Public officials could face increased due diligence standards
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Public officials could face increased due diligence standards

Date: March 5, 2012
By: Matthew Patane
State Capitol Bureau
Links: HB 1865

JEFFERSON CITY - Missouri representatives have continued to move with "all due speed" on legislation reforming investigation standards of economic development projects with the hope of preventing project breakdowns in the future. This week, members of a House committee in charge of investigating the failure of the Mamtek project in Moberly approved a packaged bill of proposed legislation that would place greater due diligence standards on officials investigating future economic development projects.

The bill would require key officials and creators of start-up companies to pay for and undergo criminal background checks. Rep. Jay Barnes, R-Jefferson City, said local governments deserve to know this information in order to better evaluate whether they wanted to invest in a economic development project.

In addition to the mandate for background checks of start-up companies, the bill requires:

A representative of the Missouri Economic Development Council, Bill Grace, reiterated his testimony from a hearing held last week, saying the bills would impede on the state's ability to attract new businesses.

"The general concern is that the state is sending the wrong message to businesses," Grace said. "This would slow down, unnecessarily, the process to develop economic projects."

The committee approved the bill with a 6-1 vote, with Rep. Thomas Long, R-Battlefield, the only dissenting vote. Long said he was concerned about the bill's requirement for criminal background checks and the possibility the results of these checks could become public. Long said the bill could have a deeper impact to the state then its original intention, but that a greater depth of investigation could be conducted on the House chamber floor.

"This strikes against my local control nerve," Long said.

Barnes, the committee chair, said the concerns about dissuading businesses from coming to Missouri were unfounded since companies seeking tax breaks should be expected to provide certain information.

"If the company is asking for a dime (from the state), then they are going to be asked to do certain things," Barnes said.

The packaged bill incorporates a series of proposals that Barnes introduced following the results of the House committee's report of its investigation into the Mamtek debacle. This week's hearing came a week after the House committee heard testimony over the original bills so no new witnesses testified in support of the bills, with Grace being the only dissenter present.

The packaged legislation is part of an effort by the General Assembly to create mechanisms that would keep a Mamtek-like situation from occurring again in Missouri. The China-based company had promised to build an artificial sweetener plant in the city of Moberly, bringing more than 600 jobs along with it. The project collapsed, however, after Mamtek failed to pay the city a $39 million bond payment. Moberly has since said it would default on the payment.

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