Osage officials await the financial health assessment of the Nation’s business arm as the firm of Baker Tilly Virchow Krause, LLP, finishes their initial assessment of Tallgrass and Osage LLC.
During the 12th Special Session of the Fifth ON Congress on June 5, Congress passed a resolution to appoint an agent to assess the companies and their subsidiaries and to advise a course of action concerning the contracts, grants, assets, and liabilities of the companies. They did not, however, vote to fund the agent. In a memorandum from ON Treasurer Samuel Alexander to the Sixth ON Congress, he details why the Nation hired the certified public accounting and consulting firm Baker Tilly. He said the firm’s Phase I initial evaluation will cost anywhere from $100,000 to $125,000.
“Baker Tilly will not exceed $125,000 in fees and expenses without specific authorization,” Alexander wrote in the memo. “The Treasurer will obtain from Baker Tilly a suitable timeline for these services, and cause the engagement letter to be properly executed. The Osage Nation shall abide by initial Baker Tilly invoicing and payment conditions to commence the engagement.
“Time is of the essence.”
ON Attorney General Holli Wells and Alexander have been in contact with Baker Tilly since June. As of Aug. 18, neither Wells or Alexander has received the Phase I evaluation from Baker Tilly, she said.
Alexander spoke to the ON Congressional Appropriations committee on Aug. 8 to answer questions about the funding of the firm’s evaluation. Chair of the committee, Congresswoman Maria Whitehorn, said she was curious as to where the funds would be coming from to pay Baker Tilly.
“I think we should be curious to know, or I am curious to know – I realize he’s acting under the law – but I was wondering what fund he’s going to pull funds out of? What he thinks are his directives or what he should do to try and allay an emergency … and where those funds will be coming from?”
According to Alexander’s memo, the lack of an appropriation from the Congress to engage and pay an agent to assess the companies constituted the emergency.
“The emergency, the mess that I saw, is detailed in this [memo] and we have an inability to obtain financial statements from [Tallgrass and Osage LLC]. They had cash flow issues and one of the indicators … when people are reluctant to do financial statements, there’s usually a reason. And, it wasn’t a very good reason,” Alexander said. “Along with the chief, we started asking for audited financial statements and we still don’t have them from either entity. One of the big concerns we had was that because of how these companies were organized, Bluestem Ranch could easily be drug into this situation. They have an excess of $2 million in their bank accounts and at the time we were afraid of that exposure.”
He told the committee that Baker Tilly was a “high dollar, very professional CPA firm” with offices across the country. They have an office in Oklahoma City, with principal offices in Chicago, “and they’ve been working on this pretty hard, I’m going to say for the last month, month and a half.”
He said he was looking forward to the firm’s report.
“The main question will the payment be drawn out of the general fund of the Treasury to pay Baker Tilly?” Whitehorn said. “In my memory, we’ve never had an emergency action taken by the treasurer. Although it’s lawful, it’s setting a precedent.”
Alexander said the money would be coming from programs with excess money and that money would be shifted out. Whitehorn asked if the committee could expect an appropriation request in the upcoming Tzi-Zho Session to pay Baker Tilly. The session begins on Sept. 4.
“It would be much cleaner if there was an appropriation from Congress,” he said. “I don’t mind doing it, but I would prefer an appropriation.”
According to the memo, the agreement could include a Phase II and Phase III that would prepare for a plan of action for Tallgrass and Osage LLCs.