Editor’s note: This commentary is by Tom Evslin, an entrepreneur, author and former Douglas administration official. This post first appeared on his blog, Fractals of Change.
[I]f we don’t know what went wrong within state government, how do we know it won’t happen again?
The EB-5 program promises U.S. green cards to foreign investors who put $500,000 to work to create private sector jobs. In Vermont the state Agency of Commerce and Community Development was responsible for both promoting and administering the EB-5 program. On the state’s watch, hundreds of millions of dollars were apparently diverted by the promoters of various projects. Then-Gov. Peter Shumlin assured investors that the state was “auditing” these projects. Vermont’s clean brand was a key part of the sales pitch to investors.
It is by far the largest scandal to surface in the EB-5 program nationwide. The investors may lose both their money and the chance of a green card, since diverted funds didn’t create jobs. Jay Peak, home to several of the projects, is in receivership. Some Vermont contractors, who have had to wait years for payment, have gone out of business. There’s an empty hole in the ground in downtown Newport, dug in anticipation of a project that was supposed to bring biotech manufacturing to the Northeast Kingdom but which was, according to the feds, almost a complete fraud.
How could this have happened on the state’s watch? The Legislature has not held a single hearing to find out. It will take a special prosecutor to determine if state employees were guilty of any wrongdoing. Gov. Phil Scott is still considering whether and when to make such an appointment.
But if all state employees are innocent, something is terribly broken inside state government. The federal government wants to immediately remove the state’s oversight. Well it should, since we still haven’t discovered how the oversight was so incredibly deficient. The investors, the contractors and the state’s brand have been deeply damaged. But the Legislature seems incredibly uncurious about how all this could have happened.
Did the conflict between the commerce agency’s promotional and supervisory roles make this inevitable? If so, does commerce have other such conflicts? What about other agencies? Does the agriculture agency both promote farming and administer various farm programs? Are there conflicts like this in the vast reach of the Agency of Human Services? How do we know another huge scandal isn’t brewing? Does the attorney general’s office have an impossibly conflicted role in both defending state government and state employees and enforcing the state’s laws?
Do we need to reorganize parts of state government? Do we need some new laws? These are questions which are best answered through legislative hearings. These hearings should not be a witch hunt. They certainly shouldn’t be partisan. But, before further damage is done by and to the state, these hearings must happen.
