Roanoke Times explores MZM, Goode, Martinsville & Virginia relationship.
The Roanoke Times deserves credit for providing the resources for writer Laurence Hammack and researcher Belinda Harris to research the relationship between Martinsville, the state, MZM, and Rep. Virgil Goode, using FOIA requests to gain access to internal documents. The resulting story suggests that Martinsville may have gotten the short end of the stick in this deal, and that things may not turn out so well for Martinsville in their relationship with MZM. Here’s one of the more interesting bits, about Goode’s role in engineering MZM’s sweetheart with the state:
According to the documents and interviews, Goode’s involvement — combined with a desire by everyone involved to help a job-starved area — led to a state incentives package that ventured “outside the normal procedures.”The result was a sweet deal for MZM.
The company acquired the shell building at less than half its value. To make up the difference, Martinsville obtained $500,000 in state grants and agreed to pay back the money if the company did not deliver on its promises of jobs and site improvements.
“That’s not the way we do things,” said John Sternlicht, general counsel to the Virginia Economic Development Partnership, the state agency that drafted a performance agreement.
“The company is usually on the hook,” Sternlicht said. “But in this instance, based on [Martinsville's] urgent request, this is what we did.”
Goode was the one who suggested the unusual agreement, which was reached at a time when negotiations between MZM and Martinsville appeared to be bogging down, according to e-mails.
As Hammack explains, the MZM/Goode/Martinsville/Virginia relationship was both odd and strained. MZM clearly wanted to squeeze every possible penny out of Virginia and Martinsville. They’ve now left Martinsville in the awkward position of potentially owing hundreds of thousands of dollars to the state if MZM — over which Martinsville presumably has no control — fails to meet their projected 75 people employed or $4.4M in capital investments within thirty months. To date, halfway through that period, MZM has created 35 jobs and nearly half of those capital investments are completed.
The trouble, though, is that MZM is in bad shape. The Pentagon ordered a freeze on any new MZM work in late June, and their sugar daddy, Duke Cunningham, has been forced to resign from congress and is facing prison time. The man who built and ran the company, Mitchell Wade, was forced to quit the company this past summer, and he’ll inevitably be facing prison time, too. MZM’s entire business model is premised on receiving contracts in exchange for bribes. With the end of the bribery will come the end of the contracts. So why would they double the size of their operations in Martinsville? If they’re not getting new work, presumably operations would, at best, remain static in size. More likely, they would shrink.
If Martinsville ends up having to pay out hundreds of thousands of dollars for MZM’s non-performance thanks to a deal designed and brokered by Rep. Virgil Goode, that’s going to put Goode in a tight spot. For Martinsville’s economic situation, that would really just be adding insult to injury. Or, more accurately, injury to injury.
Anyhow, read the Roanoke Times article — I haven’t done justice to the long investigative piece for which, again, the Times deserves a lot of credit for putting their resources towards.
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