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Failed Egg Farm Cost Navajo Nation $1.25 Million

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The Navajo Nation had to fork over $1.25 million in tribal funds for a defunct egg farm, and an audit completed March 7 confirmed the tribe will probably never see the money again, reported The Farmington Daily Times.

"It is somewhat water under the bridge," LoRenzo Bates, chairman of the Navajo Nation Council Budget and Finance Committee, told The Daily Times. "At the end of the day, the Navajo Nation is out $1.2 million."

Diné Poultry Products Inc. had secured a $3 million loan from the Native American Bank, using tribal money as collateral, approved by the Navajo Nation Council's Budget and Finance Committee in December 2005. The proposed $12.2 million egg farm on the New Mexico side of the reservation broke ground off U.S. 550 in the Huerfano Chapter. The egg farm was a joint economic venture for the Nageezi and Huerfano chapters, stated The Daily Times.

The company never produced an egg, shut down and defaulted on the loan. The tribe was left to compensate $1.25 million, the amount of money Diné Poultry Products Inc. spent. The Native American Bank demanded collateral in December 2008, and the tribe repaid $1.25 million from the Navajo Dam Escrow Account, a fund established between the Navajo Nation and the city of Farmington.

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"This was the Navajo people's money," Nageezi Chapter President Ervin Chavez told The Daily Times. "It makes you wonder if the tribe is going to get some of this money back."

The audit by the Navajo Nation Office of the Auditor General called the company's expenses "questionable," stated The Daily Times. "We noted that about 50 percent was expended for professional services by consultants including a key consultant that was paid $565,000," an executive summary of the report stated. "The DPPI board also paid itself over $341,000 as reimbursements, wages and stipends."

Established as a for-profit corporation in 2004, Dine Poultry Products marketed the company to produce more than 145 million table eggs each year. Company owners from the two tribal communities were gearing to distribute the eggs to federal government entities in the western U.S., The Daily Times said.