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Commerce leaders chafe at proposal to impose ethics, salary rules on nonprofit

Posted April 3

Secretary of Commerce Sharon Decker listens to Gov. Pat McCrory speak at a news conference at the Governor's Mansion on Jan. 21, 2014.

— Draft legislation reworking the rules for a new private nonprofit designed to recruit businesses to North Carolina would make the corporation's employees subject to state ethics, personnel and travel polices – prompting objections from Commerce Department leaders. 

"The objective here is nimbleness, speed of movement, the ability to take action and to market the state effectively," said Commerce Secretary Sharon Decker. "I'm looking at all of the legislation with that lens. So, I've got concerns about legislation that might be preventive." 

When Gov. Pat McCrory took office, plans were already in the works to turn some of the Commerce Department's functions over to a private nonprofit that would be run by state appointees. According to the idea's proponents, private-sector employees would be able to both react more quickly to businesses showing interest in the state and develop long-term relationships. A private nonprofit would also be able to keep more of its activities secret, although the Commerce Department already has many sweeping exceptions to public records laws not enjoyed by other state agencies. 

During the 2013 legislative session, lawmakers pushed forward with a bill that would have told the Commerce Department how to create the nonprofit and laid down rules for the corporation. But that bill never received final approval because it got bogged down in a fight over natural gas drilling. 

But lawmakers did place a short provision in the state budget that gave the Commerce Department authority to move ahead with the transition. McCrory, Decker and others have taken those few paragraphs and run with them. A new nonprofit has been formed, and the state has begun the process of moving marketing functions over the to 501(c)(3) corporations. 

Legislation that the Joint Legislative Economic Development and Global Engagement Committee formally recommended to the 2014 General Assembly session would place more rules around the new nonprofit. 

Decker and Richard Lindenmuth, the chief executive of what is now called the Economic Development Partnership of North Carolina, both told members of the committee that they welcomed the legislation but had some objections. 

For example, the legislation requires that the nonprofit raise $10 million from private sources before drawing down its state funding. 

"That slows the process," Decker said after Thursday's meeting. 

Asked by Sen. Brent Jackson, R-Sampson, whether the nonprofit would be subject to state ethics rules, Lindenmuth said Commerce officials were still negotiating with lawmakers on that point.

"That's an area for discussion. I don't think any of us intend to be less than truly ethical," Lindenmuth said.

However, he said, ethics and other disclosure rules could interfere with the ability of businesses recruiters to host business dinners and keep information from private industry secret. 

He gave the example of a recent negotiation in which North Carolina was talking with a realtor who represented a business considering a move. Another state's recruitment team was allowed to talk directly to the company's officials, but North Carolina couldn't.

"The company was afraid that, if they announced their name here, it would be public information and, therefore, everybody would know that they were coming here, including their employees," Lindenmuth told the committee. 

State personnel and expense rules could also pose a problem for the new nonprofit, he said. For example, he said that state workers are limited to a lower per diem than might be practical for some recruitment trips.

"I don't think we could find a $60 hotel in France at the Paris Air Show," Lindenmuth said. 

Rep. Tom Murry, R-Wake, called the bill "a good faith effort" to address concerns from all parties, but said that it was still being negotiated.

The General Assembly session begins on May 6.

9 Comments

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  • rlsmith5 Apr 4, 3:11 p.m.

    What does McCory think the NC dept of Commerce was setup to do. Can he not again run the state departments without giving more money to his cronnies that got him elected. What does he think we are paying Commerce Dept to do? He gets deeper under the cover with more people as each day passes. This is a SHAME he got elected and can't do his job.

  • scubagirl2 Apr 4, 2:50 p.m.

    WHY should they NOT be subject to the policies. Those particular policies: ETHICS, personnel and travel-should be in EVERY organization, non-profit or not. To fight them implies to me one might have some things in mind to hide! IF having ethics in place slows the process BUT MAKES IT ETHICAL then that is how it should be!!!

  • free2bme Apr 4, 2:43 p.m.

    These folks- McCrory and his gang, have no ethics that is why they do not want to be held to ethical practices. They are better at being deceptive and keeping their secrets. Can't wait to vote McCrory out and get some decency returned to this state.

  • bluecharger Apr 4, 9:31 a.m.

    We're going to be cleaning up NC looooooooooooong after these creeps are gone.*sigh*

  • raleighboy524 Apr 4, 9:28 a.m.

    The fundamental question is -- does NC really need a private non-profit to recruit businesses? The goal in this proposal, of course, it to grease the way for sweetheart deals and kickbacks with pals of the governor and other state officials, hidden behind the flimsy excuse that companies will not move to NC if the discussions may become public.

  • SaveEnergyMan Apr 4, 8:30 a.m.

    They SHOULD be subject to state ethics laws. These laws prevent someone from giving/accepting gifts and other considerations for personal benefit and limit conflicts of interest.

    State employees work with confidential private info all of the time, without having to disclose it. I don't trust anyone in gov't to be acting in "good faith". Call it human nature.

    Also, the travel example is not true. A state employee can request "excess" hotel reimbursements if there is a good reason - a conference at a resort hotel or travel to a city where costs are higher - like Paris or NYC. There is a procedure - for good reason, it happens all of the time when needed.

  • AliceBToklas Apr 3, 4:22 p.m.

    Are we to understand they want to avoid having ethics get in their way? Interesting idea.

  • skeeter II Apr 3, 3:47 p.m.

    Why does the State need to change the requiting of companies to move to NC? By not requiring the employees or contractors of the new Non-Profit to be under the State Ethics laws, could allow some "SHADY DEALS" that would be kept secret!!!!!!

    Example: Someone negotiates a GOOD deal for a company and then becomes their employee within a year!

    I would hope that any deal through the new Non-Profit would require the individual approval of the Department of Commerce, and depending on the dollar deal and importance to NC might require the approval of the Govenor if not also the Council of State.

    I think the purpose of creating the Non-Profit is to HIDE the deals given to have the company move into NC. That is a BAD IDEA and the operating rules approved by the Legislature should require disclosure of all the details of each deal. I believe that is what the Department of Commerce strongly wants to avoid!!!

  • whatelseisnew Apr 3, 3:43 p.m.

    NO reason they should not be subject to the same rules even if the idea of ethics in Government is pretty funny. It pretty much does not exist.