UPDATE: Audit attacks Missouri Technology Corp. for conflicts of interest

Wednesday, December 1, 2010 | 8:48 p.m. CST

JEFFERSON CITY — Missouri Auditor Susan Montee blasted a state-funded technology agency Wednesday for conflicts of interest, misuse of money and general ineffectiveness at attracting business investments to the state.

Montee released a state audit that accuses the Missouri Technology Corp. of numerous conflicts involving former staff, board members, consultants and attorneys. It said the agency paid unnecessarily high travel expenses, kept no minutes of closed-door meetings and has failed to spur substantial investment in technology-based companies.

"In recent years, there has been significant money given into the MTC to be funneled out to these projects, and it is not achieving its goals," Montee said during a press conference at the Capitol.

The MTC was created under a 1994 state law as a nonprofit entity with a board partially appointed by the governor and employees paid by the state. Its purpose is to promote economic development through technology in businesses.

Montee accused its director, Jason Hall, of making political threats against her as her staff worked on the audit and she campaigned for re-election. Montee lost to Republican Tom Schweich during the Nov. 2 election.

During the auditing process, Hall at one point highlighted that he was "a good friend" of Schweich, Montee said.

Hall did not return phone messages to his office Wednesday.

Schweich, who takes office in January, said he knows Hall from their previous work at the same law firm but doesn't consider him a close friend. He also said he didn't recall speaking to Hall about an audit.

In a written response included in the audit, the technology agency noted it recently adopted policies regarding conflicts of interest and the investment of its money. It also said most of the problems cited in the audit occurred before Hall took over in April 2009.

The agency said it "already produced many outstanding accomplishments" with its state money, including securing $20 million of capital for Missouri-based businesses through an investment by the agency of about $1 million.

The agency's former executive director, Rob Monsees, also defended its track record.

"There have been a number of companies recruited to the state that wouldn't be here but for that investment by MTC and my role," Monsees said.

He later added: "I question Susan Montee's ability to judge whether MTC was successful in helping technology companies."

The audit cites a report by an MTC board member that alleged various conflicts of interest within the organization. The report was first publicized by The Kansas City Star in March.

Montee said the agency provided her auditors only a redacted version of the report, but also said its accusations generally were true.

Montee said several board members served simultaneously on the board of a nonprofit entity that received money from the MTC and that the agency's general counsel represented both it and a consulting firm while negotiations over a potential investment were ongoing.

The audit claimed that Monsees was seeking a job with the San Diego-based consulting firm Finistere Ventures at the same time details of its management of a venture capital fund for the MTC were being negotiated.

Monsees said a review initiated by the agency cleared him of any conflict. Monsees, a Republican, said he was fired when Democratic Gov. Jay Nixon took office in January 2009, and had been rehired on a day-by-day basis. It was during that time, Monsees said, he put job feelers out to Finistere and other firms and no longer had any decision-making role at the agency.

The auditor also cited a potential conflict involving Mike Mills, a deputy director of the Department of Economic Development under former Republican Gov. Matt Blunt. Mills served as a department representative to the MTC and, after leaving the department in 2009, was hired as a consultant to Finistere to promote the venture capital fund, Montee said.

Mills said Wednesday there was no conflict because he had no role in the technology corporation's deal with Finistere, which occurred after he left state government.

The audit faults the technology agency for paying excessive travel expenses for Finistere, including a $2,000 first-class plane ticket, vehicle rental fees in Memphis, Tenn., and "extravagant group meals" that in one case averaged $79 per person.

Monsees said he did not recall those particular expenses, but added: "My general impression is that Finistere was very helpful to the state of Missouri."

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