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Pork Council memo explains Validus

If you were to interview yourself, then write a story based on the interview, it’s a safe bet the story might be more self-serving than, say, what your neighbor or mother-in-law might write about you.

Safe? In fact, certain – as the boss at the National Pork Producer Council proved recently in a lengthy, 16 question-and-answer memo to “NPPC Board Members, State Executives, NPPC Staff” in reply to a column here two weeks ago that outlined an EPA audit of Validus Services, LLC, a for-profit subsidiary of the not-for-profit NPPC.

The memo, from Neil Dierks, chief executive officer of NPPC, did not dispute the reported facts; it couldn’t because all came from a Feb. 2007 EPA Office of Inspector General report that recommended EPA seek to recover nearly $25.2 million of the $25.4 million given America’s Clean Water Foundation (ACWF) in three federal grants, $21.1 million of which went to NPPC’s Validus for on-farm environmental assessment work.

Instead, Dierks takes exception to how the column “selectively uses words contained in the EPA ... review (but) omits many other things that were said.”

For example, Dierks cites, “Comments excluded from the report and left out of the newspaper column includes recognition by the head administrator of the Grants section of EPA ‘saying the program provided a good service for producers and the environment.’”

Dierks italicized and boldfaced the EPA quote for emphasis.
It could have been chiseled on Lincoln’s forehead at Mt. Rushmore and I would not have quoted it because, as Dierks himself writes, the remark was “excluded from the report.”

The second question of the 16 posed by Dierks asks “Has NPPC made or lost money through the ownership of Validus?”

Answer: “At this point NPPC had incurred a slight loss with Validus. The loss would be erased if the $800,000 account receivable from the program could be recovered from ACWF or the EPA.”

In all likelihood, conceded Dierks in a June 27 telephone interview, the 800k ain’t coming because ACWF, like the $25.4 million in EPA grants it received and the $21.1 million it then passed through to Validus, is gone.

In fact, to quote something actually in the EPA report, a July 14, 2006 letter from ACWF’s attorney “stated that all members of the Board of Directors had resigned, the Foundation filed dissolution papers in the District of Columbia, and it no longer had any employees or an office location.”

Many of the memo’s other questions are softballs Dierks hits out of the park. Many answers, however, are curveballs that bend around information in the EPA audit.

The ninth question of the self-interview, for example, touches on money again: “Did NPPC profit from the deal with ACWF?”
“The agreement was between Validus and ACWF,” writes Dierks.
True; equally true is that Validus is a wholly-owned, for-profit subsidiary of NPPC.

“To date,” he continues, “there has been no profit realized from Validus to NPPC. Any ‘profit’ to Validus was a result of Validus being able to perform the services at a lower cost than contracted for as a result of efficiency and cost cutting efforts.”

Maybe, but the $1.25 million received by Validus for “License Fees” from ACWF – money EPA labeled “not allowable” because Validus “did not incur any costs for licensing fees” – didn’t hurt either.
Despite that $1.25 million windfall and Dierks’ bugling about “Validus being able to ... lower cost ... as a result of efficiency and cost cutting efforts,” Validus still lost money.

Which begs a question Dierks didn’t ask: Does any NPPC member actually know what its hired hands are doing?

Talk among yourselves and then, if you wish, write a memo.

Readers with questions or comments for Alan Guebert may write to him in care of this publication.

This farm news was published in the July 4, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.
7/5/2007