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Wed September 26, 2012
State Auditor: Mo. DED didn't follow proper procedures leading to Mamtek failure
A state audit released Tuesday says that the Missouri Department of Economic Development could have done a better job of screening applicants for tax credits for the failed Mamtek project in Moberly.
Two years ago the small northeast Missouri town issued $39 million in bonds to get the company to build an artificial sweetener plant. Mamtek later missed a bond payment and construction halted, and Moberly’s bond rating was downgraded as a result. State Auditor Tom Schweich says the due diligence procedures used by the DED were woefully inadequate
“Certain items that they were supposed to look at, credit background and other things, were not looked at for some of the projects," Schweich says. "We found situations actually where they had a list, and they would actually write ‘no’ next to some of the items, and they still awarded the incentive.”
In response, DED officials say they exercised substantial due diligence on the Mamtek project, although the agency revised its procedures afterwards.
Schweich says DED’s new due diligence procedures are significantly better.