This year, Virginia spent more than $67 million on economic development, and it did so with very little oversight. That’s what five investigators found after nearly a year of study. As Sandy Hausman reports, they blasted the Economic Development Partnership and called for big changes in Richmond.
Two years ago, a Chinese company collected $1.4 million from the state to start a furniture factory near Lynchburg. Lindenburg Industry promised to invest $113 million of its own money to create 349 jobs. State officials agreed to the deal after checking a company website that listed a North Carolina address. It turned out the firm was not located there, and its Virginia venture never got off the ground.
“I think that’s clearly an example of lack of due diligence in making sure that the company was, in fact, a real company that was applying for an incentive grant, and it really highlights the lack of processes in place to ensure that they have legitimate companies receiving these grants,” says Hal Greer, director of the Joint Legislative Audit and Review Commission.
His team of five investigators concluded the Virginia Economic Development Partnership was not well managed, putting the state at risk for fraud and poor use of limited resources. Their report placed blame on a 24-person board of directors appointed by the governor and the legislature.
“The board really doesn’t have any oversight or approval of anything that the agency is doing day to day,” Greer says.
To remedy the situation, the commission recommends minimal requirements for board members, hiring of a staff to keep the board informed, and creation of a plan that would include checking to make sure companies that get state aid create the jobs and invest the money they promised in applying for economic development grants.