Major WEDC Issues & Timeline

By Robert Miranda, Editor: Wisconsin Spanish Journal

July 10, 2015

The Mother Jones report: “Scott Walker’s Office Was Part of a Sneaky Effort to Keep His Records Private” link is below. It seems clear that this action, to tamper with Wisconsin’s open records law, comes on the heels of several news reports published in media outlets all over Wisconsin highlighting a loan given to a failing corporation without staff review. Reports indicate that taxpayer money was used by the Building Committee Inc. to pay for luxury cars including a Maserati.
http://m.motherjones.com/politics/2015/07/scott-walker-wisconsin-open-records

The link below is to an article in which it gives a quote by Paul Jadin, once a key WEDC administrator who left the agency not long after its creation.

The quote is clearly a smoking gun statement directly from Jadin’s mouth.

“All of the processes, particularly underwriting and tracking. As we started to receive these internal reviews, we learned what we were doing was not acceptable and obviously that had to change,” said Jadin. “We knew there was an issue. I asked just about every week, ‘Bring me the loan portfolio. Bring me our balances on economic development tax credits, job tax credits’; I’d get assurances that that information was coming. And instead of getting a report when I demanded it, I’d get a resignation from a controller.”
http://wtaq.com/news/articles/2013/may/13/ex-wedc-chief-paul-jadin-audit-found-nothing-new-calls-systems-a-mess/

Clearly Jadin must be brought to a state hearing and asked directly whether or not he was ordered by Governor Scott Walker to give the Building Committee, Inc., or any other corporation (s) loans without staff review/underwrite.

The timeline below was provided to me by State Senator Lena Taylor, who released it upon my request. It is telling indeed and clearly shows WEDC operated without financial protocols. The fact that no financial checks and balances where established put WEDC staff at risk for releasing funds without proper authority and protocols, freeing Walker of responsibility.

Only Paul Jadin can tell us now why was the loan released and if he was ordered by Walker to release the loan to the Building Committee, Inc., and/or to any other corporation (s) in similar circumstances.

_______________________________

Timeline of major WEDC issues:

2015:

May- A Wisconsin State Journal investigative report finds:

  • Serious open records concerns with a Building Committee Inc. loan… The required loan paperwork appears to be missing or never existed.

  • Potentially fraudulent actions on the part of the business owner who appears to have falsified forms in order to secure a state loan.

  • Serious questions about the role of some of Governor Walker’s top advisors – then-DOA Secretary Mike Huebsch, Governor Walker’s campaign manager Keith Gilkes, and others who may have influenced WEDC to give out a loan to a major campaign contributor.

Rep. Barca and Sen. Lassa ask U.S. Attorney General to investigate violations of federal law including fraud, pay to play, contributions in the name of another and theft or bribery concerning programs receiving federal funds.

May- The Legislative Audit Bureau issues another scathing report that indicates:

WEDC did not consistently follow state law or its own policies when making awards.

WEDC did not require grant and loan recipients to submit information showing that jobs were actually created or retained.

WEDC maintained a $15.6 M unassigned fund balance, which was larger than necessary.

WEDC awarded tax credits without verifying the accuracy of information submitted by businesses.

WEDC did not report clear, accurate and complete information on numbers of jobs created and retained as a result of its programs.

WEDC amended loan contracts to defer loan repayments, wrote off loans, and forgave loans, which reduced its potentially uncollectible loan balance in 2014.

April- Outsourcing: Eaton Corporation (a global power systems management corporation) announced layoffs due to outsourcing—twice—after receiving taxpayer help from WEDC. It received nearly $370,000 in tax incentives from WEDC since 2012 and is shipping jobs from Wisconsin to Mexico for the second time in three years.

2014:

September- Personnel WEDC’s VP of Business and Industry Development resigned saying COO Ryan Murray is “causing deep and lasting harm” at WEDC. The VP, Lee Swindall, rescinded his resignation a couple days later.

WEDC has had problems with turnover of top staff. Had Swindall left, he would have been the third VP to leave this year.

WEDC’s own internal reports found a 25% turnover – three times higher than other state agencies (versus 7–10% at the State of WI overall) WEDC’s consultant found that the #1 cause of turnover is inconsistent messaging and management style.

May- One Wisconsin Now reports that nearly 60 percent of the financial assistance money awarded by the Wisconsin Economic Development Corporation (WEDC) has gone to businesses whose owners or employees have donated money to the campaign of Gov. Scott Walker (R-Wisconsin) or the Republican Governors Association (RGA).

2013:

May- The Legislative Audit Bureau issues a startling report that WEDC violated state law in at least six ways including making awards to ineligible recipients for ineligible projects and for amounts that exceeded specified limits. It unveiled a huge range of issues including WEDC had no policies for handling delinquent loans, no policies for employee purchases and did not have adequate records to assess its effectiveness in creating jobs.

October- A national report by Good Jobs First sites WEDC as an example of the problems that have been caused around the country by quasi-private economic development corporations and that oversight of taxpayer resources in an inherent problem with this model.

2012:

June– During the bidding process for a statewide computer system, the Wisconsin Department of Administration (DOA) found out that WEDC pre-empted the process by making a “soft offer” for tax credits to a business. Upon discovery, DOA had to suspend the bidding process and WEDC had to rescind the tax credit offer as it violated what should be a fair and competitive process.

July– The Milwaukee Journal Sentinel reported that WEDC was projected to spend $14 million more than it was allotted, creating a deficit in the agency.

August– The U.S. Department of Housing and Urban Development criticized WEDC for not following federal laws and state policies, when it gave out $9.6 million in grants. The situation intensified as WEDC’s board and the public were not told about the condemning letter causing one of the board members to threaten resignation.

September– After the Governor appointed his young aide Ryan Murray, a Republican political operative with no private-sector or economic development experience, as Deputy Secretary and COO, WEDC’s CEO and Secretary Paul Jadin announced his resignation.

October– WEDC announced after a Joint Legislative Audit Committee hearing that it had lost track of $69.3 million in loans, at least $9 million of which were overdue. Because of the hasty transformation from DOC to WEDC, no one was assigned to tracking this huge loan portfolio.

December- Schenck Audit shoes financial transactions were either not recorded or improperly recorded throughout the year and went undetected by WEDC

December- the Financial Institutions Products Corporation (FIPCO) Report says WEDC was “created quickly with an incomplete infrastructure.”

Source: Wisconsin State Senator Lena Taylor

Was the attempt to tamper with the open records law a diversion to pass other laws? Or was it a real effort to prevent more information about WEDC from coming out? Who gave the order to Jadin to release $500,000 to the Building Committee, Inc.?

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Last edited by Tyler Schuster.   Page last modified on July 10, 2015

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