SLDC Selects Former FTX Auditor With No-Bid Contract
In the agency’s continuing struggle to convince taxpayers that the troubled Northside Small Business and Nonprofit Grant Program is sound, St. Louis Development Corporation (SLDC) has hired Armanino, a national accounting firm most widely known for being FTX’s auditor. FTX’s collapse and subsequent criminal prosecutions are recognized as one of the largest financial fraud cases in American history. Up until the collapse of the company, Armanino had been serving as the company’s auditor. While the firm stands by their 2020 and 2021 financial reviews of the collapsed exchange, they did discontinue offering their services to crypto-related firms. Following the collapse of FTX, Armanino also stopped auditing other crypto-based companies. Following FTX’s collapse and the high-profile arrests of the company’s leadership, the reputational damage was so great that Bloomberg reported the firm stopped auditing all publicly traded companies. It is also worth noting that SLDC’s contracting decision was reportedly made without the agency’s standard RFP process, which would have ensured multiple bidders for the job.
Asked for comment, SLDC Vice President of Communications and Public Affairs Deion Broxton stated “Armanino Advisory LLC has worked with various departments in the City of St. Louis and has been a reputable partner. North City businesses have been waiting a while for funding. SLDC has deadlines to meet. We want to ensure the qualified awardees don’t have to wait much longer. SLDC followed procurement policies.” When questioned about the firm’s reputation and role in the FTX scandal, Broxton responded “SLDC can’t speak to negative reports on Armanino. We can speak to this current and past relationships, which have been good.”
Broxton added that SLDC had discussions with other, unnamed accounting firms about the audit. He stated that Armanino was selected and offered the contract because “SLDC believed Armanino proved to be capable of effectively accomplishing this task.”
When asked about the selection of the sample that the firm is auditing, Broxton stated that Armanino is selecting the sample, not SLDC. As noted in the Post-Dispatch’s reporting, Armanino has been working on the audit for some time. According to SLDC the audit’s initial phase has been completed. Asked for a timeline of the project’s completion, Broxton stated “At the end of Armanino’s six-month contract, a full report will be provided.”
This is the second contract that SLDC has approved to help get the troubled grant program back on track. After reporting that grant applications were approved from businesses and projects that didn’t meet the program’s qualifications, SLDC faulted Grow America for the botched process. At that time, local consulting firm Morgan Graves was hired to take over the vetting process. This is not the only politically-connect contract that Morgan Graves has recently been awarded. The firm was also recently awarded a contract for the Missouri Department of Motor Vehicles office in the Central West End. Whether Morgan Graves identified further issues that prompted the newly announced audit is unknown.
(Note: Armanino was contacted last week and asked for comment. As of publication they have not responded to questions. If responses to questions are submitted, they will be added to the story.)
