By M.D. Kittle
MADISON — A conflict of interest problem involving Gov. Tony Evers and the Wisconsin Economic Development Corp. has caught lawmakers’ attention, exposing a bigger question of potential corruption in how the Democratic governor has handed out billions of dollars in federal COVID relief funds at his disposal.
“From Day 1, there has been a significant lack of transparency into how these moneys are distributed, about who is making these decisions, and this administration has not been willing to answer these questions,” said Mike Mikalsen, chief of staff for state Sen. Steve Nass (R-Whitewater).
“Sen. Nass is aware of a group of legislators having preliminary discussions about requesting an audit into the exact circumstances (Empower Wisconsin) is raising,” Mikalsen added.
Last week, Empower Wisconsin reported that Evers’ recent pot of $60 million in regional workforce development grants included nearly $1 million to be passed through to gener7tor, a business accelerator co-founded by Joe Kirgues. Kirgues is an Evers’ appointee to the WEDC board. The grant was awarded to Kenosha, which is partnering with the Madison-based company. gener8tor will be paid to provide “coaching, mentorship and networking to start-up founders of color and women founders.”
While the city of Kenosha is a governmental entity, its partner in the grant project is a nationally ranked player in the field of start-up acceleration. It is a very profitable company, deriving revenue from equity in the businesses gener8tor helps incubate.
Will the company take a piece of the proceeds from the start-ups it mentors under the taxpayer-funded grant program? Kirgues and an official from WEDC have not returned multiple requests for comment.
It’s not clear whether Kirgues had any role in the grant selection process.
The grant program is available to nonprofit or governmental entities “to help implement collaborative, innovative plans to tackle a specific region’s most pressing workforce challenge,” according to a previous press release. The grants are administered through an interagency effort between the Wisconsin Economic Development Corporation and the Department of Workforce Development.
gener8tor’s involvement in the Kenosha project would seem to be a conflict of interest under state ethics laws.
“It’s a perception problem for sure,” a legislative aide who frequently deals with economic development issues told Empower Wisconsin. “He’s a public official tied into this.”
“The legislature hereby reaffirms that a state public official holds his or her position as a public trust, and any effort to realize substantial personal gain through official conduct is a violation of that trust,” the statute states in part.
The Workforce Innovation Grant Program is funded through the American Rescue Plan Act’s Coronavirus State and Local Fiscal Recovery Funds agency through which funding is passed through must comply with the Award Terms and Conditions, according to the state Legislative Reference Bureau (LRB). The final rule governing the funds notes that as part of the Award Terms and Conditions, recipients agree to maintain a conflict-of-interest policy consistent with federal procurement standards. The standards frown on public officials benefitting from program grants their government entities control.
LRB stresses it cannot offer an interpretation on how the law might apply to a particular situation and the information requested by Empower Wisconsin is not an expression of the agency’s opinion on the grant award.
Mikalsen said the WEDC grant process speaks to the broader issue of the Evers administration’s failure to fully account for the approximately $4.5 billion in federal money he is free to spend at his discretion — money he has used like a massive, unregulated campaign war chest.
According to the Legislative Fiscal Bureau, Evers had spent through the full $2 billion in federal CARES Act funding, as of Dec. 31. He has allocated about $1.6 billion of the $2.5 billion the state received in ARPA cash. The Fiscal Bureau is still waiting to confirm precisely what expenditures the administration has made to date.
That’s the problem.
“They (the administration) are throwing these programs out there out of the blue,” Mikalsen said of the various grant programs the administration has created, making them public mainly through press releases and press conferences. Several of Nass’ constituents have complained that they have had difficulties applying for the grants or getting updates on the grant process.
Mikalsen said much of the media have failed to hold the governor accountable on his lack of transparency in spending the unprecedented amount of federal funds.
“If a Republican governor were kicking out this level of money, there would be people at every one of these liberal newspapers who would be assigned to be looking at these different programs,” Mikalsen said. “They don’t apply the same standards to this governor who has control over record-setting amounts of slush money.”