What the ethics committee's 22-page report on Ellsworth's contract does and doesn't say

The Senate Ethics Committee charged with investigating a senator’s controversial state-funded contract wrapped up its work Wednesday, signing off on a 22-page report of its findings.

The Senate voted to convene the committee after Sen. Jason Ellsworth, R-Hamilton, obtained a contract for his longtime friend using leftover state money that he had control of when he was formerly Senate president. The contract, which was canceled before money changed hands, improperly skipped the public bidding process required by state rules. The Legislative Audit Division released a memo concluding that the business deal was a waste of state resources and an abuse of Ellsworth’s government position.

The Department of Justice is also investigating any criminal wrongdoing in connection with the contract following a referral from the Legislative Audit Division.

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The ethics committee, which is made up of two Democrats and two Republicans, chose to narrowly tailor its work: The lawmakers were adamant that their investigation was solely a fact-finding endeavor, and they chose not to look at any possible criminal wrongdoing nor to make a recommendation to the full Senate on any punishment. The panel used a section of Montana law pertaining to ethics standards for legislators to guide its work.

To form its final report, the committee and its staff cross-examined multiple witnesses, subpoenaed countless documents and hired an outside attorney. Ellsworth did not appear as a witness in the hearings and his friend and former business associate he contracted, Bryce Eggleston, submitted a pre-recorded video that was not cross-examined.

The report confirmed the Montana State News Bureau's reporting that Ellsworth sent two nearly identical contracts to legislative staff with invoices that were due upon receipt. Those contracts were ultimately combined into one and a pay plan was implemented.

The document, which includes a timeline dating back to 2014, explains that Ellsworth approved payment on the first invoice, but the contract was canceled before money was sent to Eggleston. The report also includes testimony from Eggleston that Ellsworth did not have a financial stake in Eggleston’s company that was contracted to do the work, something that Ellsworth previously told the press.

"Sen. Ellsworth's actions bound the state, and there was not much the state could do to unwind this contract," Department of Administration Director Misty Ann Giles said during an ethics hearing, adding that Ellsworth "short-circuited" the typical procurement process.

Testimony from Giles and three legislative staffers said that Ellsworth did not declare a "potential conflict of interest" when communicating with them about the business deal. Ellsworth went as far as to tell Giles that the Special Select Committee on Judicial Oversight and Reform, which was home to the leftover money funding the contract, "had signed off on hiring someone from outside" to provide the bill implementation services, the report explains.

"Regardless of the Department of Administration's efforts to 're-form' the Agile contract, Director Giles agreed that 'no one can contract their way around ethics,'" the report reads.

Central to the saga is that the contracts were originally submitted to staff by Ellsworth as two documents for amounts below $100,000, but when taken together totaled $170,100. According to state rules, contracts for below $100,000 are not subject to the same scrutiny or public bidding process.

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A section of the report pertaining to the divided contracts sparked debate Wednesday among Sen. Laura Smith, D-Helena, and others on the committee. Smith was hesitant to include a quote from the Legislative Audit Division's report which stated the contracts were "artificially" split and that constituted a waste of state resources.

"I really struggle with this idea that we would include someone else's conclusion about the facts, and I think this blurs the line between the questions of fact and the questions of law and conclusion," Smith said. "I just have concerns about including legal conclusions."

In a rare moment of pushback from the committee’s special counsel, Adam Duerk, he said the auditor’s memo speaks to the ethical statute that the committee was using to guide its investigation.

"Here are just a few things to consider: The legislative auditor's memo and the legislative auditor’s investigation in this case are both facts," Duerk said. "Both of those things occurred. The memo itself is a fact."

The committee did not include a quote from the audit memo, but compromised on language referencing the audit memo:

"Legislative Auditor and Division Director Angus Maciver testified that his office substantiated the allegations involving Senator Ellsworth's actions related to the Agile Report of the contracts as instances of waste and abuse, and there was 'an artificial division of the contract, contrary to state law,'" the document reads.

The report will be distributed among the other 46 senators not on the committee, and the full Senate will take up discussion on how to address Ellsworth’s actions. Senate leaders from both parties this week said they expected that to happen soon but did not have an exact timeline.

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When the Senate previously debated how to address Ellsworth's actions, the chamber broke into fierce debate. Should it pursue punishing Ellsworth, that could range from taking no action against the Hamilton Republican — who has been absent from the Capitol building due to health issues, according to his attorney — to expelling him from office.

The ethics committee often seemed like a thorn in the side of legislators and staff. As the chair of the committee struck his gavel and adjourned the meeting for the final time Wednesday, an air of relief hung in the room.