State lawmakers continue digging for details of the failed project to bring a production facility for Mamtek, a sucralose manufacturer, to Moberly. The House Committee on Government Accountability heard five hours of testimony Tuesday, with more scheduled for Wednesday. Two issues were the prime targets of questioning.
First was the matter of due diligence: was it done and by whom?
The underwriting firm Morgan Keegan, hired by the City of Moberly, was represented by Dick Murray and Kevin Thompson. The pair testified that their job did not include due diligence, and they looked to the City for that.
The City of Moberly and Moberly Area Economic Development Corporation officials say they, in turn, looked to the state. Corporation President Corey Mehaffy presented lawmakers with a binder inches thick with e-mails and other documentation from which he highlighted issues he knew they wanted to know about.
Among them was an e-mail Mehaffy received from David Meyer, a Project Manager with the state Department of Economic Development, initially making Mehaffy aware of the Mamtek project. It reads:
“We still have some due diligence to do on the project, but the lead is deemed to be legitimate enough to require a response.”
Mehaffy tells the committee the Department “conducted its own due diligence, and we relied upon that fact as we do in many other projects.”
Another e-mail raised the second biggest issue of the hearing; that of the existence, or non, of a Mamtek sugar refining plant in China. Mehaffy was first shown the e-mail November 23 by Committee Chairman Jay Barnes.
In the message, Chinese trade consultant with the Missouri Department of Agriculture Edward Li is responding to a request from Economic Development officials seeking information on the China production facility. Li responds:
“We found their plant in Fujian Province, China, never started to manufacture. In 2007, their investment project was approved by Wuyishan City, Fujian. As the initial agreement, local government build the factory and all facility for Mamtek, while Mamtek rent the facility in the beginning and will finally purchase the facility. The planned investment capital is 20 million USD, which will be invested by three phases. In 2008, although most of the facility was built, Mamtek still didn’t start manufacturing. One of the reasons is the protest from local conservation department, who insisted that the project is a kind of fine chemical industry, which should not be set in this zone. In 2009, Mamtek made the deal with local government and agreed to move out (they never started) and so far there is no other news about the new location in China.”
Mehaffey says he would have liked to have seen that e-mail. “I feel like had we seen that e-mail we certainly would have done some additional due diligence regarding that to verify where that information came from, who was involved in that information; those types of things.”
He and others working on the Mamtek deal had seen other information that seemed to confirm the existence and operation of a plant in China. At the center of that is Michael Wise, a patent attorney with the law firm Perkins Coie, working for Mamtek. Wise alleged to have visited the Fujian facility on more than one occasion and even to have product made there in his possession.
Chairman Barnes sought about a month ago to have Wise testify before the Committee. “I sent him a letter. I did not get a response.”
Mehaffy also testified that Tom Smith of Capital Business Development Associates also e-mailed him with pictures that Smith said were of the China plant, and saying the equipment at Moberly would be five times as large as that in those pictures.
As to the question of who has to pay the $39 million of bonds for the failed factory, Barnes says one thing is clear. He cites a document received from the Department of Economic Document in saying, “The City of Moberly is not…legally responsible for the bond payments. That is in large, 12 point, all caps type. Beyond that, you know, that’ll be sorted out in litigation.”
The testimony marked the first time much of the information City of Moberly and Moberly Area Economic Development Corporation representatives revealed has been discussed publicly. Mehaffy quickly became emotional during his presentation, having to pause when talking about what he called positives that came from the project, including the hiring of 14 people in the Mamtek management team that moved their families to Moberly.
Mehaffy said later, “This project is about real people with real lives, and that’s what I care about…those folks whose kids play sports with my kids, who live down the street from me, that’s what I care about.”
Efforts continue to bring a company to the facility at Moberly that Mehaffy describes as about 70 percent complete. He says negotiations are ongoing, and he asked the lawmakers on the Committee to move it forward. “It’s our goal to request this Committee’s assistance to re-engage all of the organizations that at one point supported Moberly in our efforts to bring this project online, and to refocus our collective efforts to move this project forward to create jobs and the investment that are vital to the success of this great state.”
Chairman Barnes asked if the Department of Economic Development has been involved in that ongoing effort. Mehaffy’s response was, “No sir, they have not.”
Barnes said he would bring the issue up to Economic Development Director David Kerr when he testifies before the Committee on Wednesday. “I am willing as the chairman of this committee to make a statement to Director Kerr tomorrow that they need to stop what they’re doing right now and make filling that factory in Moberly their top priority.”
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AUDIO: Testimony of Moberly Area Economic Development Corporation President Corey Mehaffy – 1 hour
Documents referenced in hearing (PDF)