Instead of encouraging “economic development,” recent deals in North Carolina reveal how the culture of corporate entitlement could foster corruption in North Carolina, published reports by Carolina Journal show.
A notoriously opportunistic organization (euphemistically speaking), the Northeast Partnership, is busy spinning deals with taxpayer money and avoiding public scrutiny. Heads-up investigative work by Carolina Journal’s Paul Chesser uncovered the Northeast Partnership’s latest trick: vacuuming a $307,575 state grant for fingerprint-security company Privaris, Inc.
The Tobacco Trust Fund Commission funneled the money to Privaris through the Martin County Economic Development Corporation. The grant ostensibly was meant to stoke economic development in which Privaris would start a business in Williamston and employ 10 to 15 people.
Trouble is, the company never hired more than three employees for the project. Should any conditions of the deal be breached, the county’s development corporation was supposed to repay to the tobacco commission “the full amount of sums awarded” and any interest accrued on the money. Like the new jobs, that never happened, either.
Another stipulation attached to the grant required the development corporation to monitor Privaris’s operations and provide a detailed report on whether the company fulfilled its part of the agreement. Guess what? That never happened, either. Karen Long, a state Department of Justice lawyer who reviews legal documents for the commission, said the county’s development corporation’s final report was unacceptable because it did not meet the requirements of the grant.
Here’s another kicker to the Privaris predicament: It just so happens that the Northeast Partnership’s executive director, Rick Watson, is an investor of the company, according to three informed sources. But neither Watson nor his lawyer sees anything wrong with that. We think that taxpayers, whose money Watson and his associates are playing around with, would find plenty wrong with that. So should state officials whose jobs are to steward public money.
Privaris’ wheelings and dealings reflect the basic nature of government-granted economic incentives: In reality, they are nothing more than bribes. Before the advent of the economic-development mindset in state, and national, politics, similar deals were labeled just that — bribes. Politicians and businessmen who engaged in such behavior often were prosecuted and sentenced to time behind bars.
But now, state governments’ eagerness to throw away revenue has instilled a widespread belief among corporations that they deserve taxpayer money. They demand the revenue before they say where they will relocate, and play one state off on another. The culture of entitlement and back-door dealing, common sense should tell anyone, breeds corruption.
Enter the Northeast Partnership and similar operations that thrive in darkness. North Carolina can expect an epidemic of similar shenanigans unless the courts step in to discourage corporate bribery. The legislative and executive branches of government so far have proven powerless to do so. Worse, they are eager participants in the problem.
Two developments in the judicial and legislative arenas, though, appear to hold some hope of arresting the onslaught of economic scams. One is a lawsuit filed in Wake County Superior Court by Carolina Journal and the North Carolina Press Association that is designed to force the Commerce Department to comply with current open-government law to divulge details of deals as soon as they are concluded. Sunshine radiating from the lawsuit should disinfect some corruption before it has a chance to fester.
Another is a pending lawsuit by the N.C. Institute for Constitutional Law that would challenge the basic legality of economic incentives. The basic health of North Carolina’s political system depends upon the outcome of these two challenges. There are also prospects for improving transparency of the process through legislation, Senate Bill 393, which is currently before the House Commerce Committee.
Richard Wagner is the editor of Carolina Journal.