Business

Corruption Charges Against Walker Are Baseless, Supporters Say

Wisconsin Gov. Scott Walker is being accused of mismanagement and corruption related to an economic development agency he helped create, but defenders say the charges are bogus.

Shortly after taking office in 2011, Walker spearheaded the creation of the Wisconsin Economic Development Corporation (WEDC) to replace the state’s Department of Commerce. The WEDC provides incentives for businesses to relocate to or expand operations in Wisconsin, and Walker has made the semi-public agency a centerpiece of his efforts to create 250,000 new jobs.

Since then, however, only about 147,000 jobs have been created, and reports from the state’s Legislative Audit Bureau (LAB) have revealed insufficient oversight of certain notable deals, according to The Daily Beast. (RELATED: Walker Distances Himself from Alleged Mismanaged Business Subsidies)

A May 2013 LAB report, for example, found that WEDC had disbursed $124.4 million without conducting formal staff reviews between 2011 and 2013. Although staff reviews were not required at the time, it apparently prevented the agency from noticing problems with the applications of some business that later proved unable to live up to the promises they had made when requesting the aid.

Defenders of Walker and the WEDC counter that such criticisms are a stretch, considering they are based on findings from more than two years ago, and say the agency has made massive improvements in response to past failings.

Laurel Patrick, a spokeswoman for the governor’s office, told The Daily Beast WEDC’s loan delinquency rate had fallen from 2.7 percent to just 0.2 percent during the intervening years, and the agency now requires staff reviews for every award it hands out. (RELATED: Scott Walker Has a Micromanagement Problem)

“The improvements did not go unnoticed,” Patrick said. “In April 2014, WEDC received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada, the highest form of recognition in governmental financial reporting.”

She also asserted that, “All companies that receive awards from WEDC are contractually required to meet certain objectives, which typically include job creation, job retention and/or capital investment.” When those targets are not met, she added, the state can impose penalties such as clawbacks or denial of tax credit claims.

Not everyone is appeased by that explanation, however, particularly after the Wisconsin State Journal reported on a $500,000 loan awarded to Building Committee Inc. (BCI), a construction company whose owner had donated $10,000 to Walker’s gubernatorial campaign. The company eventually filed for bankruptcy, defaulting on the loan without having created any jobs.

Describing the BCI deal as “Walker’s pet project,” the liberal news outlet PoliticsUSA says the incident is indicative of the “corruption and cronyism” of Walker’s administration.

The article claims that as chairman of the WEDC at the time, Walker had sole oversight of the $124 million awarded by the agency without staff review between 2011 and 2013, and used that discretion to “[hand] out … Wisconsin taxpayers’ money to his corporate donors.” (RELATED: Websites Forced To Correct And Retract False Stories About Scott Walker)

Walker’s supporters dismiss the corruption charge as absurd, pointing out that campaign contributions do not disqualify a company from receiving state benefits and denying that politics has any influence on the decision to award subsidies to a particular company.

“Political contributions are in no way tied to awards provided by the WEDC,” Patrick told TheDCNF. “Decisions related to investments or awards are contractually required to meet certain objectives and are made according to metrics approved by WEDC’s bipartisan Board of Directors.”

Any attempt to impute otherwise, she added, “is clearly political gamesmanship by legislative Democrats and others more interested in playing politics than on helping improve economic development in Wisconsin.”

Patrick also explained that, “WEDC initially approved the BCI project because it was expected to result in the creation of 155 new jobs and nearly $4 million in capital investment,” and said the agency took immediate action once it became aware of BCI’s perilous financial condition, imposing a 12 percent penalty interest rate and initiating legal action against the company.

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