[G]ov. Phil Scott has finalized the deal to sell his share of Dubois Construction.
Scott sold his 50 percent stake in the company for $2.5 million plus 3 percent interest, which the company will pay him over the next 15 years. The deal was finalized the last week of December and fulfills a pledge Scott made on the campaign trail for governor. Dubois has done business with the state during Scott’s time as lieutenant governor and state senator.
Scott told reporters on Friday that the company could not take out a large loan to pay him outright. Though the company is worth about $5 million, most of that value is tied up in hard assets including equipment, buildings and land, he said.
For Dubois Construction to write him a check up front for the sale “would have required liquidation of the business,” he said.
Going to a bank for a loan could have damaged the company’s bonding capacity, which is critical to the functioning of the business, Scott said.
Bruce Lisman, a 2016 Republican primary opponent, said Scott needed to sell the business outright to avoid a conflict of interest. The leader of one activist group said Scott’s divestment was inadequate.
Scott said he feels the issue may be under heightened scrutiny in part because of the discussion at a national level about Pres.-elect Donald Trump’s relationship to his business.
“He might want to take a look at what I’m trying to do,” Scott said.
Scott worked with attorney John Eggleston to settle the deal. Eggleston assisted in brokering the deal through which Scott purchased the company three decades ago, according to the governor.
He is renting an off-site two-car garage from Dubois Construction for $250 per month to store motorcycles and a couple of vehicles.
“I have stuff that I need to put somewhere,” Scott said.
Asked if he has a financial interest in Dubois Construction, Scott acknowledged “that Dubois Construction owes me money.” He believes the arrangement is in compliance with the state’s executive code of ethics.
If the company were to fail before the full amount is paid back, “I would be there trying to get my money,” Scott acknowledged.
Scott, however, minimized his attachment to the business.
“I’m not going to live or die over getting paid. Money isn’t everything to me,” Scott said. “I came into that business with nothing, if I left that business with nothing … I could live with the consequences.”
Scott’s mother married Bob Dubois when he was teenager, after his father passed away. During high school and college, he worked for the business before eventually he became co-owner.
Scott said he is “committed to ensuring the transparency” of the sale of the business and into the future.
He has directed state agencies to strictly adhere to a bulletin that spells out the protocol for the bidding process for state contracts, he said. He also asked the Department of Financial Management to explore publishing more frequent updates on a portal where contracts are published annually.
The new governor has faith in the integrity of the bidding process to ensure that any contracts awarded to Dubois Construction in the future are decided fairly. The process for contracts is “rigorous,” he said.
“It’s a transparent process. Anyone who has been through the bid process understands that,” Scott said.
Ben Kinsley of Campaign for Vermont, an advocacy group founded by Lisman, said the financing arrangement for the sale of the governor’s stake in the company was acceptable.
“It’s not an ideal situation, but there is precedent for it,” Kinsley said.
Kinsley said scrutiny of the company is likely to continue going forward.
“Many people will be looking very closely at, you know, the governor’s business and how it interacts with the state going forward just to make sure there’s a bright line there,” Kinsley said.
Paul Burns, director of the Vermont Public Interest Research Group, said the arrangement does not fully divest the governor from the company.
“It seems as though Gov. Scott will have an ongoing interest in the financial success of his former business,” Burns said.
Burns said Scott continues to have a financial interest in Dubois Construction because the business must be successful in order to repay him back.
To fully avoid a conflict, Burns said, the company should obtain a loan from a bank in order to pay Scott the full amount, then pay the bank back over time.
“It doesn’t need to be a conflict of interest on the level of what we’re seeing from Trump to still be a conflict,” Burns said.
Scott has said Dubois needs bonding capacity and consequently would be unable to obtain a bank loan.
In fiscal year 2016, Dubois contracted with the state for $55,191 worth of business.
