The state of Tennessee failed to keep track of almost $150 million in taxpayer dollars as part of a government program to fund startups, state auditors have found.
A report released today by the state comptroller leveled a withering attack at the TNInvestco program, which is managed by the Tennessee Department of Economic and Community Development and was set up under former Gov. Phil Bredesen.
The department did not establish adequate internal controls, did not perform adequate reviews and did not submit reports as required, auditors wrote. The lack of oversight resulted in "serious and pervasive noncompliance with program requirements and increasing the risk of fraud, waste, and abuse," according to the report.
Initially, the idea behind TNInvestco was to stimulate job growth by granting $149,220,016 to 10 Tennessee-based investment firms which were then required to invest the money in what they saw as promising startups.
The state raised the money by selling $200 million in future premium tax credits to Tennessee-based insurance companies - trading in $200 million in future revenue for $150 million in cash.
But the state did not keep track of where the money went after it disbursed it to private firms, the report found.
That wasn't the only problem at ECD.
The state agency also failed to properly execute contracts, failed to pursue collection of some loans and didn't get conflict-of-interest disclosures from all staff and board members.
See tomorrow's Times Free Press for more.
Contact staff writer Ellis Smith at email@example.com or 423-757-6315.