A fight over transparency at NC startup incubator, fueled by $500 million in tax dollars

An ambitious new plan to use half a billion dollars in public funds to help turn scientific research at North Carolina universities into job-creating private sector projects is grappling with infighting as political appointees on its board of directors question its practices and transparency.

The group, NCInnovation, recently announced its initial round of grants. Its goal is essentially to copy the success of Research Triangle Park — where many businesses were founded or guided by researchers from UNC-Chapel Hill, N.C. State and Duke universities — and apply that formula to parts of the state where university research has received less private-sector attention.

NCInnovation wants to have another slate of grant applications ready for debate and potential approval by May; the deadline to submit applications is next month. But staff members have complained of not being able to do their normal work leading up to that May goal while they deal with a deluge of paperwork revolving around records requests and legal claims made by board member Art Pope.

Tensions boiled over during a board of directors meeting Tuesday, ahead of a vote on a new policy that could limit the ability of Pope or others to carry on with their requests.

Josh Howard, the group’s top lawyer, said Pope’s efforts have been “poorly received” by himself and others on the group’s professional staff. Howard said he now has two desks in his office covered by stacks of paperwork.

“Every single one of those 13 stacks of paper is from Art Pope,” Howard said. “Getting responses out to Art Pope, processing information from Art Pope. … We need to get some guardrails for constant harassment of staff for information.”

Pope is a wealthy businessman and longtime Republican Party insider who had publicly opposed NCInnovation — citing general opposition to government spending in the private sector — before he was added to the board last year.

Since being named to the board by state legislative leadership, Pope has continued his critiques of NCInnovation, calling for its finances to be audited and questioning whether it should lose the state funding that constitutes the vast majority of the group’s finances. He told WRAL in April he had concerns about its internal accounting.

At the end of Tuesday’s meeting, after being on the losing end of several votes by his fellow board members, Pope said he was filing a whistleblower complaint against NCInnovation. The chairman of the board of directors, retired Truist Bank Chief Executive Kelly King, dismissed it as a distraction.

“We will of course handle this latest complaint, one of many, from Mr. Pope fairly and in accordance with our policies and procedures," King wrote in a statement to WRAL after the meeting. “While this unfortunate distraction plays out, NCInnovation will remain focused on supporting North Carolina’s world-class university researchers who are working on amazing projects with real-world impacts. In fact, in today’s meeting the Board voted unanimously on its process for reviewing and approving future research grants.”

During the meeting, following Howard’s criticism, Pope suggested that if he were just freely given more access to internal records from the outset, he wouldn’t need to submit so many time-consuming requests.

“If you have 13 stacks of papers, that’s a lot,” Pope said. “It might be easier to just sit down, cooperate.”

The rest of the board of directors, however, decided to go in the opposite direction. The board voted to pass new rules more clearly outlining what kind of information board members are or aren’t entitled to outside of normal public records rules.

Transparency concerns

Three of the 13 board members voted against the new rules: Pope, Blannie Miller and Beth Friedrich. "The Public Records Act gives an absolute right to directors, and everyone else, to examine those documents," Miller said.

But an outside lawyer hired by NCInnovation to help draft the new policy and explain it to the board told Miller public records laws don’t necessarily apply to all of NCInnovation's documents. Some of the group’s data is public, since it’s state-funded. But not all is, since it deals with proprietary business and academic data. In similar situations dealing with the intersection of government and the private sector, such as economic development agreements, it’s common for some information to be exempt from open records laws.

King, the board chairman, said he and most other board members thought new rules were needed to allow unreasonable requests to be quickly dismissed.

“What we’re trying to find is a reasonable, good-faith approach,” King said.

Later in the meeting, Pope also tried asking for a personal meeting with the outside financial firm that recently gave NCInnovation a clean audit — a request King criticized, saying Pope’s claims were “irrelevant and, frankly, inappropriate.”

Pope then asked for a vote to delay accepting the results of that audit. It failed with every board member voting to approve the audit except for Pope, Miller and Friedrich.

History of political disagreements

Those three board members who voted against the new rules on records requests, and who expressed concerns about the audit results, are all appointees of Republican state House Speaker Tim Moore.

Their opposition to the rest of the board on Tuesday underscored the apparent continued fight over NCInnovation among legislative leadership.

As part of the 2023 state budget, the legislature voted to give NCInnovation $500 million in exchange for seats on the group’s board of directors, alongside others from the business world who joined the board previously. The state Senate originally wanted to give the group more than $1 billion, but the state House was far more skeptical, wanting to give it only $50 million. They settled on $500 million.

Since then, it has been Moore's appointees to the board — Pope in particular — who have raised the most questions about the work NCInnovation is doing and how transparent it is being with its half-billion dollars in state taxpayer dollars.

At Tuesday’s meeting, Miller also raised questions about whether board members were abiding by strict enough conflict-of-interest rules.

“I have real concerns,” she said, adding: “I would probably say that the risks outweigh the benefits” of moving forward on certain issues without stricter conflict-of-interest rules in place.