WEDC heads say problems serious but fixable

MADISON, Wis. (AP) — Serious but fixable problems have been uncovered in Wisconsin's 17-month-old quasi-public economic development agency that failed to carefully track $56 million in loans to businesses, leaders of the agency said in a Friday memo.

The memo to Wisconsin Economic Development Corp. board members was a status update on the agency's efforts to address problems that led to not systematically tracking the loans. Borrowers have fallen behind on payments on loans now worth $12.1 million, the agency said Friday.

While no evidence of any misconduct has been uncovered, interim WEDC Secretary Reed Hall and deputy secretary Ryan Murray said they did find isolated problems related to internal documentation and reporting processes.

"While serious, these problems are fixable and should not discredit the many successes WEDC has achieved," Hall and Murray said in the memo.

Murray told the WEDC board in October that when the agency was created last year, no one was put in charge of keeping track of the loans that had been issued by its predecessor agency, the Commerce Department.

Murray said in an interview that there were a number of what he called "disjointed" efforts to address the tracking of the loans, but "there seemed to be a lack of will and leadership to push the issue."

The initial head of the agency, former Green Bay Mayor Paul Jadin, resigned at the end of October. Hall, the former executive director of the Marshfield Clinic, has agreed to serve as interim chief executive officer until a permanent replacement is found.

Jadin led the transition from the old Department of Commerce to WEDC, which was created in 2011 by Gov. Scott Walker and the Republican-controlled Legislature to help drive job creation in Wisconsin. Creating the new agency was one of Walker's top priorities when he took office with a campaign promise to create 250,000 private sector jobs in four years.

It was in the agency's "single-minded focus to drive job creation through new initiatives" that some "missteps" were made, Friday's memo said.

One problem, Hall said in an interview, was that the number of employees dropped from 300 in the old Department of Commerce to just 50 at WEDC. There was not enough attention paid to detail, he said.

Steps being taken to address the problems, the memo said, include bringing on the new leadership team of Hall and Murray, who worked as Walker's deputy chief of staff before being moved to WEDC in the summer.

Outside reviews of WEDC's operations are under way by Financial Institution Products Corp. and accounting firm Schenck SC. Both are expected to report their findings at the board's Dec. 18 meeting.

The nonpartisan Legislative Audit Bureau also is in the middle of an audit.

Hall expressed confidence that problems within the agency were being well documented and corrected.

"We're still close enough to the infancy of the organization that we can still go back and do things right," he said.

The memo provides a detailed breakdown of the $56 million in loans that were not tracked. Of that amount, about $2.7 million are past due, $2.4 million have been written off and $2.6 million have been forgiven, as of June 30. The value of the loans as of Nov. 2 was $12.1 million, WEDC said.

The unaccounted for loans were just one of several problems for WEDC.

Federal officials recently raised concerns that for eight months WEDC spent nearly $10 million without legal authority. This summer the state had to suspend and then restart bidding on a state contract after WEDC offered one bidder, Skyward of Stevens Point, tax credits if it won the contract.

Copyright 2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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According to the 2010 U.S. Census, Wisconsin’s population totaled 5,686,986, a 6.0% increase over the 2000 U.S. Census count of 5,363,715. (Source: Wisconsin Blue Book)
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