The chairman of the Committee on Government Oversight and Accountability, Jefferson City representative Jay Barnes (R), says there are no new details revealed in the report beyond what came out in the hearing. The report recaps that information and offers six recommendations for changes that he says could prevent more similar failures.
Barnes says chief among those recommendations is that communication by the Department of Economic Development and local economic development officials must improve. “In this case, the Department of Economic Development had information from their own consultant in China that Mamtek had a similar lease-purchase agreement with a local government in China to the exact same deal they pitched to Moberly that went belly up in China, and that exact details of that information from China were never shared with people from Moberly or the third-party professionals involved.”
The other key recommendation, Barnes says, is that how due diligence is done in a municipal bond appropriation deal must be reassessed. “(The Committee was) told by professional after professional that Mamtek itself didn’t matter in the calculation. Well, we have no evidence to conclude that they’re wrong, legally, but that’s not the way it ought to be.”
With its report filed, the Committee can now take up legislation related to economic development and specifically, the Mamtek situation. Some bills have already been filed that deal with issues related to what happened with Mamtek. Barnes points to House Bill 1304 and House Joint Resolution 58 both sponsored by Committee member, Representative Chris Kelly (D-Columbia). Barnes says he is also working on legislation.
Economic development officials note that time is of the essence in some deals that have states competing with one another. Barnes says most of what is recommended in the report should not put Missouri at a disadvantage in trying to land projects. He offers the example of the financial statement Mamtek offered saying it had $7.2 million in cash or cash equivalent. Barnes says that was never verified by a third-party, and should have been. “That’s not something that takes any amount of time. It’s not something that any legitimate business looking to operate and receive tax incentives in our state should balk at.”
Barnes notes, based on the testimony the Committee heard from economic development officials, countless deals are administered just like the Mamtek project all the time. “If standard operating procedure gets the deal done most of the time, well why would we change our standard operating procedure? But, the fact that something hasn’t failed dramatically in the past isn’t necessarily indicative that the process weeds out all potential failures, as we’ve seen in this case.”
The report signals the end of the fact-finding investigation by the House Committee without the input of two key players. Mamtek CEO Bruce Cole and bond counsel Tom Cunningham both refused to testify. Asked whether he is satisfied moving forward without Cole’s testimony, Barnes says, “We wanted to get the report out. We’re running against time constraint here.” Barnes says in the scope of the Committee’s work, nothing was lost by not hearing from Cole.
AUDIO: Mike Lear interviews Jay Barnes (13:00)