office already had, Bates said.

Harold Skow, director of the Nation's Department of Information Technology, confirmed that the president's office had internet capability before it contracted with OnSat.

"There was no need for an extra satellite in there," Skow said.

Begay said that no one from the president's office was interviewed for the audit.

"Is this how the Navajo Nation conducts business?" Bates wondered.

Committee Vice Chairman asked if the tribe was still doing business with OnSat.

There is another contract modification, the 11th, for the DCD contract "at the gate," Grant said.

"We've been holding it up, but there's considerable political pressure being put on us," Grant added.

The company's contract with Head Start has also been modified eight times.

A Tale of Two Audits
It is troubling that two audits turned up vastly different findings, Grant acknowledged. The contract modifications also deviated from standard practices, Grant said.

Generally, if a contract is modified by more than 20 percent it has to be rebid, he explained.

Nelson Begaye said all the departments involved with OnSat need to be called in, so questions can be asked.

Someone has to be held responsible for this, Chee said.

"My concern is what is the driving force behind doing business like this?" Bates said. "There's something else happening here that we may not know about."

At the urging of the Department of Justice, B & F then went into executive session.

John Christian Hopkins can be reached at hopkins1960@hotmail.com.