Forum editorial: WebSmart makes N.D. look bad

Not long ago, WebSmart was to emerging businesses in North Dakota as what a snifter of Napoleon brandy is to a shot of redeye. Indeed, politicians pointed to the Minot-based telemarketing company as a top-shelf operation -- a "how to" for growing...

Not long ago, WebSmart was to emerging businesses in North Dakota as what a snifter of Napoleon brandy is to a shot of redeye.

Indeed, politicians pointed to the Minot-based telemarketing company as a top-shelf operation -- a "how to" for growing jobs in North Dakota.

That was before WebSmart secretly shuttered its operations in the dead of night six months ago, sending 620 people into unemployment without as much as the paychecks they were owed.

Patrick Springer's two-part series on WebSmart that begins on today's front page certainly suggests the company turned into a "how to" for corporate welfare, while employees got cheated, lenders got stiffed and the law belatedly got interested in its potentially shady business practices.

The lack of accountability to the public and press allowed WebSmart to operate in the dark. This newspaper has continually urged the North Dakota Legislature to be more accountable to the people concerning how their tax dollars are being used to support economic development programs.


We renew that call, pointing to the WebSmart fiasco. Public accountability in such matters is not a ground-breaking concept. The city of Fargo earlier this month agreed to let the struggling Global Electric Motors keep an annual $85,000 property-tax exemption when it fell on hard times and failed to meet hiring goals that led to the tax break.

The city did pull a $61,000 tax exemption for a GEM shipping facility no longer being used.

The open discussion was evidence of Fargo leaders' good stewardship. And that didn't chase GEM out of Fargo.

But look at what can happen when business is done with virtually no public oversight:

Astonishingly, as Springer reports today, WebSmart quietly sought to rework its deal with Minot that allowed creation of jobs that could pay as little as $6,600 a year, in return for $230,000 in grants. No, that is not a typographical error: $6,600.

Due to meager public reporting requirements, all we know from its dealings with North Dakota is that WebSmart borrowed $500,000 from the Bank of North Dakota through a low-cost PACE loan and that it got $300,000 through a North Dakota Development Fund loan.

Under existing state regulations, there is no proof whether those loans created the number of jobs WebSmart promised -- whatever that number was -- what those jobs paid, whether WebSmart met any of its many financial obligations, and so on.

We certainly are not advocating that all confidentiality be waived in economic development projects. North Dakota must provide a climate where businesses are not placed in a competitive disadvantage by having to open each page of their accounting books to the public. No, there must be a sense of reasonableness so business with well-paying jobs locates in North Dakota.


The jobs created also must be good jobs; the state could do well to follow that mission of the Fargo-Cass County Economic Development Corporation.

North Dakotans have every right to know how many jobs are being created by businesses that receive state support, how much those jobs pay, and verifiable proof that hiring promises are kept.

It is baffling that legislators are so remiss about making this information public.

Forum editorials represent the opinion of Forum management and the newspaper's Editorial Board

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