Alcohol-control director Dennis Kellen said he will soon step down, his decision coming after a second legislative committee blistered him Wednesday with questions about how his agency lost $300,000 on paper in its mishandling of a bankrupt liquor outlet in Eden.
"The department was incompetent," said Sen. John Valentine, R-Orem. "I'm going to give them the benefit of the doubt, but there is also strong evidence that they actively misled [liquor commissioners] on the extent of the losses."
Valentine put the blame on Kellen, saying "it's probably time to have a change."
Kellen, a department veteran of 36 years and director since 2007, has vacillated for months about retiring. Last month, the agenda for the Utah Department of Alcoholic Beverage Control's board included an item regarding his departure. But it was stricken from the agenda days before the board met.
Because terms have expired for two of the five commissioners who serve on the agency's board, Kellen has chosen to stay on, giving time for the governor to select nominees and for the Senate to confirm them. The governor and Senate also have the final say on choosing a new executive director, a process that is expected to be completed by the end of the year.
Gov. Gary Herbert said in a statement Wednesday that he had asked Kellen to remain at his post until the two new members join the board. Herbert said it is his intention "to fill the [vacancies] and then direct [the board] to conduct a thorough process to provide recommendations on Mr. Kellen's replacement."
After questioning by lawmakers, Kellen quickly left Wednesday's hearing but later issued a statement, saying, "I am staying in my position until the commission has the opportunity to select a replacement for me."
Sen. Valentine said former board chairman Sam Granato would be a good choice to replace Kellen and friends have been lobbying the governor on Granato's behalf. Valentine added, however, that the commission should also consider other candidates before making a selection.
At the hearing, Sen. Curt Bramble, R-Provo, also was critical of Kellen, calling the department's handling of the Eden store "a reflection on your management."
In May, Kellen faced similar tough questioning from Senate President Michael Waddoups, R-Taylorsville, and House Speaker Becky Lockhart, R-Provo.
Legislative auditors have been critical of Kellen and the department for continuing to ship liquor to the Eden agency over several months, despite the store's mounting debt, and for increasing compensation retroactively to reduce the store's debt, despite the unaccounted funds.
Losses began accruing within a month of its opening in the summer of 2009. The store at 2595 N. Highway 162 closed in July. Its operator, Bill Lyman, filed for bankruptcy, listing liabilities of $500,000 up to $1 million. Losses to the state were about $300,000, but it was reimbursed for the unpaid bills through insurance payments.
The Eden store was one of 100 state package agencies, which are different from larger state-owned stores in that they are privately run outlets in small towns and resorts. Monthly payments from the state to the operators are based on sales volumes.