A state audit released today says that the Missouri Department of Economic Development (DED) 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 (R) said 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 said. "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.”
Schweich said town officials should have been more cautious, but added that his audit examined the DED, not Moberly.
“The checklists that (DED) used weren’t always followed," Schweich said. "All the checklists were missing important issues about criminal background checks, credit worthiness, and other items we listed in the audit…so they weren’t following their previous procedures, and their previous procedures were not sufficient.”
Schweich said, though, that the Economic Development department has since adopted new due diligence procedures that are significantly better. In response, DED officials said that they did exercise substantial due diligence when the Mamtek project was under consideration.
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