Can WEDC Oversee Foxconn Deal?
State jobs agency has failed for seven years. Can it protect taxpayers and watchdog Foxconn?
![Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo by Jeramey Jannene.](https://urbanmilwaukee.com/wp-content/uploads/2017/07/048.jpg)
Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo by Jeramey Jannene.
“Can you find out the nuclear flaw in the Foxconn deal?” a woman asked me. She was referring to words leaked out of secret negotiations between the state and a Taiwanese billionaire.
Lawmakers, who recently voted in favor of the Foxconn deal, did so without seeing any contract. They put faith in a state operation known as Wisconsin Economic Development (WEDC).
Despite being paid for entirely with public funds, the $3 billion contract with Foxconn is not public. Nor do lawmakers who approved the plan know what problems exist in the draft contract. As the saying goes, the devil is in the details. Lawmakers and the public cannot see the details and are asked to trust WEDC negotiating the deal and later overseeing the Foxconn’s compliance.
For years, the nonpartisan Legislative Audit Bureau (LAB) reported concerns about WEDC’s administration and oversight of economic development programs.
In 2013, nearly two years after WEDC was created, auditors could not report on state dollars spent by WEDC because their financial and accounting systems were not adequate. Members of the Joint Legislative Audit Committee learned spending was tracked largely by credit card statements. To remedy this serious problem, legislators passed a new law that included an independent audit of all WEDC financial statements. Financial statement preparation should be basic for any state agency.
At an October 2013 Audit Committee public hearing, WEDC leaders promised they had complied with all the LAB recommendations. However, a year later, auditors reported many problems related to basic operations and the tracking of money. For example, auditors found some spending not recorded in the accounting system and found past due loans that were missing.
By 2015, auditors discovered a larger than necessary cash balance at WEDC. By the end of June 2015, WEDC had accumulated in excess of $85 million as reported in a 2017 audit.
Losing loans and not properly accounting for internal expenses are problems associated with the operation of a troubled agency. But the problems WEDC could encounter in overseeing a large project like Foxconn are related to the independent evaluation of the company’s promises compared to their actual records.
Four years after WEDC was established auditors finally could report that WEDC made ANY effort to obtain information about jobs were actually created. However, further review by auditors showed the attempts made by WEDC only compared a company’s own promises to report and the reports a company itself filed. WEDC made no effort to verify the information submitted.
In its most recent audit, the LAB reported WEDC paid an outside consultant $24,900 to do the work they were required to do since their existence in 2011. Auditors found concerns including that the contractor’s work was limited and did not include grants.
If Wisconsin taxpayers cannot be confident after seven years and the investment of hundreds of millions of state dollars that promised jobs were created, how can we possibly be confident WEDC can negotiate and oversee a $3 billion contract?
No local government would ever agree to spend money without seeing a contract. No banker would agree to loan funds without a contract. No businessperson would ever commit funds without a contract.
Lawmakers bought a pig in a poke – an unknown deal.
WEDC has not earned lawmakers trust, nor that of the public. Lawmakers can and should do more to oversee this project.
State Sen. Kathleen Vinehout, D-Alma, is a member of the Wisconsin state Senate.
More about the Foxconn Facility
- Biden Hails ‘Transformative’ Microsoft Project in Mount Pleasant - Sophie Bolich - May 8th, 2024
- Microsoft’s Wisconsin Data Center Now A $3.3 Billion Project - Jeramey Jannene - May 8th, 2024
- We Energies Will Spend $335 Million on Microsoft Development - Evan Casey - Mar 6th, 2024
- Foxconn Will Get State Subsidy For 2022 - Joe Schulz - Dec 11th, 2023
- Mount Pleasant Approves Microsoft Deal on Foxconn Land - Evan Casey - Nov 28th, 2023
- Mount Pleasant Deal With Microsoft Has No Public Subsidies - Evan Casey - Nov 14th, 2023
- Microsoft, State Announce Massive Data Center Expansion, Land Purchase - Joe Schulz - Nov 11th, 2023
- Gov. Evers Announces Microsoft Makes Major Investment in Wisconsin - Gov. Tony Evers - Nov 10th, 2023
- State Can’t Regulate We Energies $100 Million Project for Microsoft - Joe Schulz - Sep 20th, 2023
- Foxconn Selling Green Bay, Eau Claire ‘Centers’ - Joe Schulz - Aug 16th, 2023
Read more about Foxconn Facility here
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All fine to take your jabs at WEDC, no complaints. But aren’t there details that are even hidden from WEDC, too?
Rich- No. WEDC execs are negotiating in secret with Foxconn. It’s the WEDC Board (a separate voting entity) that is being kept in the dark on it, up until the,moment they have to vote to approve it.
And that’s why the Fox-con has an even bigger red flag associated with it today.
WEDC is a model scam operation designed by ALEC as written by corporate attorneys, and implemented as law by Republicans, to reward their political benefactors. There are versions in operation in other states with the same scam formula.
Taxpayer funds are used without any accountability, measurements, and auditing proof. Pure government and corporate cooperative corruption. Follow the money.