JEFFERSON CITY, Mo. (KMOX) - Managers of economic development projects could soon be held to stricter due diligence measures if Missouri’s General Assembly takes the suggestions of a House committee in charge of looking into the downfall of the Mamtek Moberly project.
The advice from the committee includes new laws mandating increased due diligence from state officials and a more exhaustive vetting process of companies seeking state incentives for economic development projects. Some of this proposed legislation would require the Department of Economic Development to produce copies of “all information it has about any company seeking both state and local economic development incentives” with all local governments of counties competing for the business. A similar law proposed by the report would mandate local officials to report any negative information they receive about a company to the state.
The report makes a point of stating the panel’s finding that the DED did not do its due diligence while investigating Mamtek, despite earlier testimony from the DED saying otherwise. The report also states that the entire project, and the repercussions of its failure, may have been stopped if the DED had shared an email from a consultant in China, which questioned the production capabilities of Mamtek in China.
The report also suggests that the speed at which the project was approved and Moberly’s reliance on third-party officials for information about Mamtek may have led to its failure. As a remedy for this conclusion, the report recommends the General Assembly look into legislation that would require either a delay before the issuance of municipal bonds or the holding of an election before a city issues bonds to a company.
The suggestions were put forth by the House Government Oversight Committee, whose chairman, Rep. Jay Barnes, R-Jefferson City, released a draft report Monday of the House investigation into the failed artificial sweetener plant. The report’s recommendations serve the purpose of proposing ways of stopping economic development projects from failing in the future.
Both of Missouri’s legislative chambers, along with the Securities and Exchange Commission and the state Attorney General, have been investigating the domestic branch of the China-based company since its financial collapse last fall. The investigation was prompted after Mamtek U.S. Inc., failed to make a $39 million bond payment to the city of Moberly. Mamtek was supposed to make the payment as part of a project to develop a sucralose plant, which Gov. Jay Nixon, a Democrat, said would create over 600 jobs.
Sen. Jim Lembke, R-St. Louis County, who is leading the Senate’s investigation of Mamtek, said he plans to release his own draft report to the Senate committee later this week.
In addition, the House report also suggests that while testimony from third-parties may be beneficial, in Moberly’s case, it was neither sufficient nor credible. As a solution to this lack of due diligence from third-party investigators, the panel suggested the state legislature look into codifying the duties of third-parties while investigating economic development projects or possibly requiring insurance for municipal bond projects.
The committee also suggested that DED make Moberly a “top priority” since the department failed to tell the city of all of its concerns relating to the company’s operations in China. This would require state lawmakers to look at legislation that would provide a new business with incentives for taking over Moberly’s plant, or any other sucralose factory that failed due to a bond issue.
KMOX © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.