Longtime consultants for the state-funded Northeastern North Carolina Regional Economic Development Commission, and the associated agency North Carolina’s Northeast Partnership, continue to work for both entities despite an apparent conflict of interest similar to one that helped cost former president and CEO Rick Watson his job.
In addition, J. Michael Scott and Cathy Scott of Roanoke Rapids, and their company Progressive Resources & Opportunities, have had their business charter suspended by the state Department of Revenue.
The Scotts still work under contract with the Commission/Partnership while also representing Moonlight Bandit Productions, a recently formed company that plans to operate the Randy Parton Theater and Carolina Crossroads Entertainment District.
Watson, until recently the president and CEO for the Commission/Partnership, was terminated by the agencies’ directors in part because of his own plans to work for Moonlight Bandit. As Commission/Partnership head, Watson tried to gain public financing for the Parton project while planning his own employment with Moonlight Bandit, which State Auditor Les Merritt — and directors of the Commission — determined was a conflict of interest.
A call made last week to a phone number listed for Progressive Resources reached a voice message machine for Moonlight Bandit Productions, and referred callers to its Internet Web site.
The Scotts, whose relationship with Watson and the Northeast Partnership/Commission dates back to 1996, did not return telephone messages left at the Partnership office, their business, their residence, or at the Moonlight Bandit number. Vann Rogerson, interim president and CEO for the Commission/Partnership, could not be reached either.
Progressive Resources has a consulting agreement with the Commission that pays $70 per hour and has generous severance terms. The contract, effective July 1, 2003, calls for a “minimum retainer” amount of $120,000 per year, to be paid quarterly. Termination of the agreement by the Commission requires a one-year written notice to Progressive, with a full payout of its annual retainer. The contract required the Commission to “maintain in readily available cash an amount equal to [Progressive Resources’] anticipated compensation to ensure satisfaction of [the] Commission’s obligations hereunder.”
According to Commission board member John Schrote, the Scotts have been given their one-year’s notice to end the contract. He said renegotiation with them after that period is possible.
“The terms in that contract are not so good,” Schrote said.
The contract also included an automatic one-year notice of termination in the case of the Commission losing 50 percent or more of its state funding. The Scotts were also permitted to own, invest in, and manage businesses in Northeastern North Carolina as long as they don’t seek financing or assistance from the Commission. No mention is made of the Partnership, and it is not clear whether Progressive Resources has a separate contract with the Partnership as well, as did Watson and Rogerson.
The Scotts reported directly to Watson, and under their contract were also eligible for “additional compensation and/or performance bonuses,” awarded at the discretion of a three-member executive committee of the Partnership’s board, which included Watson. According to a report from the state auditor released in March, the Scotts were paid an additional $87,450 in bonus money during the last three years.
Northeast Partnership officials refuse to provide documents to Carolina Journal because they claim they are a private non-profit organization not subject to the state’s Public Records Act. Government funding accounted for 95 percent of the Partnership’s revenue during the last three years.
The Scotts also appear to have run afoul of the state Department of Revenue. According to the Secretary of State’s Web site and officials with Revenue, Progressive Resources’ legal charter has been suspended. A Revenue clerk could not disclose the reason for the suspension. Based on state law, the department can implement a suspension based on a failure to file a simple report, or by not paying taxes for 90 days after they are due.
It is unclear when Progressive Resources began its affiliation with Moonlight Bandit. Both Scotts were at the forefront during a media announcement of the project last July. Cathy Scott, representing the Northeast Partnership, was also listed as the media contact for the groundbreaking ceremony for the Randy Parton Theater in November.
The Scotts in the past have pursued other outside business activities in conjunction with Watson. According to reports in The Daily Advance of Elizabeth City in 2003, they briefly formed an outside company together that was to provide economic development services — for compensation — that were already provided by the Partnership/Commission for free. Also, Watson told the newspaper at the time that he sometimes steered some small companies to the Scotts’ outside services as well.
Paul Chesser ([email protected]) is associate editor of Carolina Journal.