A legal opinion permitting state-funded economic developer Rick Watson to simultaneously work for Randy Parton’s entertainment company, which he recruited for a Roanoke Rapids project, appears to be based on the faulty assumption that Parton’s company would receive no funds from Watson’s state-funded organizations.
On Nov. 3 the Elizabeth City Daily Advance reported that Watson had received approval from his boards of directors to work for Parton’s Moonlight Bandit Productions while keeping his current $165,000 job as the CEO of the Northeast Partnership and its parent organization, the Northeastern North Carolina Regional Economic Development Commission. His duties and salary with Moonlight Bandit are unknown. In 2007 he is planning to end his Commission and Partnership job but continue employment with Moonlight Bandit.
The Commission and Partnership hired Lillington attorneys Robert Morgan, a former U.S. Senator and N.C. Attorney General, and his law partner C. Winston Gilchrist to issue a legal opinion on the appropriateness of Watson’s dual roles. The opinion was addressed to Commission Chairman Jack Runion.
“By the way of summary, it is our opinion that, based on the facts provided to us, Mr. Watson serving as transitional President and CEO of the Commission while engaging in private business with Moonlight would not constitute a conflict of interest and is not prohibited by laws or by existing contractual agreements,” wrote Morgan and Gilchrist.
The statement was apparently based on Morgan and Gilchrist’s belief that the entertainment project would not receive funds from Watson’s other organizations.
“At no time would any funds from either the Commission or the Partnership flow to Moonlight, or to any related entity. In fact, neither the Commission nor the Partnership would provide any form of assistance to Moonlight,” Morgan and Gilchrist also wrote.
The legal opinion was dated Oct. 25, but documents obtained from the North Carolina Department of Commerce show that the previous day, under Watson’s signature, the Northeastern Commission submitted documents to Commerce establishing claim to the $500,000 in state funds earmarked for the entertainment project. Watson’s actions were contrary to what the opinion said they would be.
But Commerce had a problem with Watson’s request and has not released the money. Governmental Accounts Auditor William Schmidt responded to Watson on Nov. 1, and cited three reasons for not releasing the funds. The first is that the legislation calls for the money to go to the Roanoke Rapids Entertainment Complex, an organization that either does not exist, or at least has no unique federal identification number.
The second is that prior to Commerce releasing the funds the Office of State Budget and Management must determine that the Roanoke Rapids Entertainment District has entered into contracts necessary for the successful completion of the complex.
The third reason is that beginning Sept. 1, 2005 and quarterly thereafter the “District shall report its progress in completing the complex and the total funds received to date to the Office of State Budget and Management, the Department of Commerce, and the Fiscal Research Division of the General Assembly.” The District has not released such a report.
Efforts to reach Morgan, Gilchrist, or Runion on Friday to discuss the issue were unsuccessful. But Partnership board member Cliff Copeland said, “I was not aware of that,” when told that Watson had sought the release of the state funds for the project to the Commission.
Another obstacle to the release of state funds is that there is conflicting information on just what the funds are for. The language in the budget bill states the $500,000 is for the “construction of a music and entertainment complex.” The language in the budget Conference Committee Report states, “Provide promotional funds for an entertainment complex.”
At the Nov. 11 groundbreaking ceremony Roanoke Rapids City Manager Rick Benton told CJ that the funds were definitely for marketing, but he was not sure what organization would actually receive the money.
The groundbreaking ceremony for the Randy Parton Theater and Carolina Crossroads Entertainment District was held on Nov. 11 at the site adjacent to Interstate 95 south of Roanoke Rapids. Randy, brother of Dolly Parton, recently set up Moonlight Bandit Productions to manage the $9 million main theater, which will be built by the City of Roanoke Rapids. He is in the process of moving to the area. Supporters say that the first phase of the project represents an investment of $129 million and the creation of over 2,500 jobs. But the various entities associated with the project have not publicly revealed all the sources of funds.
Watson’s apparent conflict of interest is not the only one associated with the project. Raleigh attorney Ernest Pearson represents Watson’s Northeastern Commission and Partnership and also represents Moonlight Bandit Productions.
The General Assembly created the Commission to facilitate economic development in a 16-county region. Gov. Mike Easley, House Speaker Jim Black, and Senate leader Marc Basnight each appoint six members. CJ and the Daily Advance have reported other instances in which Watson has tried to seek a financial interest in companies that his publicly funded agency was trying to help.
Don Carrington is executive editor of Carolina Journal.