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Opinion sought on loan remark

A citizen is asking North Dakota's attorney general to determine whether Gov. John Hoeven violated the law when he discussed the status of state loans to WebSmart Interactive.

A citizen is asking North Dakota's attorney general to determine whether Gov. John Hoeven violated the law when he discussed the status of state loans to WebSmart Interactive.

Steve Huenneke of Minot, N.D., sent a letter Wednesday to Attorney General Wayne Stenehjem, asking him to clarify state law involving information officials can release about state loans.

Huenneke had requested a list of delinquent loans made by the state-owned Bank of North Dakota and North Dakota Development Fund. In response, he got replies from the Industrial Commission, which oversees the state bank, and Department of Commerce, which operates the development fund.

Both agencies refused to provide a list, Huenneke said, and cited state laws prohibiting the release of confidential information.

However, Huenneke noted that Hoeven, in response to questions from reporters, has discussed the status of $800,000 in state loans to WebSmart, a failed telemarketing firm that closed in April, leaving 368 people out of work in Minot and Grand Forks.


Hoeven has said that the loans are being repaid in spite of the fact that WebSmart collapsed. A bank largely owned by Hoeven's family, First Western Bank and Trust of Minot, split a $1 million low-interest loan with the Bank of North Dakota. Each bank loaned $500,000.

Besides a subsidized, low-cost $500,000 loan from the Bank of North Dakota, WebSmart received a $300,000 loan from the North Dakota Development Fund.

Altogether, in state and local assistance, WebSmart received more than $2 million in subsidies.

Although First Western Bank and Trust now is listed in real estate records as the owner of WebSmart's headquarters, valued at almost $800,000, that collateral is split with the Bank of North Dakota, Hoeven has said.

In his complaint to Stenehjem, Huenneke said state officials are "trying to have it both ways," by selectively releasing and refusing to release information about the status of state loans.

On the one hand, he said, the governor "announces to the entire state" that WebSmart's loans aren't delinquent. But state officials with the agencies overseeing the loans maintain that state law prevents them from disclosing information.

"Is there a law I am unaware of that allows the Governor the privilege of disclosing information that is not otherwise available to the public?" Huenneke wrote Stenehjem.

The public has a right to know whether the governor violated the law by making his comments, or whether other officials broke the law by denying information, Huenneke said.


Hoeven, through a spokesman in his office, said he responded to the extent he could to reporters' questions about the loans, without breaking any laws.

"The governor said he's done everything he can to provide information," Hoeven spokesman Don Canton said. "He doesn't think he's provided too much information."

Stenehjem said he will review open records laws governing what information officials can disclose about state loans -- but he said he won't try to determine whether Hoeven actually made the comments attributed to him in The Forum and other news organizations.

"We don't do investigations of quotes," Stenehjem said of comments Hoeven made to reporters. "He's asking for my opinion on something other than an asserted failure to get access to something."

Any state citizen can request an attorney general's opinion concerning an open meetings or open records issue. To provide a legal opinion beyond that, however, requires a request by a state official, Stenehjem said.

The Industrial Commission can divulge the name of the borrower, the amount of the loan, and, in the case of a bad loan, any determination that a loan is uncollectible. Any disclosures beyond that are against the law, according to Karlene Fine, a lawyer who is the commission's executive director.

Public information regarding results of the state's economic development programs is vital, said Huenneke, an economist at Minot State University.

"Citizens need information to assess performance of state agencies and to make decisions about whether to support or not support economic policy," he said. "The policies that we're talking about involve grants, loans and other forms of public assistance to private firms.


"The economic development programs are supported by tax dollars," he added. "As a citizen, I want to analyze, not be sold. In order to analyze, citizens need information."

Readers can reach Forum reporter Patrick Springer at (701) 241-5522

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