McAuliffe’s stalled electric car company salary raises funding scheme questions
By: Dan Spencer
At this point the failures and false promises of Virginia Democratic gubernatorial candidate Terry McAuliffe’s electric car company, GreenTech, have been well documented.
For those who need a refresher, Clinton fundraiser and party insider McAuliffe re-christened himself a ‘Virginia businessman’ in his second quest for the Old Dominion governorship and touted several supposed job-creating ventures on the campaign trail, one being a wood pellet firm that has yet to become operational, and another was GreenTech Automotive, which he pledged would create thousands of jobs.
First, it was revealed that those promised jobs were to be created in Mississippi, not Virginia. Then, McAuliffe was caught fibbing about why the company chose to locate outside the state, claiming Virginia authorities had rejected their application before it was made clear that GreenTech had never completed its application materials. Then the revelation that Virginia officials were concerned that the company was “a visa-for-sale scheme” given its lack of a credible business plan and utilization of the EB-5 funding mechanism, which hands out U.S. visas to foreign investors (more on this later).
Eventually, it came out that McAuliffe had resigned from GreenTech in December 2012 despite continuing to use his role with the company as a key talking point as he campaigned around Virginia.
It is GreenTech’s participation in the EB-5 program that raises questions about why McAuliffe broke precedent and took a salary from the fledgling company.
The Statement of Economic Interests released by McAuliffe in March, shows that he received at least $10,000 in salary and wages from GreenTech in 2012. On its face, this may not seem odd given that McAuliffe was the Chairman of the company during that period. However, when one considers that GreenTech was the only company McAuliffe took a salary from between 2008 and 2012, McAuliffe has a history of declining salary from organizations he’s been involved with (he did not take a salary as DNC Chairman from 2001-2005 and vowed to donate his salary during his 2009 run for governor), and $10,000 is chump change to multi-millionaire McAuliffe, it makes less sense.
The requirements for businesses looking to utilize the EB-5 visa program – which grants foreign investors in U.S. companies green cards in exchange for investing $500,000 or more – include creating a minimum of “10 full-time jobs” within two years. Considering GreenTech’s failure to create jobs in any significant numbers, it begs the question: Was McAuliffe accepting a salary to enable GreenTech to be eligible for EB-5 funding? And if so, doesn’t that bear out concerns from Virginia Economic Development Partnership officials about GreenTech’s “(lack of) management expertise, (lack of) market preparation” and the potential that the company was “a visa-for-sale scheme with potential national security implications?”
The only person who can answer these questions is Terry McAuliffe and to date he’s kept mum on any details concerning GreenTech’s job creation, production, and why the company has fallen so short of the projections he gleefully cited in past months. So it’s unlikely he will open up about his role in enabling his company to become “the largest project to ever depend upon the EB-5 program for at least a part of its funding,” according to a Mississippi Business Journal report.
Multiple reports from the Washington Post and others have exposed flaws and potential abuse within the EB-5 program, which has come under fire for national security implications, “fuzzy” job-creation estimates, and the charges that an inordinate number of jobs have gone to “consultants, brokers and other fee-seeking middlemen.”
It would seem that raising investment funds via EB-5 is just about all that GreenTech has to show for itself. A recent report by a Virginia NBC affiliate found no evidence of any significant infrastructure or production at the company’s Mississippi site. With a number of recent incidents of fraudulent and/or failed businesses taking advantage of EB-5 to the point that investors are getting cold feet, McAuliffe needs to answer questions about his role in developing and implementing GreenTech’s funding mechanism.
Perhaps McAuliffe has perfectly reasonable explanations on all of these points. But it seems unlikely given his reticence and changing stories on the issue. Until McAuliffe comes clean, Virginia voters (and reporters) should be asking him questions like: How much did you earn from GreenTech? Did you take that salary so the company would qualify for the EB-5 visa program? And all of your activities with regard to GreenTech were above board, why won’t you release your tax returns to prove it?
Or does Terry McAuliffe not think that Virginians deserve a governor with a commitment to honesty and transparency? The answer thus far is a resounding “no.”