State officials call for legislation after EDA audit report
CHARLESTON — Treasurer Riley Moore and Auditor J.B. McCuskey have both called for legislation after a legislative report found that the West Virginia Economic Development Authority wasted nearly $25 million on failed venture capital programs.
In a press release Wednesday, Moore said he was working with the Legislature on bills to increase oversight, transparency and accountability for funds managed by state agencies after the Legislature’s Post Audit Division found the EDA lost track of a $25 million Non-Recourse Loan Program started in 2002.
“As your new Treasurer, I am not going to sit idly by while unelected bureaucrats squander taxpayer money with impunity,” Moore said. “As the state’s chief financial officer, I have a fiduciary duty to ensure taxpayer funds are spent wisely with absolute transparency and accountability — and I will do everything within my power to make sure this never happens again.”
Moore is seeking greater authority for the Board of Treasury Investments, the agency that loaned the $25 million to the EDA for the venture capital loan program. Moore wants the board to have the ability to inspect all EDA financial and administrative records for loan and loan insurance programs that use funding from the board.
Moore also wants the EDA to submit quarterly reports to the board, the governor’s office and the Legislature. The EDA also would need to submit to regular audits by the Legislative Auditor’s Office.
McCuskey, in a Twitter post, said he would once again ask for legislation that would allow his office to create a searchable database to review development subsidy data. The West Virginia Development Achievements Transparency Act would give the public access to information on grants, tax credits, and incentives from the state to private entities.
The database would show expenditures, objectives of the programs, and whether the state met the intended objectives of the expenditures. The act also includes penalties for state agencies who fail to comply or submit false information. The auditor’s office is an executive branch elected office and different from the Legislative Auditor’s Office.
“This is an issue our office has been tackling for four years,” McCuskey said. “An audit completed 15 years after the loss does not stop the waste; or help the cause. Transparency, accountability and timeliness are the solution.”
Last year, the West Virginia Development Achievements Transparency Act was introduced by Delegate Trenton Barnhart, R-Pleasants. The bill unanimously passed the House of Delegate, but never made it out of the Senate’s Economic Development Committee.
The Legislative Auditor’s Office released a report Tuesday detailing the failure of the EDA’s Non-Recourse Loan Program. Between 2002 and 2016, the program loaned $25 million to seven venture capital firms. These companies were supposed to invest in West Virginia businesses to spur the economy and create jobs.
Nearly 19 years after the program was started, four of the seven venture capital firms went into receivership, while two companies were loaned $8 million and never invested inside the state. Legislative auditors found of the $25 million loaned by the Board of Treasury Investments to the EDA, only $674,222 was repaid to the principle, resulting in a loss of more than $24 million. Auditors also discovered incomplete records as to whether the investments resulted in any economic development or job creation and retention.
Board of Treasury Investments is managed by the state treasurer’s office. The previous state treasurer, John Perdue, alerted the Legislative Auditor’s Office about the issues with the loan fund in 2019 when the office tried to close out the loan program. Moore defeated Perdue in the November election.
“This is my pledge to West Virginia taxpayers: We are going to be vigilant stewards of your money,” Moore said. “The days of squandering your tax dollars on shady deals and reckless investments are over. We’re going to make sure these agencies operate with complete transparency and accountability to protect your money from waste, fraud and abuse.”