Posted on 11/11/2002 8:40:59 AM PST by Constitution Day
Critics attack it, but Golden LEAF President Valeria Lee says the nonprofit organization was created with the future in mind. Created in 1999, the Golden LEAF awards grants and other forms of assistance for economic development, market research, product development, job training and scholarships. The money for the program comes from a national lawsuit settlement reached with tobacco companies over medical costs related to smoking. Golden LEAF is based in Rocky Mount but dispenses money statewide. Lee projects the foundation will receive $2.3 billion by the year 2025, but is far from having that amount in its coffers. The foundation has awarded about $7.7 million in grants to help tobacco farmers trying to find new ways to make money. "We're a long way from it," she said. "We try to be real clear about job creation, business development and work force preparedness." Don Carrington, vice president of the conservative Raleigh think tank, The John Locke Foundation, calls the Golden LEAF Foundation the "mother of all slush funds." "I think Valeria is a good person, but she is running a stupid operation," Carrington said. "She's an honorable person, but the setup makes pretty much everything (the foundation) does dishonorable." Carrington said the foundation gives money in the name of economic development. Grants have included $125,000 for a blast freezer for blueberries in Bladen County, $150,000 for an egg-processing plant in Nashville, $300,000 to increase markets for grain growers, $39,000 for research on sweet potatoes for use in ethanol and other industrial uses and $150,000 to help market goats in Franklin, Wake, Nash and Johnston counties. The Golden LEAF also has provided money for economic incentives of $2 million to help lure California electronics giant Flextronics to locate its East Coast headquarters in Franklin County and $400,000 to help pay costs associated with Universal Leaf's new tobacco processing plant in Nash County. Giving money to a project such as developing a market for goat meat is unnecessary, Carrington said. "It's part of the problem of having government doing things it shouldn't be doing," he said. "Government should not be out there messing in the marketplace. Our people are not starving. Our food supply works well - whether it's goats, beef or pigs. It's up to consumers to sort that out. The only way government should intervene is if we didn't have enough food in the state and a subsidy was required to get people to produce food. That would be a market failure. The government could intervene. That is not the case with the goats." Carrington said the foundation is making grants in the name of economic development. "Every time you look at a Golden LEAF grant, go find yourself a smoker," he said. "We raised the prices on a product (tobacco) that is legal if a person chooses to use it, so that Lee can give out money to the friends of Governor Mike Easley, Senate leader Marc Basnight and House speaker Jim Black. The foundation's whole operation is convoluted and messy. I don't think any honorable person could avoid conflicts of interest and the problems (the foundation) is beginning to have. It's a slush fund controlled pretty much by Easley, Black and Basnight." Lee said the foundation expects to receive about $82 million from the tobacco settlement this fiscal year. Carrington said the state is using old money from cities and counties to balance its budget, while Democrats have preserved the Golden LEAF Foundation for miscellaneous grants. "As a result, we've had local taxes go up," he said. "But we're going to keep the Golden LEAF alive. It's just a matter of priorities, and they've chosen the wrong ones. It's not Valeria's fault. She's just handling the money. It's really up to the legislature. What the Golden LEAF is doing is not only questionable, and has resulted in city and county reimbursements being taken from local governments that have had to raise taxes. But we're going to keep the Golden LEAF alive. It's just a matter of priorities, and they've chosen the wrong ones." Carrington said lawsuits filed by the state on behalf of sick smokers and to pay increased Medicare costs because "evil tobacco is at fault" were costly. "No money has been paid back to the taxpayers," he said. "I didn't see a check in the mail. All they've done is increase government spending, and (they) did it by forcing cigarette companies to raise their prices. It's a great scheme. The money was supposed to pay for increased costs of taking care of sick smokers and to help farmers transition. I have compassion for the farmers on this." Carrington said grants made by the foundation are done in the name of economic development. "The Golden LEAF gave money to Carolina Horse Park between Raeford and Southern Pines," he said. "Any money you give has some economic impact. If I went into your wallet and took $20 and spent it, I could look at it as economic impact. All the money the foundation has comes from a convoluted lawsuit that required cigarette companies to raise prices. Money they give for anything is considered economic development." Lee said The John Locke Foundation is right in its assessment that all Golden LEAF grants are going for economic development. "Golden LEAF was set up for economic advancement," Lee said. "LEAF stands for long-term economic advancement foundation. What we are doing with these venture funds is trying to use our investment as part of an economic recovery for North Carolina. Just as in the past, we have been trying to use grants toward that end." About half the tobacco settlement money ($2.3 billion) goes to discretionary economic development, Lee said. "If the truth be told, the John Locke Foundation is correct in saying about our grants (that they all are made in the name of economic development)," Lee said. "For those that want us to invest in education, that is an economic development strategy. Health care is an economic development strategy, as are the cultural arts. All are certainly economic interests in the community. That is the truth. "What we are doing is trying to improve the lives of families and giving priorities to communities that have historically relied on tobacco or are economically distressed," she said. "That's our mission. It's in our charter." Some lawmakers are questioning the Golden LEAF's decision to invest $30 million in a venture-capital fund, citing possible political connections. Lee said she is happy to clear up an skepticism about that decision. "We provide grants for business expansion in the area, whether it's Flextronics in Franklin County, Universal Leaf in Nash County or Lowe's Home Improvements Warehouse in northeastern North Carolina," she said. "We try to get a major industry to locate in our state, especially in rural communities. We help workers get the skills they need and try to find alternatives for folks who want to stay in farming. That is the story of what Golden LEAF is about." Golden LEAF this year is investing in biotech and bioscience activities. "That is our only departure from other investment activities," Lee said. "Initially, we had set up just to provide money through grants from our earnings investments. We are departing from that and using investment strategically, just as we made grants strategically." Lee said those who have criticized the foundation for investing $30 million in a venture-capital fund are not informed. The foundation made a commitment earlier this month to invest money in biotech and bioscience ventures, and at a later stage, research. "No money has changed hands," Lee said. "These companies are ready to make the move to the market. The concerns raised as to how we selected the individual new groups being formed are based on incomplete information."{M6 The John Locke Foundation poses the question: Is the Golden LEAF Foundation truly independent of the three most powerful men in the state - Easley, Black and Basnight? "The money was to pay for increased costs of taking care of sick smokers," Carrington said. "The tobacco industry has been in decline for a long time. Why do they get treated better than any other industry? The settlement was to directly help tobacco farmers. The Golden LEAF is just a slush fund." The fight for control of the N.C. House of Representatives following Tuesday's election will be a big deal, Carrington said. "Every Republican in the General Assembly voted against establishment of the Golden LEAF Foundation, and several Democrats were against it," he said. "It was very controversial when it was set up." If Republicans get control of the House, Carrington said money now going to the Golden LEAF Foundation could end up in the General Fund, where legislators could use it to compete for better uses. Once the fight for control of the House is over, it will be interesting to see appointments made to the Golden LEAF's board, he said. "Democrats still control that board," he said. "But Republicans who don't like this nonsense might make it hard to get away with." Lee said the foundation has nothing to do with who serves on its board. "Members are appointed by the governor, speaker of the House and president of the Senate," she said. "Each of those people appoint five members. It's not as though Golden LEAF chooses its members to be on the board." Lee said she does not think the Locke Foundation has paid much attention to how Golden LEAF is making its grants. "We've made grants for two years and met Friday to look at our third year of grants," Lee said. "Surry Community College and Republicans and Democrats in Surry County were very pleased we were responding to farmers and helping to expand the wine industry in that part of the state. "We've done our work without regard to what might be perceived as political districts. We have looked at tobacco farmers as a class and people who get involved in the tobacco industry. We've said, what can we do to help you make transitions to future opportunities? Tobacco is still an important crop in North Carolina, until it is no longer a viable option." Lee said the foundation has supported projects such as the Tobacco Growers Association. "Governor Easley and others have not called me and said, this is a grant you have to make," Lee said. “The governor and others are an influence because the Golden LEAF Foundation is mindful of what they are doing to improve conditions in North Carolina. We hope that what we're doing is to complement good efforts, wherever they might be." Is the Golden LEAF Foundation a slush fund? "Absolutely not," said Lee. "We definitely are not a fund where people are calling me and saying, send funds to A, B or C. It is a misrepresentation of the Golden LEAF Foundation for the Locke Foundation to call it a slush fund." Butting Heads
By TOM MURPHY, Rocky Mount Telegram
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