ALBUQUERQUE – An investigation into the conduct of Spaceport America’s chief executive officer is ongoing and initial findings are expected in the coming weeks, the organization’s interim leader said Wednesday.
Interim CEO Scott McLaughlin testified before a New Mexico legislative panel, saying the recent shakeup stemming from a whistleblower complaint filed in June has left the taxpayer-financed spaceport in a difficult situation.
Dan Hicks, who was appointed by spaceport authority board members in 2016 to lead Spaceport America, was placed on administrative leave after former financial officer Zach De Gregorio accused him of circumventing internal financial controls and accounting procedures. De Gregorio later resigned, and Hicks has declined to comment on the allegations, citing the pending investigation.
The state Economic Development Department is paying an outside accounting firm to review procurement procedures as well as agreements governing the gross receipts tax and the use of revenue generated by the tax. The state auditor’s office also is reviewing financial aspects related to the spaceport.
“That doesn’t necessarily mean anything was done wrong, but there was enough indication in the investigation to take a quick look at that, so that’s also ongoing,” McLaughlin told lawmakers.
All capital projects at the spaceport also are being assessed because of the open investigation, he said.
Located in a remote stretch of southern New Mexico, Spaceport America is billed as the world’s first installation built specifically for the burgeoning commercial space industry to ferry paying passengers to the lower fringes of space and launch other payloads into orbit.
The idea to build the desert outpost was first hatched years ago by British billionaire Richard Branson and former Gov. Bill Richardson. While commercial flights have yet to begin, Virgin Galactic – the spaceport’s anchor tenant – is preparing for a final round of test flights in the coming months.
Lawmakers didn’t ask any questions about the investigation. But they peppered McLaughlin about the potential for New Mexico to finally see a return on the investments in the spaceport that have been made by the state and the counties of Doña Ana and Sierra.
McLaughlin said it has been a challenging year since many vertical rocket launches and the annual collegiate-level rocket competition hosted by the spaceport had to be scrubbed because of the coronavirus pandemic. The Spaceport America Cup typically draws about 1,500 students to New Mexico, so not having them here this year was a blow to hotels and restaurants, he said.
The pandemic also forced the suspension of all public tours at spaceport, and McLaughlin said officials haven’t been able to rent the facility for commercials and other photo shoots.
“It’s been kind of a big hit, and we’re all kind of getting tired of it – I think everybody is getting tired of coronavirus. But we need to stay safe so we’ll continue to do so,” he said.
McLaughlin said user fees and lease payments are the biggest revenue generators for the spaceport. He estimated that tour and merchandise revenues also will be down because of the pandemic.
“We don’t know what next year is going to look like yet. But we do know it’s going to be quite a bit lower in terms of revenue,” he said.
The bright spot is that the spaceport has new tenants. Virgin Galactic is on track to start flights next year, and there are indications that investment in space will continue to grow. McLaughlin pointed to a recent study that reported start-up space ventures attracted $5.7 billion in financing during 2019, nearly doubling the record that was set the previous year.