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Federal inspectors say it was an improper conflict of interest. But the Box Elder County farmer involved told them he just meant to lend a neighborly hand.

The farmer sat on a board that decided which of his neighbors would receive federal money to help level their fields. But many of them paid him to do that work with funds he helped approve.The Agriculture Department inspector general complained that might give the appearance that farmers could improve their chances for such grants by hiring the board member. So the inspector general demanded he resign or give up his field leveling business.

Royal K. Norman, Utah executive director for the U.S. Agricultural Stabilization and Conservation Service (ASCS), said the man did not have to resign because he had just reached his nine-year limit on the board and by rules could not seek re-election anyway.

That was revealed in inspector general reports obtained by the Deseret News. The reports did not name the farmer, and Norman refused to, saying he felt it would violate the federal Privacy Act.

Other portions of inspector general reports also said tens of thousands of dollars had been paid improperly by Norman's agency to farmers in selected counties - and called for a statewide review for similar problems. Norman said that since the review has been completed, he found only minor problems and corrected them.

But the inspector general led off his criticisms of ASCS operations in Utah with the apparent conflict of interest on its Box Elder County Committee - where members are elected by neighboring farmers to help determine how to spread federal agriculture grants.

Inspectors worried the conflict it found "could result in unnecessary criticism of the agency or department since the county committee member has, in effect, obligated funds for practices in which he has a financial interest."

But reports said no evidence was found that the man was hired as a reward for helping secure grants. But he did do work for seven other farmers who had received $13,710 in 1988 and 1989 for field leveling, reports said.

The report also said the man told inspectors "that he laser-leveled a field about five or six years ago and was pleased with the results. Therefore, he decided to lease a machine to do more leveling on his own. However, he said he received so many requests to do work for his neighbors that he began a custom leveling enterprise."

Other inspector general complaints included that much Utah land accepted into the Conservation Reserve Program - designed to help control erosion - was ineligible.

"We identified ineligible and unsupported program payments of about $128,320. The producers were also scheduled to receive additional . . . payments of about $461,540 on the ineligible and questionable acreage," reports said.

It added, "This occurred because county office personnel did not use available farm records or require supporting evidence to verify that land designated . . . was cropped in at least two of the base period years."

The problems were found in review of operations in Box Elder, Sanpete and San Juan counties. The inspector general asked Norman to review operations at all its 22 offices in the state serving Utah's 29 counties. Norman said only minor problems were found and corrected.

Reports also said Box Elder, Sanpete and San Juan Counties had paid $8,180 too much to nine farmers through the Agricultural Conservation Program - which is designed to restore and protect basic land and water resources.

"Costs were not prorated when producers performed a greater extent than was determined to be needed and approved by the county committees," inspectors said. Again it ordered a review of other offices, which Norman said was completed and similar minor problems found and corrected.

The ASCS serves 13,000 farms in Utah. For 1989, it spread program payments among them amounting to about $45 million, reports said.