Ethics Commission Launches Inquiry into North Dakota Development Fund
The North Dakota Ethics Commission has officially voted to launch an inquiry into the state’s Development Fund, a move that signals a significant escalation in the ongoing scrutiny surrounding the agency’s financial management. This decision, reached unanimously on Wednesday, expands upon an earlier September effort to examine the fund’s internal conflict-of-interest policies. The inquiry comes at a sensitive time for the organization, which just Tuesday announced over $6.3 million in new loan approvals, including a major $5 million investment for a drone battery manufacturing plant in Fargo.
The North Dakota Development Fund is designed to provide a financial lifeline for businesses that might struggle to find capital through conventional lending institutions. However, that mission is currently overshadowed by a performance audit covering July 2019 through June 2024. As reported by KMOT/KFYR, auditors flagged nearly $4 million in financing distributed to five different entities that shared connections to two members of the fund’s own board. The audit noted a lack of clear documentation regarding how these potential conflicts were managed, identified, or mitigated.
The Legislative Push for Reform
The fallout from the audit has been swift. The state legislature’s audit review committee has already recommended that the fund be dismantled entirely, with its remaining portfolio transferred to the Bank of North Dakota. While such a structural change would require a formal vote by state lawmakers, the recommendation highlights the depth of the concern regarding the fund’s oversight. The committee also referred the audit’s findings to Attorney General Drew Wrigley for a potential investigation, though Wrigley declined to take the case, citing a conflict of interest arising from his office’s representation of current and former fund officials in a pending civil lawsuit.
In the absence of action from the Attorney General’s office, the Ethics Commission has stepped into the void. Commission Chair Pam Sharp explained the necessity of the inquiry during a recent briefing on the commission’s next steps.
“We talked about who else it would be if we weren’t the ones initiating it because the Attorney General can’t. So, what we decided to do was open an inquiry to get some information. It could lead to an investigation, but we need to get some information first,” said Sharp.
North Dakota Fund Implements Stricter Disclosure Requirements
For the average taxpayer and the business community in North Dakota, the “so what” of this inquiry is rooted in accountability and the integrity of state-backed financing. When public funds are used to fill gaps in the private credit market, the expectation of transparency is absolute.
The fund has already signaled it is attempting to course-correct, with officials stating they have implemented stricter disclosure requirements, prohibited related-party transactions, and initiated broader policy updates.
Commission Reviews Audit Report to Determine Investigation
The commission’s immediate focus is a methodical review of the audit report and the testimony collected by the legislative committee. This initial phase is strictly an information-gathering exercise, and it is important to emphasize that the existence of an inquiry does not establish that an ethics violation has occurred. The commission will now determine if the evidence warrants a full-scale investigation, a process that will likely keep the Development Fund under a microscope for the foreseeable future.
NORTH DAKOTA — North Dakota Ethics Commission Opens First Development Fund Inquiry
