LANSING ? The Michigan House moved several bills designed to prevent the fraud that was allegedly perpetrated on the Michigan Economic Growth Authority Program earlier in the month, but it appeared Wednesday there would not be any disciplinary action within the Michigan Economic Development Corporation as a result of the con.

The legislation, some of which passed the full House, would require businesses and their owners to attest to not having committed certain fraud related crimes to apply for a MEGA grant. They also could not be incorporated in certain tax shelter countries as a way to prevent hiding funds.

The House unanimously passed legislation requiring criminal background checks for MEGA recipients (HB 4553 ).

Evidence of a conviction, especially of an individual, does not necessarily mean the company would not get the credit or grant. The state would have to determine if the conviction had an impact on the firm’s business integrity.

Michigan Economic Development Corporation CEO Greg Main still declined Wednesday to discuss personnel matters surrounding the alleged con of the agency over a development deal, but he indicated it was unlikely there would be much severe fallout.

Mr. Main said he had offered his own resignation to Gov. Jennifer Granholm over the issue, but again declined to discuss the outcome of that discussion.

“I’m still standing here,” he said.

Pat Clawson, a Flint-area investigator who was one of the first to expose the alleged fraud, told the Senate Commerce Committee that Mr. Main and others in the chain involved with the Michigan Economic Growth Authority grant for Renewable and Sustainable Companies LLC should be fired.

“I want to see somebody’s head on a spike,” Clawson said. “It’s long past due that somebody in state government be held personally liable. There’s a culture here in Lansing that’s unaccountable to the people.”

Clawson said it took him about 15 minutes of Internet searches to uncover the alleged fraud, including finding that the company, which was supposedly putting together a multi-million dollar deal, was headquartered in a mobile home park north of Flint.

But Main said the case manager and others involved where not directly to blame. “I view it as a systemic problem,” Main said. “They were just doing what we told them to do.”

Sen. Jason Allen (R-Traverse City), chair of the Senate Commerce and Tourism Committee, also said he was not going to call for any heads to roll over the deal, at least for now. More important, he said, was to be sure the state could not be scammed again.

“We’re very prepared to put the appropriate oversight in place,” Allen said. “We’re working on this over the break to come up with a better system.”

Allen said he was not prepared to move as quickly as the House had, moving bills out of committee and passing some of them on to the Senate on Wednesday, and he said the House measures were, to an extent, a knee-jerk reaction to the incident.

Companies seeking tax credits from the state would have to attest that they had not been convicted of a number of different crimes in bills sent to the full House a week after a convicted embezzler was able to win a $9.1 million tax credit.

HB 4553 and 11 other bills (HB 4516 , HB 4543 , HB 4544 , HB 4545 , HB 4546 , HB 4547 , HB 4548 , HB 4549 , HB 4550 , HB 4551 and HB 4542 ) were reported on 4-0 votes from the House Oversight and Investigations Committee. Republicans on the panel passed on voting saying there needed to be more time to look at the legislation.

Later, the full House also voted on HB 4547 and HB 4549 on nearly unanimous votes.

Rep. Martin Griffin (D-Jackson), committee chair, said he hoped the legislation approved would not hurt the ability of the state to attract companies with its development program through the Michigan Economic Growth Authority. While in a perfect world, states would not have to offer up tax credits and actual cash to entice companies, Griffin said, this was the “unfortunate evil” the state has to deal with. “We’ve got to play the game,” he said.

And until the scandal erupted last week involving Richard Short and his firm RASCO, which was going to allegedly develop a facility in Flint to provide alternative energy systems around the world, Mr. Griffin said the state had done well in avoiding problems.

“For the overwhelming majority of applications the MEDC does an outstanding job. Out of 600 awards this is the first to have a problem,” he said, adding he hoped “it’s the one and only one that comes back to bite them in the butt.”

But on the House floor, Rep. Tom McMillin (R-Rochester Hills) said it was doubtful Mr. Short was the only person to get away with such a fraud and he called on the legislation to require audits going back five years.

“They don’t compare those job creation claims to the unemployment insurance agency filings,” he said. “The audit would at least have to show that.”

Committee member Rep. Ken Horn (R-Frankenmuth) said there was an indication the MEDC was going to drop the RASCO application but that local pressure had kept it in the pipeline.

Under the main bill in the package, a company applying for grants or credits under a variety of state programs would have to affirm that in the previous 15 years it had not been convicted of a criminal offense regarding a state contract, or that it had not convicted or been civilly liable for embezzlement, theft, bribery, forgery, falsification of records, receiving stolen property or violating anti-trust provisions.

The bill also requires that a company not be incorporated in a country listed as a tax haven.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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