Television ads in the Virginia governor’s race criticize Lt. Gov. Ralph Northam for his role on a state economic development board. But there is less here than meets the eye:
- The ads say Northam missed 58 percent of the Virginia Economic Development Partnership meetings. Northam was an ex officio member of the board and sits on 13 other boards. Northam or his representative attended all VEDP board meetings.
- The ads also say Northam “helped lead Virginia’s economic development agency that gave $1.4 million to a Chinese company with a fake website.” However, the board does not approve grants, which are recommended by staff and approved by the governor.
Virginia and New Jersey are the only two states with gubernatorial elections in 2017. In Virginia, Republican Ed Gillespie, a former chairman of the Republican National Committee, faces Northam, a Democrat who has served as the state’s lieutenant governor since 2014. Recent polling shows the Virginia race remains close.
The Gillespie campaign has run two TV ads in recent days that focus on a $1.4 million state economic grant to a Beijing-based company for a failed project in Appomattox County.
The ad says, “China wins, America loses. It’s a story that Virginia families know all too well. Ralph Northam’s made things worse. Northam helped lead Virginia’s economic development agency that gave $1.4 million to a Chinese company with a fake website. Virginia taxpayers got ripped off.”
The facts about the project are accurate. Virginia awarded Lindenburg Industry, a Chinese manufacturing company, a $1.4 million economic incentive grant in 2014 for a plant that would manufacture industrial clean-air products. The $113 million project was supposed to create 349 jobs.
But the project never materialized, and the agency confirmed for us that the funds were not recovered — a point that is made in Gillespie’s TV ads.
But the ad overplays Northam’s role in the awarding of the $1.4 million grant for the Appomattox project.
The ad says Northam “helped lead” the agency. As lieutenant governor, Northam was an ex officio member of the board — one of 24 voting members at the time. He also sits on 13 other boards.
The VEDP board has no direct role in the grant process. The agency is run by a professional staff, which in most cases “has discretion over which businesses receive grant awards and the amount awarded, pending final approval by the Governor,” according to a 2016 management audit of the agency by the Joint Legislative Audit and Review Commission.
The Governor’s Development Opportunity Fund — now known as the Commonwealth’s Development Opportunity Fund, or COP Fund — was the source of the $1.4 million. The “final approval authority” for that fund is the governor (see table C-1 of the 2016 management audit).
Gov. Terry McAuliffe was instrumental in awarding the grant, according to agency records.
The agency lists the Lindenburg project among its “case studies.” In its description of the project, the agency says: “This project is a result of Governor McAuliffe’s meeting with company officials in China during VEDP’s Asia Marketing Mission.”
When he announced the grant on Nov. 5, 2014, McAuliffe said: “I had the great privilege of meeting with company officials in Beijing, China and close this significant win during my Asia marketing mission and I am thrilled that Lindenburg Industry is establishing their first U.S. manufacturing operation in Virginia.”
The Gillespie campaign, in response to our questions about the ad, said Northam should be held accountable for the board’s failure to provide oversight on the Lindenburg project. It referred us to the 2016 management audit.
That report said the board has a history of failing to provide effective oversight since the economic development agency was established in 1995 by then-Gov. George Allen. “The board has historically not held VEDP sufficiently accountable, largely due to members’ lack of engagement and apparent misunderstanding of their governing responsibilities,” the report says.
The audit commission recommended that the Legislature amend the statute governing the VEDP to make clear that the board “is a supervisory board and is responsible for ensuring that VEDP executes all of its statutory responsibilities efficiently and effectively.”
We also note that the report says that improvements have been made to the board since 2014, which is when Northam joined the board.
“The board’s demonstrated efforts to improve its level of engagement since 2014 represent an important and necessary step forward with respect to the governance and oversight — and therefore the accountability — of VEDP,” the report said.
The audit commission did an analysis of 133 projects from fiscal year 2006 to fiscal year 2015, saying the agency “has not sought repayment for 23 projects that did not meet their contractual requirements, totaling an estimated $8.7 million.” It also said that nearly half — 46 percent — of the 133 projects “did not meet all [contractual] requirements.”
On the Lindenburg Industry grant, the audit blamed the VEDP professional staff for failing “to validate the legitimacy of a company that received a $1.4 million COF grant in November 2014.”
A second Gillespie TV ad also attacks Northam on the failed Lindenburg Industry project, but this time it focuses on Northam’s attendance record.
It says that Northam “skipped 58 percent of the meetings at Virginia’s economic development agency and they gave $1.4 million tax dollars to a bogus Chinese company with a fake website.”
(To be clear, the company exists, but it had a website that contained false information.)
When we asked the Gillespie campaign about the claim, it provided us with a list of 12 board meeting minutes from March 12, 2014, which was Northam’s first, to March 9, 2017, which was Northam’s last. (Northam left the board after the governor and state General Assembly agreed on legislation in April that restructured the board, reducing the number of its members to 17 — including six ex officio members, but not the lieutenant governor.)
The meeting minutes showed that Northam attended five meetings and sent staff to seven. So while the ad says that Northam “skipped 58 percent” of the meetings, it fails to say that the lieutenant governor’s office was represented at 100 percent of the meetings.
As we mentioned earlier, Northam was an ex officio member of the board. He also sits on 13 other boards and serves as the Senate president, presiding over the Senate sessions.
It’s not uncommon for high-ranking ex officio members to send staff to represent them on the boards that are assigned to them by virtue of their position.
It’s also not uncommon for elected officials to be criticized for not attending meetings, even if they send someone else in their place. In fact, board attendance has been an issue in previous Virginia campaigns, and both parties have used it as an attack line.
In 2009, the Democratic candidate for lieutenant governor, Jody Wagner, criticized then-Lt. Gov. Bill Bolling at an Oct. 19, 2009, debate for attending only 6 percent of the meetings for seven state boards and commissions.
“These are critical times, and we need a lieutenant governor who’s going to show up every day and work full time to make sure we’re moving the commonwealth of Virginia forward,” Wagner said.
Bolling, a Republican, called the attack on his board attendance “a classic example of the distortion, the dishonesty and, quite frankly, the hypocrisy” of a failing campaign. He also noted that “a member of my staff” attended meetings he missed – that’s what happened in Northam’s case as well. But the Gillespie campaign ad does not say that (and neither does a similar ad on Northam’s board attendance paid for by the conservative Americans for Prosperity.)
In fact, both Gillespie ads don’t tell the full story. That’s why we present a more complete story about Northam’s role on the board. We leave it for Virginia voters to make up their own minds about Northam’s culpability in the agency’s decisions, particularly as it pertains to the $1.4 million that state voters lost on the Appomattox project.