Scott Walker’s “Scandal-Plagued” Wisconsin Economic Development Corporation in “Full Meltdown”

Governor Scott Walker (R-Wisconsin)

Governor Scott Walker
(R-Wisconsin)

By Elaine Magliaro

On Monday, Mary Bottari of PRWatch posted an article about Governor Scott Walker of Wisconsin titled Privatization Fail: Scott Walker’s WEDC in Full Meltdown. (FYI: WEDC stands for Wisconsin Economic Development Corporation.)

Bottari said that during his 2010 gubernatorial campaign, Walker “famously promised to create 250,000 jobs in his first term.” She added, “Toward this end, one of his first acts as governor was to privatize the state’s economic development agency.” WEDC opened its doors in July 2011–and Walker named himself Chairman of the Board.

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Zachary Roth of MSNBC noted that Walker announced his ambitious plan to turn the “state’s commerce department into a semi-private corporation laser-focused on economic growth and job creation” just three days after he was sworn into office. In a statement announcing the WEDC, Walker said, “Transforming the Department of Commerce will align state government with our most important mission: creating jobs.” Roth said that WEDC’s major role was to “make loans to private companies.”

Unfortunately, Walker’s “semi-private” corporation has not been successful at creating jobs in Wisconsin–and audits of WEDC have shown that the agency  was mismanaged and “scandal-plagued.”

Bottari:

After a series of damning audits, which highlighted mismanagement and incompetence, and news reports of special treatment for Walker donors…Democratic state lawmakers called for a federal investigation of the scandal-plagued entity.

Alice Ollstein of ThinkProgress wrote an article about WEDC earlier this month. She said a “damning report” that was released by Wisconsin’s non-partisan Legislative Audit Bureau claimed that the agency had “been routinely violating its own rules and state law.”

Ollstein:

Walker set up the Wisconsin Economic Development Corporation in 2011 in order to give taxpayer dollars to private corporations to help them create jobs for Wisconsin workers. But a new audit of more than 100 grants from the agency found that the WEDC failed to follow up on whether the companies were actually using the funds to create and retain jobs.

The group also gave loans and tax credits to companies that did not meet its requirements, and did not even attempt to fact-check claims by the companies about the number of jobs they created. Additionally, the agency forgave, wrote off or deferred more than $4 million in loan payments that the corporations were supposed to pay back to the state.

Ollstein added that WEDC has been plagued by scandals ever since its creation. According to Ollstein, a 2013 audit of WEDC found that the agency had “repeatedly failed to follow state laws regarding the use of public funds.” She added that in 2014, two corporations–Eaton and Plexus–that had received millions of dollars of taxpayers’ money from the WEDC, had “outsourced jobs to Mexico and other foreign countries, and laid off hundreds of Wisconsin workers.”

According to Bottari, “WEDC was in charge of a staggering amount of taxpayer dollars: $519 million in bonds, grants, loans, and tax credits in 2011-2012 alone.” She said that the WEDC board was ultimately responsible for those dollars. Bottari added, “While experts debate the role state government plays in job creation, one set of jobs Walker can more precisely lay claim to are those created by the economic development corporation he governs.”

Bottari:

In 2012, the Milwaukee Journal Sentinel broke the story that WEDC had lost track of $12 million in loans because it never asked businesses to pay…them back. The federal housing authority demanded changes at WEDC after determining it had spent some $10 million in federal funds without authorization. A damning 2013 audit by Wisconsin’s professional, nonpartisan state audit bureau made headlines when it documented dozens of ways in which the new agency was breaking the law. The audit showed that WEDC made awards to ineligible recipients, for ineligible projects, and for amounts that exceeded specified limits.

Bottari said that WEDC had promised “to clean up its act and reported to the legislature and the state audit bureau in October 2013 it had addressed all the concerns raised in the May 2013 audit.” She noted, however, that the new May 2015 state audit showed that the “situation is even worse.”

Bottari reported that the Center for Media and Democracy (CMD) “spent weeks analyzing data in 2014 and “determined that for a two-year period (FY 2012 and FY 2013), WEDC could only lay claim to creating some 5,860 jobs.” She said that  WEDC “misled the legislature and the public by claiming to have created 60,000 jobs” during that period of time. She added, “Instead of counting the ‘actual’ jobs created, the agency used the cooked-up phrase ‘impacted.’”  Bottari said that the report published by CMD “documented how jobs lost to plant closings in the state over the same period (13,616) trumped the job creation numbers.”

Bottari:

The new audit details a series of damning facts. WEDC failed to demand that jobs be created with each contract. WEDC failed to make sure that projects hit wage targets. And it failed to demand sufficient documentation, such as payroll records, to show that jobs were actually being created or retained.

In one instance, WEDC executed a $4 million contract and allowed $1.6 million of it to be used for debt repayment. WEDC would not answer CMD’s inquiries on the topic. From a check of the WEDC data base, this grantee appears to be SHINE Medical Technologies of Monona, who pled “business sensitive information” and would not comment further on the issue. In another instance, WEDC gave a business $517,000 in tax credits for “retaining” jobs even though it determined that the business employed 307 fewer eligible employees than a year earlier. A check of the WEDC database finds Plexus Corp. of Neenah recording a 307 job drop.

Zachary Roth said that as Walker is laying the groundwork for a 2016 presidential run, “WEDC appears rudderless and deeply troubled.” He added, “Government and press reports have raised serious questions about the agency’s transparency, effectiveness, political independence and compliance with the law. Walker…has twice in recent months announced major shifts to the agency’s structure and mission—and this week he has been forced to deny that he knew about a questionable loan to a political contributor’s company.”

Despite Walker’s claims that he’d create 250,000 jobs in Wisconsin during his first term as governor, his state’s “job growth continues to lag far behind the nation’s—taking a toll on the governor’s popularity at home.”

Public Policy Polling (May 13, 2015):

PPP’s national Republican poll for May continues to find Scott Walker leading the field, but it’s tightly clustered and his support has actually dropped two consecutive surveys now.

Do you think Scott Walker has a chance of being elected president in 2016?

SOURCES

Privatization Fail: Scott Walker’s WEDC in Full Meltdown (PRWatch)

Scott Walker jobs agency in ‘chaos’ amid calls for federal probe (MSNBC)

Scott Walker Gave Corporations Cash To Create Jobs, Forgot To Check If They Created Jobs (ThinkProgress)

Republican Presidential Primary 2016: Walker Still Leads Nationally, Clinton Over 60% (Public Policy Polling)

 

This entry was posted in Campaign Finance, Capitalism, Conservatives, Corruption, Economic Policy, Economics, Fascists/Corporatists, Justice, Oligarchy, Political Science, Politics, States, Tea Party, United States and tagged , , , , . Bookmark the permalink.

40 Responses to Scott Walker’s “Scandal-Plagued” Wisconsin Economic Development Corporation in “Full Meltdown”

  1. rafflaw says:

    Walker is as dirty as they come!

  2. bron98 says:

    get rid of the WEDC, don’t privatize it. the idea that government should be a venture capitalist is wrong. I don’t know if he is dirty but there certainly is doubt in his ability to operate on a national scale.

  3. blouise says:

    He’s the best the RNC has to offer.

  4. michaelbeaton says:

    Who could have possibly know?

    It just is silly strange how this just keeps on happening….over… and over…. and …over and over…

    and over….

    wonder why. that is?

  5. I. Annie says:

    Rafflaw, almost half of us in Wisconsin knew just how dirty Walker is, but the other half didn’t care as long as he was a Republican. I think there is some serious buyer’s remorse going on in this state. His polling numbers are way down and with this latest scandal, I imagine they’ll fall even lower yet.

  6. blouise says:

    My goodness, whatever will Americans for Prosperity say? The Koch boys invested heavily in Walker and they don’t like a loser.

  7. Elaine M. says:

    State had sued for tax delinquency firm given unsecured jobs loan
    By Jason Stein and Andrew Hahn of the Journal Sentinel
    May 19, 2015
    http://www.jsonline.com/news/statepolitics/scott-walkers-lawyer-governor-never-received-wedc-loan-letter-b99503261z1-304279131.html

    Excerpt:
    Madison — Gov. Scott Walker’s flagship jobs agency in September 2011 gave an unsecured $500,000 loan from taxpayers to a now-defunct company whose owner had been taken to court a year earlier for not paying taxes.

    Building Committee Inc. and its owner William Minahan, a donor to Walker’s campaign, indicated in their September 2011 application for the state loan that the company, its owners and officials had not been involved in any lawsuits or civil cases in the previous five years.

    But online public records show that Minahan faced legal action by the state Department of Revenue in November 2010 for tax delinquency in the amount of $15,700 and that Building Committee was also sued for thousands of dollars in a money judgment case just over a year before Minahan signed the application. They were the first of many court actions that have been filed against Building Committee.

  8. Elaine M. says:

    blouise,

    Speaking of the Koch boys:

  9. pete says:

    I guess the bag is for cleaning up Scotty’s little “messes”.

  10. Elaine M. says:

    Pete,

    The bag is way too small for that!

  11. Elaine M. says:

    Scott Walker dumps budget proposal that would have exempted WEDC records
    http://host.madison.com/news/local/govt-and-politics/scott-walker-dumps-budget-proposal-that-would-have-exempted-wedc/article_98e6b218-e041-5c22-93f5-078ee0198482.html

    Excerpt:
    The proposed records exemptions raised additional concerns in the wake of a State Journal investigation of a $500,000 taxpayer loan to a struggling construction company.

    The exemptions would cover company financial information shared with WEDC, as well as records stored in the agency’s records management system, which a nonpartisan Legislative Fiscal Bureau analyst warned “could be interpreted in an overly broad manner.”

    Brett Healy, president of the MacIver Institute, a conservative think tank, said the proposal “would be a step backwards in terms of transparency.”

    “We need more transparency in government, not less,” Healy said.

    “This is a cost of doing business with the state. If you are interested in securing government assistance, there are some transparency responsibilities that come with that.”

    Bill Lueders, president of the Wisconsin Freedom of Information Council, said his concern with the proposal was that “information about the troubled financial history of an individual applying for a state handout would be off limits.”

    The State Journal reported Sunday that Walker’s top aides pushed for a $4.3 million loan to Building Committee Inc. WEDC ended up giving the company a $500,000 unsecured loan, which has not been repaid. The company and its owner, William Minahan, had exhibited signs of financial distress before and after the loan was approved.

    “Of all the agencies you would want to give a sweeping ability to keep things secret, this would have to be the last on any sane person’s list,” Lueders said.

    “If anything the governor should be bending over backwards to increase the amount of transparency at this troubled agency,” he said.

  12. Elaine M. says:

    Top Scott Walker aides pushed for questionable $500,000 WEDC loan
    http://host.madison.com/news/local/govt-and-politics/top-scott-walker-aides-pushed-for-questionable-wedc-loan/article_2a29333c-c3dd-50ac-a4b6-c333506530e0.html

    Excerpt:
    Gov. Scott Walker’s top aides and a powerful lobbyist pressed for a taxpayer-funded loan in 2011 to a financially struggling Milwaukee construction company that lost the state half a million dollars, created no jobs and raised questions about where the money went, a State Journal investigation has found.

    The extraordinary steps led the Wisconsin Economic Development Corp. in 2011 to award a $500,000 unsecured loan to Building Committee Inc., owned by William Minahan, for a proposed project to retrofit bank and credit union buildings for energy efficiency.

    The loan, which was not repaid, is one of several agency awards that state auditors have questioned since Walker created the agency in 2011. Last year, WEDC, the state’s flagship job-creation agency, took the unusual step of suing BCI in an attempt to get the money back.

    The failed deal was made at the urging of then-Administration Secretary Mike Huebsch, who wanted WEDC to provide a forgivable loan to the company eight times that size, according to Paul Jadin, former CEO of WEDC.

    Walker’s office confirmed that Huebsch introduced the company’s owner to Jadin. Lobbyist Eric Petersen, who represented BCI and Minahan, and Keith Gilkes, Walker’s former campaign manager who was the governor’s chief of staff at the time, met in June 2011 with Huebsch and Minahan to discuss the loan, according to records obtained by the State Journal under the state’s open records law.

    Hours after his office released those and other records to the State Journal on Friday, Walker, who is considering a 2016 presidential bid, called on the Legislature to scrap WEDC’s entire loan program, citing a recent legislative audit.

    The push to fund the BCI project came after Minahan gave Walker’s 2010 Republican campaign for governor a last-minute infusion of $10,000 on Election Day — the maximum individual contribution.

  13. blouise says:

    So now top aides and a powerful lobbyist pushed for the loan but not Walker? Hmmm. Is this what we cal “distancing”?

    Why don’t the Koch boys help out Walker by reimbursing the state?

  14. blouise17 says:

    BTW ..

    In a recent poll “The worst threat for women in 2016”, the Koch boys’ guy, Walker, came in number 2 behind Cruz and just ahead of Bush. If you don’t like women, these are the candidates for you.

  15. Elaine M. says:

    blouise,

    Walker is like Chris Christie. They are both take charge kind of guys who are on top of everything–yet they know nothing about what their staffers, aides, and political appointees are up to.

  16. blouise says:

    Elaine,

    I remember when Nixon blamed all those underlings for Watergate … then the tapes came out.

    Just in case readers have forgotten, Nixon was supposed to have been the really smart Republican.

    Ooh-la-la!

  17. Elaine M. says:

    I.Annie,

    I read an article this morning that said Walker was cc’ed on some of those WEDC letters–but the claim is that the letters were never forwarded to him.

  18. I. Annie says:

    I seeee. He claims that he didn’t know of so many things, lol.

  19. Elaine M. says:

    I.Annie,

    Here’s the article:

    Scott Walker still not receiving WEDC award letters
    http://host.madison.com/news/local/govt-and-politics/scott-walker-still-not-receiving-wedc-award-letters/article_d68f5c2b-d1da-5508-86b2-1ae923ac7145.html

    Excerpt:
    Gov. Scott Walker does not routinely get copies of economic development award letters issued by the state, even though he was criticized for that practice in 2012.

    Walker, chairman of the Wisconsin Economic Development Corp. board, said in June 2012 that he would change the agency’s practice of noting on award letters that he is copied but not actually forwarding the letters to his office.

    “If I’m included in a letter that says I’m being included in an offer, I should probably see the letter before it goes out,” Walker said at the time, according to The Associated Press.

    WEDC spokesman Mark Maley said Tuesday that “WEDC does not routinely forward award letters to the governor’s office.” And Walker spokeswoman Laurel Patrick said Tuesday the award letter template changed after the issue was raised in 2012.

    Letters no longer indicate that they are written on the governor’s behalf or that he is copied as a recipient, Patrick said.

    “He was not calling for our office to see or review the letters,” she said in an email.

    The issue came up in 2012 after Walker and his Department of Administration criticized WEDC for awarding $11.7 million in tax breaks to Skyward, a Stevens Point-based company bidding on a $15 million statewide student information system.

    The March 2012 award letter to Skyward included a “cc” notation at the bottom to Walker, which raised questions about whether he was aware of the deal even though he said he first learned of it after the June 2012 recall election. Walker’s office said then that even though he was cc’d on the awards letter, it was never forwarded.

    The same issue surfaced this week because Walker was cc’d on a September 2011 letter awarding a $500,000 loan to a struggling Milwaukee construction company.

    Walker’s office said, despite the cc notation (which stands for “carbon copy”), it never received a copy of the award letter, and a Walker lawyer confirmed that after a search.

    Maley and former WEDC CEO Paul Jadin confirmed to the State Journal on Tuesday that WEDC never forwarded the letter to Walker’s office.

    “In the early days of WEDC (and earlier at the former Department of Commerce), there was template letter language that was sent to all award recipients,” Maley said. “Even though the letter indicates that the governor was cc’d on it, that never happened.”

  20. bron98 says:

    my understanding of Watergate is that it was done by john dean to protect his wife who was a former prostitute. the only thing Nixon did was cover up in the belief no one would believe him anyway.

    from what I can gather, Nixon did not order the break-in nor did he know about it until after the fact.

    http://spartacus-educational.com/JFKcolodny.htm

    Len Colodny is a journalist. In 1992 he co-wrote with Robert Gettlin: Silent Coup: The Removal of Richard Nixon. In the book the authors claim that John Dean ordered the Watergate break-in because he knew that a call-girl ring was operating out of the Democratic headquarters. The authors also argued that Alexander Haig was not Deep Throat but was a key source for Bob Woodward, who had briefed Haig at the White House in 1969 and 1970.

    In 1992 John Dean began legal action against Len Colodny and Gordon Liddy. Dean objected to information that appeared in books by Liddy (Will) and Colodny (Silent Coup) that claimed that Dean was the mastermind of the Watergate burglaries and the true target of the break-in was to destroy information implicating him and his wife in a prostitution ring. That case was settled in 1999 when State Farm Insurance Company paid Colodny $410,000.00 to allow Dean to dismiss the case without going to summary judgement. Dean also had to agree not to sue Colodny again and that was in the Court Order.

    John Dean encouraged former DNC secretary Ida Well to sue Gordon Liddy on the same subject as his original suit in US District Court in Baltimore. In July, 2002, jurors reached a unanimous decision in favor of Liddy and the theory put forward in Silent Coup: The Removal of Richard Nixon.

    Colodny has written extensively about Watergate. Articles by him include Felt Was Asked Under Oath in 1975 If He Was Deep Throat (9th June, 2005) and Still Protecting Al Haig (7th July, 2005).

  21. pete says:

    I believe the phrase you’re looking for is “plausible deniability”.

  22. blouise17 says:

    The break-in in which the Plumbers Unit were caught was simply to repair already successfully installed listening devices done during a previous break-in. Whether or not Dean duped Liddy is Liddy’s problem for as general council to CREP (pronounced “creep”, the committee to ‘re-elect the president) and as one of the original founders of the Plumbers (a group operating initially out of the Whitehouse to stop leaks like the Pentagon Papers then migrating over to CREP to take illegal and criminal actions on Nixon’s behalf), Liddy was front and center to take the fall. There is no honor among thieves so Dean and Kiddy can lie about each other all they want. It’s great entertainment.

    Ehrlichman, the Assistant to the President for Domestic Affairs and Special Investigations Unit knew about Liddy’s goal to perform an intelligence gathering operation for Committee to Re-elect the President. You expect intelligent adults to believe that Ehrlichman never discussed this intelligence gathering with his boss? If so, then I have some beautiful property for sale just a half mile north of my house … you can have it for a mere $2000.00.

  23. And there is nothing suspicious about the nearly 20 minute gap on the so-called Watergate Tapes. Nothing at all. It’s not as if criminals have ever tried to or succeeded in destroying evidence. While we’re at it, let’s just gloss over the fact that Gordon Liddy (whom I’ve had the distinctly creepy “honor” of meeting) and Howard Hunt said under oath that they had discussed plans to dose journalist Jack Anderson with LSD or stage a fatal mugging. What happened to their plans for a journalist who had been a pain in the ass to Nixon since 1960? The plan was only abandoned after the break-in made the news.

    Yep.

    Nothing to see here.

    Move along.

  24. blouise says:

    Gene,

    I, too, met Liddy who was in the company of another dubious character, my brother.

    I do believe you and I share some sort of karmic relationship which probably should not be looked at too closely.

  25. “I do believe you and I share some sort of karmic relationship”

    Of this, I think there is no question, Blouise. :mrgreen:

  26. bron98 says:

    From what I have read, I believe Nixon did not know. He may have known about others but I don’t think he ordered nor knew about that one. I am not at all a fan of Nixon but he wasn’t stupid.

  27. Elaine M. says:

    bron,

    Bill Clinton’s not stupid. He was a Rhodes Scholar. Yet, he did some things that got him into trouble–and which called his judgment into question. Lots of smart folks think they’ll never get caught doing things that they shouldn’t.

  28. On the tapes, he also wasn’t particularly shocked about that particular break-in. He was also on tape a year before the Watergate episode explicitly ordering Haldeman to break into the Brookings Institution and steal its files on Vietnam.

    At best, I think pete got it right. True, not everything Nixon did was pure evil, but it is one of the great curiosities of the universe that great good can come from great evil and vice versa. Nixon was a criminal and I think that is without question. That he went unpunished for his crimes (as did his cohorts for the most part) is part of what paved the path to sorry state we see the Office of the President in today. Without his being pardoned, G.H.W. Bush would have gone to prison for Iran-Contra and never been President, W. and The Penguin would have been arrested, tried and imprisoned for their collective treasons and Obama would have been impeached for his ultra vires claim of the power to execute American citizens without Due Process.

  29. blouise says:

    There was nothing stupid, in Nixon’s view on politics, in planting listening devices in the DNC Watergate offices. If you are at all familiar with the tapes then you will recall Nixon’s lamenting that everyone was doing it. What was stupid was carrying cash that could be traced back to CREP and then to the Plumbers and in turn to the Whitehouse where the Plumbers got their start. That is eventually what put Liddy into fall-guy position. As one of the founders of the Whitehouse Plumbers and general council to CREP with continued oversight of criminal activity on Nixon’s ‘re-election behalf as accounted for in his discussions with Ehrlichman, the guy was toast. Eventually, Ehrlichman was toast

    As to Nixon’s intelligence, I give you the only President forced to resign … really burned toast. But I will grant you that he was the smartest Republican the party had, then and now, because he did manage to stay out of prison.

  30. blouise17 says:

    BTW … in case you haven’t caught onto the strategy… Hillary is running against the party, not an individual. Thus … Nixon was and is the best representative the Republicans have. He’s certainly better than tea baggers.

    This fun!!

  31. gbk says:

    Bron’s adopted thesis is easily shot down by realpolitik.

    Namely, does one seriously think that a president and his cabinet would abdicate their power for mere counsel attempting to hide the trivialities of his wife’s past? Dean would have hung out to dry.

    Does one seriously think Erlichman would have played this game, or Colson for that matter? And what of then Attorney General John Mitchell; does he strike anyone as to giving up the ghost for an underlings’ wife’s predilection’s?

  32. gbk says:

    It is crazy how current (meaning not so long ago) history is revised to suit the purposes of any idealism.

    Watergate was one of the last fully documentable transgressions of US government. Though we have the information offered by Snowden, few believe the ramifications. We also have the Iran-Contra “scandal” of Reagan, yet few noticed then, let alone now.

    I don’t believe Bron’s adopted thesis for a second.

  33. gbk says:

    Nixon claimed executive privilege when special prosecutor Archibald Cox subpoenaed tape recordings of conversations made in the Oval Office.

    When his claim of executive privilege was refused by Cox, and Judge John Sirica, Nixon offered edited transcripts. When this was refused by both Cox and Sirica, and upheld by a federal appeals court, Nixon ordered Attorney General Richardson to fire Cox. Richardson resigned whereupon Nixon ordered Deputy Attorney General William Ruckelshaus to fire Cox. Ruckelshaus’ response was to also resign. The discharging of Cox was carried out by the FBI whose agents moved in to Cox’s office at the request of the White House.

    And all of this for a claimed former prostitute. I don’t think so.

  34. gbk says:

    Sorry, forgot to give a historical reference for Cox.

    Archibald Cox, Jr. was the first Watergate special prosecutor.

  35. blouise says:

    gbk,

    (Thanks for the card. I saved it.)

    Liddy was trying to resurrect himself with that Dean fairytale. He’s a seriously flawed dude who could never quite grasp how totally irrelevant he was in the scheme of things which is, of course, why he was so well suited for talk radio and FOX News. There are lots of folks like Bron out there just waiting for the next Liddy to grab their intellect.

  36. gbk says:

    This is off the top of my head, as it was reading done long ago, but if anyone researches Liddy (by this I mean BOOKS published after 1971) one finds his hands in Central and South America, and also in Laos and Cambodia.

  37. gbk says:

    Blouise,

    I’m sorry my expression of condolence did not reach you sooner. I hope you are well.

  38. blouise says:

    gbk,

    Doing so-so. Shock provides a nice cushion but reality is a bitch.

    Liddy talked too much which is always a sign of incompetence.

  39. gbk says:

    Blouise,

    If there is anything I could offer to help; don’t be shy.

    Peace, always.

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