Amid controversy in Commerce, loaned executive program is axed

CHARLESTON, W.Va. — As the Governor’s Office continues to eye its own Department of Commerce with scrutiny, a program to embed executives from private businesses in the agency has been stopped.

The Governor’s Office has been increasingly critical of aspects of the Commerce department for weeks, starting with controversy over the long-term flood relief efforts overseen by the agency and culminating with last week’s forced resignation of Secretary Woody Thrasher.

On Friday, as Gov. Jim Justice and his general counsel were describing the reasons for Thrasher’s departure, they ventured into a previously undisclosed investigation of how a private investors worked alongside the Commerce department on development issues such as the potential $87 billion deal with China.

Brian Abraham

“We found many ethical issues at Commerce because of the way the programs were being run through a program called Excel, where individuals were allowed to come into the program that had inherent conflicts of interest,” senior counsel Brian Abraham said during the Friday press conference.

Excel was one of Woody Thrasher’s initiatives that he described publicly and proudly.

“We’re very excited about a new initiative called the Excel program, which will recruit loaned executives and retired executives to help with our staffing. In that way, we’re going to be able to go out and target a whole bunch of industries and cover a lot more bases than we have in the past,” Thrasher told West Virginia Executive magazine last August.

A month after that, he described the program with similar excitement to Huntington’s Herald-Dispatch newspaper.

“Participants will confront challenging economic development issues and help grow jobs in West Virginia,” Thrasher said. “Participants will solve problems, improve processes, and design new programs to change the trajectory of West Virginia.”

The close relationship between private executives and the state agency would benefit both, Thrasher told the Herald-Dispatch.

“It should be a program that benefits the individual. It gives them the chance to interact with people they would normally never be able to interact with,” he said last September. “Secondly, it’s great for the company. It takes a bright young executive and puts them in an environment where they really develop their business skills substantially.”

With Thrasher now gone, Excel is no more.

The website at Commerce that used to describe it now gets a “page not found error.”

And the Governor’s Office confirmed on Monday that the only remnant of the program is an aspect where retired executives mentor younger ones.

Thrasher was asked to resign last week after extended controversies over how the state was administering long-term flood relief money through the Department of Commerce.

Gov. Jim Justice

But the governor said there was more to Thrasher’s departure than just that. “Too many mistakes. That’s just all there is to it,” Justice said Friday on MetroNews’ “Talkline.” “And it just became ever so apparent from the standpoint of confidence and everything else that it just had to be.”

Justice went on to describe an aspect as “people who were put on an Excel list and that were going to China and basically, maybe even working for their own interest rather than the government’s interest.”

At least one of those who was participating in the Excel program was Clay Riley, an executive vice president with Thrasher Group, the engineering company that Woody Thrasher and his father Henry started.

Riley wasn’t trying to hide the relationship. Both Excel and the Thrasher Group have been listed on his LinkedIn page and on his Twitter account. Riley wasn’t immediately available for comment today.

Riley was working with two engineers from other companies on a broad effort to help evaluate site readiness for the state. Executives in the program were not supposed to work on projects that would involve their own companies.

Woody Thrasher had been operating with a blind trust for his assets but still had a 70-percent ownership stake in the company bearing his name. It’s also hard to imagine that, once he became Commerce secretary, he’d forgotten the executives in his own company.

Asked about the program at the end of a Monday news conference about other matters, Gov. Jim Justice turned the question over to his senior adviser, Bray Cary.

Cary said from the perspective of the Governor’s Office, the Excel program crossed an ethical line.

“The loaned executives were actual executives who were still being paid by the companies they worked for, and they were in there trying to help out but there were some conflicts and ethical challenges because sometimes the very companies they worked for were doing business through or with the Commerce department,” Cary said.

“So that has been shut down so we can get away from any of those conflicts.”

Cary’s own connections have been questioned for his role with the Governor’s Office. He’s also a board member for the natural gas company EQT, with millions of dollars in stock holdings.

Cary started with the Governor’s Office as a volunteer but this spring was put on the payroll at $8.75 an hour. This past legislative session, a bill passed to make the state Ethics Act apply to ‘public servant volunteers.’ People called it the Bray Cary bill for short.

Speaking after Monday’s press conference, Cary said there is a role for the private sector in West Virginia development but that such participation crossed the line with Excel.

“The theory of the program was really good but the problem is there were ethical conflicts under West Virginia ethics code about how those people in the companies they were with could be involved going forward,” Cary said.

“So you don’t want to have the companies on the outside inside the Commerce department.”

On Friday, the governor and general counsel Abraham described an investigation into the Commerce department that focused on Steve Hedrick, the CEO of Appalachia Development Group LLC. and  CEO of the Mid-Atlantic Technology, Research and Innovation Center, known as MATRIC.

They contended that Hedrick had become closely involved with talks over a potential $80 billion deal with investors from China and “probably shouldn’t be involved in the negotiations.”

Matrick released a statement on Friday that Hedrick was happy “to support the Commerce Department’s mission to attract business to the state.”

One of the problems with Hedricks’ situation, Abraham told The Charleston Gazette-Mail last week, was that he was not a part of Excel, which would have allowed a more official status.

Part of the allegation was that Hedrick had flown on state aircraft, including a trip to Chicago where he was the only listed passenger. But another part of the allegation was that Hedrick would be able to use insider status for private gain through the investments.

“The whole issue was that the individual in question was part of the West Virginia delegation and yet they stayed behind and met with, in this case the Chinese, seeking a direct investment into his company,” Cary said Monday.





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