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Integrity Florida calls for Investigation of Enterprise Florida

Dan Krassner, Co-Founder and Executive Director Integrity Florida, and Ben Wilcox, Research Director Integrity Florida, in an email state, “The lavish travel and wasteful government purchasing practices of Enterprise Florida, a taxpayer supported entity serving as the privatized commerce department for the State of Florida, was detailed in an investigative report by Michael Buczyner, WPEC/CBS 12 titled ‘State-run agency accused of abusing taxpayers dollars‘ on February 25.  The Department of Economic Opportunity (DEO) is responsible for the state’s contract with Enterprise Florida, but it has clearly turned a blind eye to this waste and abuse of the taxpayers’ money.”

“Enterprise Florida travel guidelines do not comply with official state travel restrictions, even though the entity is using taxpayer funds allocated by the state legislature.  According to an internal audit prepared on March 15, 2012 by McGladrey, only three Enterprise Florida executives, Secretary of Commerce Gray Swoope, Chief Operating Officer Griff Salmon and Chief Marketing Officer Melissa Medley, all former employees of the Mississippi Development Authority, gained ‘unlimited signing authority’ on February 7, 2012, to execute contracts and make significant purchases of non-economic development goods and services,” note Krassner and Wilcox.

Since the new authority was granted to these top three executives at Enterprise Florida, here is a sampling of the organization’s questionable expenses:

  • Nearly $22,000 spent on New York Yankee Luxury Suites and related purchases.
  • More than $13,000 spent at the San Diego Zoo.
  • $12,000 spent on Texas Rangers baseball.
  • More than $7,000 spent at Cowboys Stadium.
  • More than $4,000 spent on Atlanta Braves baseball.
  • More than $4,000 spent on limousine services.
  • Nearly $3,300 spent at Truluck’s Seafood Steak & Crab House in Austin, Texas.
  • More than $2,500 spent at the 21 Club.
  • More than $2,000 spent at 4Rivers Smokehouse.
  • More than $1,300 spent on a charter fishing boat.
  • Roughly another $30,000 per month spent on American Express credit cards for unknown expenditures.
  • Thousands more on airfare, luxury resorts and hotels, expensive meals and limousine services.

The people of Florida deserve accountability and transparency within every aspect of our government.  Given the appearance of impropriety, an inspector general report is needed to determine whether the taxpayer resources that support Enterprise Florida are properly protected and whether corrective action is needed.  A company this large, supported by hard-working Florida families, must be held to the highest ethical standards.

Additional Resources:

Integrity Florida letter to Governor Rick Scott “Eliminate government waste at Enterprise Florida, investigation needed” (read more)

“State-run agency accused of abusing taxpayer dollars” Story by Michael Buczyner / CBS 12 NEWS (read more) (watch video)

Enterprise Florida Internal Audit by McGladrey – March 15, 2012 (read more)

Enterprise Florida, Inc. Vendor Payments – January 1, 2012 to August 28, 2013 (read more)

Enterprise Florida receives more than 97% of its funding from taxpayers (read more on page 24) (watch video starting at 1:00:20 about an hour into the video)

  • $57.4 million total 2012-13 budget for Enterprise Florida
  • $56 million (97.6%) in government/public/taxpayer-funded sources
  • $1.4 million (2.4%) from the private sector

Bipartisan efforts to hold Enterprise Florida accountable with bills filed for the 2014 legislative session:

  • Applies state ethics code to Enterprise Florida staff – CS/SB 846: Governmental Ethics GENERAL BILL by Senate Ethics and Elections Commission; Senator Jack Latvala (read more)
  • Strengthening Enterprise Florida disclosure practices and fiscal accountability SB 1270: Economic Incentive Programs GENERAL BILL by Senator Eleanor Sobel (read more)
  • Strengthening Enterprise Florida disclosure practices and fiscal accountability HB 1103: Economic Incentive Programs GENERAL BILL by Representative Jose Javier Rodriguez (read more)

CEO of Enterprise Florida gets hefty pay increase at the expense of taxpayers

Gray Swope, President and CEO of Enterprise Florida, Inc.

Enterprise Florida Inc.’s mission is to “[D]iversify Florida’s economy and create better-paying jobs for its citizens by supporting, attracting and helping to create globally competitive businesses in innovative, high-growth industries.”

According to Integrity Florida, The Tea Party Network, Americans for Prosperity – Florida and Progress Florida, the biggest better-paying job created for the next two years is that of Commerce Secretary and the President and CEO of Enterprise Florida, Inc. Gray Swope. Swope will now receive a base salary of $275,000 with a tier two incentive of $100,000. Additionally, Swope was given a two year contract with a severance (golden parachute) of  $137,500 if he is fired without cause by the Board of Directors. So who is on the board? Powerful business interests, Governor Scott, CFO Jeff Atwater, AG Pam Bondi, Secretary of State Ken Detzner and state Senator Nancy Detert.

Among the powerful business executives is Alex Glenn representing Duke Energy. WDW – FL reported that the Florida Public Service Commission recently voted 4 to 1 in favor of a settlement agreement that would make Duke Energy’s Florida customers pay $3.2 billion for the the broken Crystal River and the proposed-then-canceled Levy County nuclear power plants.

In a joint statement from Integrity Florida, The Tea Party Network, Americans for Prosperity – Florida and Progress Florida regarding the new Enterprise Florida contract for Commerce Secretary Gray Swoope (see page 17):

The culture of cronyism at Enterprise Florida where corporations buy their seats at the table and get taxpayer-funded deals in return is abhorred across the political spectrum. The pay raise is the board’s way to thank the commerce secretary for picking their companies for so many vendor contracts and subsidy deals. It is fiscally irresponsible for any state official to get a two-year contract and golden parachute near the end of a governor’s term.

Why did the board decide now was the right time for an exorbitant pay increase with more than 600,000 Floridians still looking for jobs? Most Florida employers who are creating private sector jobs are doing so without subsidies from taxpayers. Florida needs to work to build a business environment where every employer matters, not just the connected.

It is more interesting that Florida is considering legislation to create “Benefit Corporations”. Nineteen states and the District of Columbia have passed Benefit Corporation legislation. There is a move to pass Benefit Corporation legislation in Florida.

According to the BenefitCorp.net website, “Certified B Corporations are leading a global movement to redefine success in business…Business, the most powerful man-made force on the planet, must create value for society, not just shareholders…Over 600 businesses have already joined our community, encouraging all companies to compete not just to be the best in the world, but to be the best for the world. As a result of our collective success, individuals and communities will enjoy greater economic opportunity, society will address its most challenging environmental problems, and more people will find fulfillment by bringing their whole selves to work.”

It may be that success may be defined as a seat at the government table in Florida?

 

IG Report: Enterprise Florida’s corporate welfare process a mess

Governor Rick Scott today released the Florida Chief Inspector General’s report on Digital Domain. Digital Domain received $20 million in taxpayer funding to “create jobs” in the state. According to the Executive Summary:

The process designed to award economic development incentive funding under the Quick Action Closing Fund (QACF) statute did not result in a recommendation by Enterprise Florida, Inc. (EFI) to the Office of Tourism, Trade, and Economic Development (OTTED). Concurrent to that statutory process, Digital Domain sought alternative means to obtain funding. In 2009, the funds for QACF that were unexpended in Fiscal Year (FY) 2008-2009, were reverted by the Legislature, appropriated within the same fiscal year to OTTIED and were awarded to recipients including Digital Domain, without the requirement to follow the statutory process for awarding QACF awards.

Although a statutorily prescribed process in place for determining Digital Domain’s eligibility for a QACF award did not result in a recommendation to fund Digital Domain an award of $20 million to Digital Domain still occurred. [My emphasis]

“There needs to be more oversight and accountability of the public’s money,” said Dan Krassner, executive director of the independent government watchdog group Integrity Florida.

Krassner states, “The report makes it clear that Enterprise Florida offered Digital Domain more than $6 million from the closing fund. Unfortunately, Enterprise Florida still appears to be utilizing an insufficient vetting process. Enterprise Florida made several incentive deals with companies just in the last year that have gone bankrupt, including one headed by a convicted cocaine trafficker.”

Companies should not be allowed to circumvent the process but they continue to do so.

“Gov. Scott guaranteed 1,000 new jobs from Northrop Grumman in his State of the State speech. After the speech, Enterprise Florida sat down with the company to negotiate how much money the company wants. How could taxpayers possibly get a good deal with that flawed process? Integrity Florida is encouraged to see bipartisan efforts by lawmakers to increase accountability and transparency of incentive deals,” notes Krassner.

The IG report states, “Testimony supported that although improvements have been made to statutes and processes since 2009, an award similar to the one to Digital Domain could happen again today if the Legislature appropriates funds and gives the Executive Branch the discretion to expend those funds.”  [My emphasis]

The Chief Inspector General made the following recommendations:

Therefore, We recommend that the DEO conduct a formal evaluation of the current statutory provisions to ensure the incentive authority, waiver authority and time frames for evaluation and decision making adequately protect the state’s interests and determine if recommendations for enhancements should be made to the Legislature.

We also recommend that DEO and EFI conduct a review of the economic development incentive processes so that recommendations for improvement may be considered such as documentation and codification of the complete decision making process.

Finally we recommend that DEO and EFI define and codify the process to be followed when DEO’s Division of Strategic Business Development and EFI staff disagree on whether to fund a project. At a minimum, this process should include full disclosure in writing to ensure transparency of the rationale for the ñnal decision.

Governor Scott issued the following statement:

“This Inspector General report shows two things – first, our current economic project vetting process is in place for a reason, and second, that process was clearly circumvented by the previous administration for the Digital Domain deal. We must ensure Florida has the tools needed to compete for economic investment, but we must also ensure that competitive process includes protocols to safeguard taxpayer dollars by focusing on a return on investment.”