Other views: Take action now to avoid more WebSmart fiascos
The Sunday/Monday Forum articles, "The WebSmart fiasco" and editorial seeking legislative reforms prove to be very thought provocative articles.
The Sunday/Monday Forum articles, "The WebSmart fiasco" and editorial seeking legislative reforms prove to be very thought provocative articles. The articles relate to two lists, "$2 million aid from the public purse" and those "standing in line to collect approximately $1.4 million of debt." The editorial urges the North Dakota Legislature to be more accountable concerning how our tax dollars are being used.
We need action now; we can't wait two years.
Not surprising, the First Western Bank and Trust of Minot and the State Bank of North Dakota do not appear on either list. They are now the "owner of record" of property valued at $792,200. The $860,000 investment in land and property, ($60,000 from the city of Minot for land, $500,000 from the N.D. PACE Fund for the building, $300,000 from the N.D. Development Fund for construction) apparently had no mortgages and was spent on something else (???). WebSmart then asked for and received a $1 million loan from the First Western Bank and Trust, using the property as collateral. The banks may well have "personal guaranties" from each WebSmart principal. The two banks did as they should, business as normal, creating as little risk to stockholders as possible.
Wouldn't it be better if the above three government entities now held the mortgage and had "personal guaranties" from WebSmart principles?
A "financial information clause" must be required whereby "the borrower agrees to provide, upon request, any financial statement or information to the lender that may be deemed necessary with a warrant that this information be accurate, correct and complete." The individuals managing these government entities, whether elected or appointed, must have the ultimate responsibility for constant review of the profitability, financial condition and compliance of each loan or grant.
WebSmart should have filed three federal and state tax returns 2000, -01 and -02. An annual review of these documents should have afforded sufficient information of WebSmart's deteriorating financial condition to cause alarm.
Why is financial reporting to government entities not now a requirement?
Why are personal guarantees of the borrowers not required by government lenders?
Can not these requirements be added now instead of waiting for legislation in 2005?
Nowatzki is a Jamestown, N.D., businessman.