WEDC board meeting (copy)

Until recently, Gov. Scott Walker served as chairman of the Wisconsin Economic Development Corp. board. The agency's poor performance has raised questions about Walker's record now that he's running for president.

A new report from a liberal advocacy group asserts that Gov. Scott Walker's flagship jobs agency has given Wisconsin "four years of failure," while a spokesman for the Wisconsin Economic Development Corporation says that's nothing more than a one-sided attack.

The report from One Wisconsin Institute, the research arm of One Wisconsin Now, shows close ties between donors to Walker's campaigns and recipients of awards from WEDC — the quasi-public agency Walker launched to replace the state Department of Commerce shortly after he took office in 2011. 

"After four years, the verdict on Walker’s flagship jobs agency is in," said OWN executive director Scot Ross. "Beyond the devastating audits and a revolving door of top personnel, the agency has been a complete failure on meeting promised job creation goals. Its only success appears to be in directing awards to Scott Walker’s campaign donors."

WEDC was one of Walker's top priorities upon taking office, touted as a way to spur job growth in Wisconsin. But the agency has been mired in problems including accounting failures, high turnover and several bad loans, and Walker came up short on his pledge to create 250,000 private-sector jobs during his first term.

In February 2011, OWN warned against WEDC's creation, arguing that Walker was creating "an unaccountable ... goody bag for his most favored campaign contributors."

The organization says now that its prediction has come true.

Since 2009, when Walker first ran for governor, his campaign committee has received more than $2.1 million from donors with ties to WEDC award recipients, according to the report. And of the $1.15 billion awarded by WEDC, more than $700 million — or more than 60 percent — has been given to Walker donors.

Those figures are similar to another OWN report released about a year ago, which showed that nearly 60 percent of some $975 million in WEDC awards had gone to firms that had contributed to Walker or the Republican Governors Association.

WEDC spokesman Mark Maley said OWN's new report is "one-sided," coming from a group with a clear bias. He called the report "no more than a recycled version of a similar slanted report that the group issued in 2014."

"The conclusions were wrong then, and they’re wrong now," Maley said. "There is no way to make this any clearer: Political affiliation and campaign contributions absolutely play no role in determining which companies receive awards from WEDC."

Ross shot back by pointing to a finance report filed on Friday by the super PAC supporting Walker in his presidential campaign. According to FEC filings, Clasen Quality Coatings owner Jay Jensen donated $100,000 to Unintimidated PAC on April 27.

Jensen's company was previously awarded $500,000 from WEDC.

WEDC awards are given to companies that meet a strict set of criteria for specific programs within the agency that have been approved by its bipartisan board of directors, Maley said.

"In granting awards, WEDC has a thorough and transparent process that includes a review of the application by our underwriters and other staff experts, and presenting that information to a leadership committee for review and approval," Maley said. "Depending on the size and nature of the award, applications are sometimes presented to the bipartisan Board of Directors for approval."

Ross pushed back on that statement, arguing that for WEDC to claim its "review of grants and awards suggests they haven't read the multiple independent audits showing otherwise."

"Team Walker's claim (that) campaign contributions don't influence awards is provably false with three letters: B-C-I," Ross said.

Ross was referring to an unsecured $500,000 loan to the since-dissolved Building Committee Inc., which was not repaid — even as the company was collapsing.

The loan was given after BCI owner William Minahan donated the maximum $10,000 to Walker's campaign.

OWN cited several more examples of relationships between Walker's campaign and WEDC award recipients it says present the appearance of an ethical conflict.

They include Jon Hammes, who was recently announced as a co-chairman of Walker's presidential fundraising campaign. WEDC approved nearly $56 million in low-interest federal loans for Hammes' Edgewater Hotel in Madison. Hammes is also an investor in the Milwaukee Bucks. The team is set to receive $250 million in taxpayer funds to partially fund a new arena.

OWN also pointed to John Menard, Jr., CEO of Menard Inc., who reportedly contributed $1.5 million to the Wisconsin Club for Growth, a group that spent heavily on defending Walker in the 2012 recall election. Menard's company was awarded up to $1.8 million in WEDC tax credits.

Ross said "the lack of protections for taxpayer dollars combined with WEDC’s record of incompetence and corruption raise serious questions about whether political calculation and influence outweigh merit in Wisconsin."

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A Walker spokeswoman joined WEDC in strongly disputing OWN's suggestions of cronyism.

"As we have stated MANY times, political contributions are in no way tied to tax incentives provided by the Wisconsin Economic Development Corporation," Walker spokeswoman Laurel Patrick said in an email. "Decisions related to investments or awards are contractually required to meet certain objectives, which typically include specific job creation, job retention or capital investment obligations, and are made according to metrics approved by WEDC’s bipartisan Board of Directors."

Patrick pointed to the announcement earlier this year that WEDC will provide $9 million in tax credits to Exact Sciences Corp. The company is headed by Kevin Conroy, a Democrat whose wife, Sheila, served as campaign treasurer for Walker's 2014 opponent Mary Burke.

"The size of the award required a vote from the bipartisan WEDC Board of Directors and was unanimously approved. Gov. Walker voted to approve this contract when he was Chair of the Board," Patrick said. "So as you can see, these contracts truly are performance-based and are tied to job creation, retention, and capital investment in Wisconsin. WEDC’s focus is on helping to grow our economy and create jobs."

Maley acknowledged that WEDC has had some "growing pains" in its early years, but noted that the agency took steps after a May 2013 audit to address concerns. 

"WEDC implemented significant changes and more than 100 policies to rebuild accountability, transparency, and public trust in its operations," Maley said.

Those changes include hiring a vice president of credit and risk to improve financial management, reorganizing compliance functions and adding staff to focus on compliance, implementing employee ethics and purchasing policies, strengthening reporting and collections in the financial award process, forming new board committees with public members and replacing an old financial management software system.

Maley said those efforts led to WEDC's loan delinquency rate dropping from 2.7 percent in 2013 to 0.2 percent in 2014, and its uncollectable loan balance declining from $5.5 million in 2013 to $1.3 million in 2014. The percentage of late performance reports fell from 55 percent to 5.4 percent in two years, Maley said.

Walker was replaced as WEDC chairman by Dan Ariens, president and CEO of Ariens Company, mid-July.

Maley said Ariens has made it clear that "the board and staff will work together to build upon the changes we’ve already instituted to be even more responsive to the business community while still meeting the highest standards of public accountability."

He noted that the WEDC board voted unanimously to have the Center for Regional Economic Competitiveness review the agency's operations and procedures, and present recommendations to the board.

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