UPDATE: Audit reveals WEDC broke state law - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

UPDATE: Audit reveals WEDC broke state law


MADISON (WKOW) -- The public/private agency Governor Scott Walker created to grow 250,000 new jobs in Wisconsin is in violation of state law.

That's what an audit of the Wisconsin Economic Development Corporation (WEDC) shows.  The non-partisan Legislative Audit Bureau released a detailed report of its audit Wednesday.

The report shows that from July 2011 to December 2012, WEDC failed to follow a number of state statutes in their financial and job creation reporting, awarded loans and grants to ineligible projects and failed to keep track of spending within the organization itself.

"We've never uncovered any fraud or willful deceit.  Inadequate documentation, yes," said Reed Hall, who took over as interim WEDC Chief Executive Officer in Nov. 2012 and then on a permanent basis in January 2013.

The LAB report states WEDC never kept track of the job creation efforts for a group of companies it awarded money to, which in turn prevented the agency from presenting legislators with accurate information on its job creation efforts last November.   Both are required of the agency under state law.

"I think their suggestion we're violating the statute is subject to interpretation," said Hall.  "We don't agree with that."

"The first step to correcting a problem is to own up to the problem and to propose to do something different," said Rep. Peter Barca (D-Kenosha), the Assembly Minority Leader and a member of the WEDC Board. 

Rep. Barca said the report clearly shows a lack of accountability, control and follow-through.

"I would have an audit done next year and if these serious problems are not cleared up, I think its time to abandon this experiment," said Rep. Barca, who said WEDC could revert back the Department of Commerce, the agency it replaced.

The audit also shows 56 percent of the agency's credit card purchases were put on expense reports with no description of their purpose.  That included money spent on alcohol, ITunes gift cards and six Badgers football season tickets.

"We use those tickets for entertaining companies that are considering moving to Wisconsin or are expanding substantially in Wisconsin," explained Hall.

Hall said any improper purchases have been paid back by the responsible employees, but could not provide a dollar amount on how much money was returned to the agency.

Republican lawmakers are joining Rep. Barca in demanding more answers.  Sen. Robert Cowles (R-Green Bay) and Rep. Samantha Kerkman (R-Powers Lake, the Co-Chairs of the Joint Legislative Audit Committee, have scheduled a meeting for May 9th to review the problems.

WEDC is no stranger to controversy.

In June 2012, former WEDC CEO Paul Jadin improperly offered tax incentives to Skyward Inc., a Stevens Point company that was bidding on a school software contract.  But the incentives were offered while another comp nay was still in the running for the contract, and the process had to be suspended and restarted.

Then in August 2012, the U.S. Department of Housing and Urban Development called out WEDC for mishandling millions of dollars in federal grant money.

Finally, in October 2012, WEDC admitted it had failed to keep track of more than $8 million in unpaid loans-- to 99 Wisconsin businesses.


MADISON (WKOW) -- A new nonpartisan audit shows a series of problems with the Wisconsin Economic Development Corporation.  

Findings from the Legislative Audit Bureau show the economic development agency failed to follow state law, awarded money to ineligible projects and didn't monitor those who have gotten money.

Republican lawmakers are calling for change. Senator Rob Cowles, Legislative Audit Committee co-chair, says "there is a significant disconnect between our expectations of WEDC and the reality of their performance with regard to transparency and accountability."

The WEDC's leader Reed Hall says they are making progress in addressing the problems found in the audit. Hall says many solutions are already in place or are in the process of being implemented.

Capitol Bureau Chief Greg Neumann will have more on this story tonight on 27 News at 5 & 6.

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