March 23, 2010
Action follows failure in review of MEGA application
LANSING - Governor Jennifer M. Granholm today issued an executive order and an executive directive to enhance transparency and accountability at the Michigan Economic Development Corporation (MEDC) and to address the failure that led to the recent approval by the Michigan Economic Growth Authority (MEGA) of a fraudulent application for a tax incentive. The governor's action comes on the same day the MEDC is implementing changes to its internal procedures and the MEDC executive committee began its own review of the incident and proposed responses.
"We are fighting hard for every company investment that will help us diversify our economy and create jobs for Michigan citizens, and this incident is wholly inconsistent with the work we're doing and the integrity of our process. To ensure that no such errors occur in the future, the system must be fixed, and with today's actions, it will be fixed," Granholm said today. "We owe it to the taxpayers of this state, and to the hundreds of company executives who have chosen to invest in Michigan, to ensure that we are upholding the highest standards of any state in the nation when it comes to our economic development program."
Under the governor's Executive Order 2010-3, the MEGA board will be reorganized in the following ways:
- The president of the Michigan Strategic Fund will no longer serve as a voting member of the Michigan Economic Growth Authority board of directors but will serve as an ex officio, non-voting member of the board;
- The state budget director will replace the director of the Michigan Department of Transportation as a voting member of the MEGA board;
- The state treasurer, a current member of the MEGA board, will serve as chair.
Governor Granholm also issued Executive Directive 2010-2 to establish:
- a business integrity verification program, which includes policies that require tax credit applicants to submit a written business integrity questionnaire and other documentation and submit to a civil, criminal, or credit background check if a background check is necessary to verify the business integrity of the business entity.
- new duties for the chief compliance officer within the Michigan Strategic Fund to assist in the enforcement of policies and procedures to prevent illegal, unethical, or improper conduct on the part of applicants for tax credits; and to recommend other policies and procedures to protect the interests of the state.
- specific standards of conduct as outlined by existing state law.
Legislation codifying the changes outlined in the executive order and executive directive is being drafted for approval by the Michigan Legislature.
"We are committed to upholding the highest standards in our work on behalf of Michigan citizens, and it is clear that changes are necessary to uphold their trust," said Greg Main, CEO of the MEDC. "Starting today, we are putting in place the safeguards that are outlined in the governor's directive, which will ensure that we are verifying the integrity of every applicant, every application and doing the due diligence that our work demands."
Matthew Cullen, chair of the MEDC executive committee, said, "While this appears to be an isolated incident, it demands an unprecedented level of scrutiny by the board that has been appointed to oversee the operation of the MEDC, and we intend to conduct a thorough, objective review to make sure that it never happens again."
The governor has requested a separate criminal investigation by the Michigan State Police of Richard Short, the MEGA applicant with a history of fraudulent activities.
The governor also announced that she is appointing her legal counsel Steven C. Liedel to the MEDC executive committee. Liedel succeeds the late Dennis Toffolo as a representative of public agencies on the MEDC executive committee for a term that begins today and expires April 5, 2012.
# # #
