Felony charges against the business executive who fooled the state of Missouri and the city of Moberly in the disastrous Mamtek U.S. deal are a welcome and overdue show of accountability.
The economic development debacle that left Moberly in default on a loan has been marked by a shocking lack of due diligence by state and local officials. And there’s nothing in place to prevent a recurrence.
In 2010, executive Bruce Cole stirred up a bidding war among Missouri cities with promises of a factory that would create 600 jobs to manufacture an artificial sweetener. Moberly, a city of 14,000 about 30 miles north of Columbia, jumped at the chance.
The state pledged $17 million in incentives. Moberly had to back $39 million in bonds.
Missouri’s Economic Development Department was concerned about its inability to verify some of Cole’s information, including the existence of a sweetener factory in China. But the state agency watched as Moberly signed off on the deal.
Mamtek began work on the factory, but missed its first bond payment in August 2011 and halted construction a month later.
This week, law enforcement officials announced that Cole, who lives in California, was charged with one count of stealing and four counts of securities fraud. Officials allege Cole diverted bond revenues for his personal use as well as to a dummy company, and that the Chinese factory was a lie.
Gov. Jay Nixon has repeatedly said the state paid out none of its promised incentives to Mamtek, and so no taxpayer money was lost.
But the pledged state enticements helped Moberly seal its deal. State economic development officials signed off on issuing bonds.
A legislative committee proposed some good safeguards last session to help prevent future fiascos, but couldn’t get them signed into law. Nixon needs to acknowledge responsibility for Mamtek, and the legislature should push its sound reforms next session.
Copyright The Kansas City Star. Reprinted with permission. Questions? Contact Opinion editor Elizabeth Conner.