Updated 7:10 p.m. | Posted 12:36 p.m.
Commerce Commissioner Mike Rothman has asked the state legislative auditor to investigate claims that he disregarded requests from key members of his department to terminate a contract with a controversial nonprofit.
MPR News reported Thursday that Community Action of Minneapolis had for years misspent money from an energy assistance fund run by the Commerce Department before the state finally shut down the nonprofit in September.
Gov. Mark Dayton Dayton said he takes the allegations regarding Rothman's oversight of Community Action very seriously. That's why he and Rothman want Legislative Auditor Jim Nobles to look into claims that politics may have influenced Rothman.
Some Commerce Department staffers say Rothman continued funding Community Action despite concerns over how the nonprofit spent public money.
Dayton said he wants to know what happened.
"The purpose of the investigation is to have someone independent and experienced making those determinations and provide all the information to both or all sides of the story," the governor said.
Dayton said Community Action of Minneapolis CEO Bill Davis never discussed contracts with him. Although Dayton acknowledged that Davis' endorsement was important when he ran for governor in 2010, he called Davis a political, not a personal, friend.
The governor said Davis was a respected leader in the DFL Party and the African-American community. Dayton added that he has not spoken to Davis in a year.
Davis has not responded to interview requests.
Republican House Speaker-designate Kurt Daudt said he was troubled by the MPR News story.
"If it's true that Rothman chose to put politics before protecting Minnesotans, he should resign," Daudt said.
In an interview earlier this week, Rothman said he took several steps to monitor Community Action. He said any discussion of politics in meetings had to do with protecting low-income people in Minneapolis.
After discovering that Community Action misspent $1.3 million in 2011, the Commerce Department closely monitored the nonprofit, Rothman said.
"At that time, we didn't find any evidence of criminal activity or fraud," he said. "We put them on a very strict corrective action program, and when this came to light this August, it was in essence the last straw."
Rothman's statements to defend his stewardship of the department don't satisfy Republican Senate Minority Leader David Hann.
Hann, R-Eden Prairie, said the Senate should hold a hearing in January on Rothman's confirmation. If the Senate doesn't confirm Rothman, the commissioner would lose his job, said Hann, who said the Senate should reject Rothman.
"It does raise a lot of troubling concerns for us and members of the public about just who exactly Commissioner Rothman is working for," Hann said. "Is he working for the governor as a political agent or is he working for the state as the chief compliance officer over insurance and other regulatory matters?"
But a DFL senator who has been one of Bill Davis' biggest critics said she's not ready to fire Rothman.
State Sen. Barb Goodwin of Columbia Heights, who first started raising concerns about Davis' spending in 1998, said Rothman has been a "terrific commissioner." She said she'd have to see a lot more problems involving Rothman before voting against his confirmation.
"He's no different than anybody else that was afraid of Bill Davis for no good reason," Goodwin said. "A lot of people in both parties were afraid of Bill Davis, and they gave him power that he shouldn't have had."
Goodwin said Davis is the one who should be punished.
State investigators are reviewing Community Action's books to determine if the state can reclaim any misspent public money. Goodwin believes there should also be a criminal investigation.
Legislative Auditor Jim Nobles said his investigation won't stop with the Commerce Department. He said he'll investigate all state and federal grants given to Community Action agencies across the state.
"The state of Minnesota provides literally tens of millions of dollars to a lot of different nonprofit organizations," Nobles said. "That's a good thing to be utilizing their expertise and their involvement in their communities but it's public money and there has to be accountability."
Nobles said he does not believe the state is doing enough to ensure community action agencies are spending taxpayer money appropriately. If that were the case, he said, the problems at Community Action of Minneapolis would have been stopped a long time ago.