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Preliminary EDC audit shows 'no evidence of wrongdoing'
By Derek Hodges
"No evidence of wrongdoing by any county employee" is the preliminary conclusion of an audit into the county's economic development office and the Economic Development Commission, said auditor Mitch Crisp of Dixon Hughes PLLC.
After about an hour of meeting in closed session Jan. 19, Commissioners' Chairman Stacy Buchanan announced that he was "happy to report that no action was taken concerning any county employee in closed session."
The meeting was called so commissioners could review the audit they requested Jan. 12 when dismissing EDC Chairman Tom McClure from all county appointments.
"There is no evidence that there was any wrongdoing by any county employee," the auditor said.
Tamera Crisp, the county's economic development coordinator, who had been on administrative leave pending results of the audit, is now back at work and has been cleared of suspicion, Buchanan said.
Tamera Crisp is no relation to auditor Mitch Crisp.
Tamera Crisp, who maintained she had not been a part of any wrongdoing, was suspended "primarily for her protection," Jackson County Manager Ken Westmoreland told The Herald last week.
Mitch Crisp said the auditors came to their conclusion despite the fact that there was "plenty of opportunity for wrongdoing" by those in the economic development office and on the EDC.
"Supervision of the EDC has been pretty loose," Crisp said. "It's been less than what I would call desirable."
Crisp said the auditors found reasons for concern about the operation, organization and supervision of the EDC.
Specifically, auditors focused on several of the EDC's operations, particularly on the non-profit Jackson Development Corp. McClure is chairman of the EDC as well as of the development corporation. (Commissioners' Jan. 12 action did not remove McClure from the EDC because he was appointed to that body by Western Carolina University.)
Crisp said he reviewed EDC records from the last five to six years. He said Jackson Development was formed to provide a non-profit, tax-free way of assisting new businesses in a way that the county government can't.
Jackson Development was formed to "facilitate industrial development," and its work is "interwoven with the work of the EDC," he said.
Despite that connectedness, reviewing the records of Jackson Development could be near impossible, Crisp said.
"They are a private entity governed by a board of appointees," he said. "As such, they don't have to release their records."
As for the EDC, Crisp reported that more than $1.3 million of county money has gone into the organization since its beginning.
Crisp described six loans made by the EDC that are still outstanding. They are:
1997 – Clearwood LLC, which is paying at a reduced rate.
1999 – Southern Lumber Co., whose payments are current.
2001 – Country Collections, whose loan is in default. None of the principals for this loan will claim it.
2002-03 – Fraternal Composites, which has an "inconsistent payment record," Crisp said.
2002 – QC Apparel, whose loan has "experienced several periods of non-payment," Crisp said. Additionally, the company fails to employ the number of people the original loan terms stipulated it would.
2004 – Metrostat Technologies, whose payments are current.
Additionally, a loan was made from the EDC to Jackson Development in 2002 in the amount of $768,000. The loan was to be used to purchase the Tuckaseigee Mills property and to operate the development corporation.
Crisp said information on the loans and other financial records is "pretty sketchy at this point." He told commissioners he would issue a full report in coming weeks, hopefully in time for the next board meeting.
It is not uncommon for loans made by government bodies to companies who could not find financing otherwise to need some renegotiating, Crisp said.
"This type of loan is made at a higher-than-normal risk," Crisp said. "You do it if you really, really want that business to succeed."
When asked by Buchanan what he would recommend the county do next, Crisp said he would suggest waiting until the full report is completed.
"Right now I'd say you should just step back and look at the way the various groups are organized and the way they function," Crisp said.
After the meeting Buchanan defended the commissioners' action, saying that something needed to be done.
"When things go on with the taxpayers' money and I can't justify that to you, something's wrong," Buchanan said. "It's a mess and we're going to straighten it out."
Buchanan said the first step in fixing the problem was removing McClure from all county appointments.
Buchanan described McClure, who is not employed by the county, as having "more power than 90 percent of our county employees."
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