Last week I wrote about a $ 25 million loan program administered by the West Virginia Economic Development Authority that has lost more than $ 24 million in the past 19 years.
The Legislative Reviewer’s report on the whole matter is pretty damned, but not surprising. I’ve had a couple of readers email me asking what the next steps are. Who are the names of those responsible? Will there be a forensic exam? Is someone going to be charged?
Unfortunately, this is a common story in the West Virginia government. The current leadership of the EDA can be excused as almost everything happened during the time of former Governors Bob Wise, Joe Manchin and Earl Ray Tomblin, but we will likely never see anyone from any previous EDA leadership charged with indictment.
I’m not sure if criminal charges are even justified. In summary, under a 2002 law, the Board of Treasury Investments, which is controlled by the State Treasurer’s Office, was able to lend the EDA $ 25 million for a loan program. The EDA then lent seven venture capital firms, who then invested money in companies in West Virginia.
The goal was simple: by investing in these companies, they would be successful and retain or hire more workers. Its success would result in a return on investment for the venture capital firms, who would then repay their loans to the EDA and then repay the $ 25 million loan to the BTI.
That never happened. Excluding interest payments, the EDA could only pay BTI more than $ 600,000 on the loan principle, leaving more than $ 24 million outstanding. Four of the seven venture capital firms went bankrupt. Two of the venture capital firms, which together received $ 8 million, never invested in companies in West Virginia as needed. And the EDA kept poor records between 2002 and 2016 and was never able to confirm whether any of the venture capital investments resulted in economic development or job creation or retention.
The whole point of venture capital is investing in companies and ideas in the hopes that those investments will bring high returns as the business or idea develops. It’s a risky endeavor and it doesn’t always work. That’s not the problem unless you believe the government shouldn’t be using tax dollars to pick winners and losers.
The problem here is that the wise government and democratically controlled legislature passed the bill to create this loan program. They did not contain any real benchmarks and reporting requirements and no real control. As a result, the loan program escaped scrutiny until 2019 when former treasurer John Perdue attempted to close the loan program and discovered the issues before approaching the Legislative Auditor’s Office for an investigation.
This begs another question: why did the Treasurer’s Office only discover these issues in 2019? Perdue was a six-year-old treasurer who took office in 1997, five years before the EDA loan program was launched. Why did it take 18 years to find out that $ 25 million loaned to the EDA in 2002 had not been repaid?
The new state treasurer, Riley Moore, has only been on duty for two weeks but is preoccupied with this issue and looking at other BTI-funded programs.
Derrick Evans, the former Wayne County Republican member of the House of Delegates indicted more than three weeks ago in the sacking of the U.S. Capitol Building to prevent Congress from determining President Joe Biden as the 2020 winner Choice, was replaced last week. But that has become a controversy of its own.
Evans resigned on Jan. 9, triggering a 15-day window of time for the local political party’s executive committee to select the names of three qualified individuals to be sent to Governor Jim Justice. He then had five days from the date on which he received the list to select one of the three nominees.
In this case, the Wayne County Republican Executive Committee filed his letter in three names on Jan. 14. The West Virginia Republican Party filed its own letter with three names on January 22nd. The only difference between the two letters is that the state GOP letter switched one of the names for Joshua Booth. Coincidentally, Booth was the one Justice picked last Wednesday.
Wayne County REC has filed a lawsuit in the West Virginia Supreme Court of Appeals to compel the judiciary to choose from one of the names on their list. Justice and his advisors believe the second letter is valid and satisfied with Booth’s appointment. I was told the problem is whether the Wayne County REC followed the Republican Party’s statutes when they met and chose their names.
State law is pretty clear: the judiciary had to choose one of the names submitted by the district committee as long as it is within the 15-day period from the time the delegate resigned. After 15 days, Justice can choose who he wants according to the state code. But has the district committee followed the internal rules required by the state party? The Supreme Court has to decide.
If there had been problems with Wayne County REC’s selection of names, Justice could have waited 15 days and then made his choice. It is likely that a trial would still take place, but then the judiciary would have a good argument in court. Instead, to the layperson, it looks like the rules have been changed to designate a business owner who works as a legislator for the state.
Steven Adams can be reached at email@example.com.
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