Editorial: To guard against WEDC fraud, set strict standards for corporations

Editorial by The Capital Times

The U.S. Constitution begins with a declaration: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
That reference to the general welfare is well and wisely interpreted as a charge to use the taxing and spending powers afforded to the government to respond to the needs of the people.
How federal, state and local government agencies carry out that responsibility is always open to interpretation, and to oversight. Reasonable standards of accountability can and should be applied.
Unfortunately, unreasonable legislators have often attempted to use the tools of oversight and accountability to penalize and punish those in need. Even more unfortunately, those unreasonable legislators have often absolved powerful special interests and the politically connected individuals who pay for their campaigns from any responsibility.
It is this disconnect that fosters frustration with government and distrust of elected officials and public agencies. So states should always be on the watch to ensure that a proper balance is struck with regard to accountability for those who receive public funds — and with regard to penalties for those who abuse the public trust.
Wisconsin is currently engaged in a debate about how to strike that proper balance and we think that state Sen. Dave Hansen has made a excellent contribution to its resolution.
The Green Bay Democrat has proposed legislation that would make corporate welfare fraud a felony and impose a seven-year denial of public assistance on companies that are found to have engaged in fraud. Hansen is particularly concerned about abuses committed by corporations that receive resources from the Wisconsin Economic Development Corp., and to that end his legislation proposes the establishment of a waste, fraud and abuse hotline to identify and penalize businesses — and business owners — that commit fraud when applying for state economic development assistance.
“Corporate welfare fraud is a serious issue that can rob taxpayers of millions of dollars in a single case,” explained Hansen. “The legislation we are proposing would put in place additional tools to weed out fraud at WEDC and once found punish those who commit it.”
The legislation was introduced in the Assembly by state Rep. Chris Taylor, D-Madison, and state Rep. Katrina Shankland, D-Stevens Point.
Presumably, Hansen’s Republican colleagues will be excited to back his proposal, as it is modeled on an unemployment insurance anti-fraud bill sponsored by legislative Republicans with the purpose of creating felony penalties for individuals who commit fraud when applying for benefits. The GOP measure, which passed the Assembly with the support of every Republican member of the chamber, would impose a seven-year denial of benefits on any working Wisconsinite who is found to have fraudulently obtained unemployment benefits.

Clearly fraudulent activity should, as the Republicans suggest, be punished.

Of course, there ought to be a good measure of understanding for Wisconsinites who have lost their jobs. With their lives turned upside down, and their families facing hardship, these individuals may struggle to keep up with all the paperwork that is required to obtain unemployment benefits. When mistakes are made, there should be room for forgiveness. When decisions are required regarding penalties, watchdogs should bring a measure of understanding and sympathy to the process.
The same goes for small-business owners and farmers who are struggling to keep ahead of bureaucratic requirements.
Necessarily, standards for CEOs and other corporate officers should be stricter than those that are applied to small-business owners, farmers and unemployed workers. Well-paid corporate officers, signing off on applications for loans and grants in their comfortable suites, generally have the background and the staff support that is required to dot every “i” and cross every “t.” They’re also applying for significant sums of money.
Additionally, many of the owners and officers of major corporations are major campaign donors to elected officials who may have influence over economic development strategies. Obviously, it is vital to ensure that there is no connection between donations and the distribution of public funds to companies that are owned or led by those who write big checks to governors and legislators.
The bottom line is that the entire process of awarding state economic development assistance demands the strictest scrutiny. Oversight standards must be especially high, and penalties should be serious enough to serve as a deterrent to improper activity.
The point is not to punish Wisconsin business owners and corporate officers. Rather, the point is to weed out the bad players whose actions might give Wisconsin’s business owners and corporate officers a bad name. Only by maintaining genuine accountability — and applying strict penalties to those who engage in wrongdoing — can WEDC respect the hard work and great contributions of responsible businessmen and businesswomen.
To that end, Hansen’s anti-corporate fraud legislation establishes firm-but-fair penalties. Owners and executives of businesses that commit fraud when applying for state economic development assistance could be charged criminally and face up to 25 years in prison for each count. That’s hardly an unreasonable punishment for those who steal large sums of money from the taxpayers of Wisconsin.
“Like we’ve seen on Wall Street, until we start treating corporate welfare fraud seriously and the people who commit it feel very real consequences, there will be no end to it,” explained Hansen. “This legislation will send the message that we are serious about cracking down on those who would steal from Wisconsin taxpayers no matter how wealthy or politically connected they are.”