CHARLESTON, W.Va. — Besides allegations by the Governor’s Office that he’d mishandled West Virginia flood relief, Woody Thrasher was hit with two more claims as he was forced from office.
Now running for governor, Thrasher disputes them both.
And for the first time, he addressed two more allegations aired out by officials in the Governor’s Office after Thrasher was forced out as Commerce Secretary.
The first was his oversight of a loaned executives program at the department. These were experts from private companies who were on loan to Commerce. One was Clay Riley, an executive vice president with Thrasher Group.
The other allegation was that Thrasher had allowed private businessman Steve Hedrick to catch a solo flight on a state plane to meet up with Commerce officials for a trip to China and then stay another day to network.
Each was an issue brought up after the Governor’s Office hired private counsel, former federal prosecutor Mike Carey, to investigate the Department of Commerce in its own administration.
The findings led Gov. Jim Justice to conclude, as he said this week, “We had a Commerce department that, tell you the truth, had some rogue players. And it got out of control. By the time we found out about it, we had to step in and do something.
“We cleaned house over there, and we had people who were doing things that were surely inappropriate.”
Thrasher disagrees that either of the allegations amounted to actual wrongdoing.
Hedrick in China
“Couldn’t believe they criticized that,” Thrasher said. “First of all, it was a long-term policy when you’re recruiting industry for West Virginia, you take someone with you who knows that industry.
“If you’re in automotive, you take somebody who knows automotive. If it’s tourism, you take somebody who knows tourism. If it’s petrochemicals, you take somebody who knows petrochemicals.”
Hedrick leads the MATRIC development firm based in South Charleston. He has been at the center of a proposal to build an Appalachia Storage & Trading Hub that has been promoted by West Virginia’s elected leaders.
The storage hub was believed to be one of the main investment targets when West Virginia hatched an agreement with China Energy in late 2017.
“When this China thing came to the forefront, I went to the person I thought knew the most about it, and that was Steve Hedrick,” Thrasher said. “Absolutely he was a valued partner.
“To be criticized for flying my friends all over the world couldn’t have been further from the truth.”
As part of that arrangement, Hedrick wound up alone on a $4,228 state airplane flight to Chicago to link up with the trip.
“Took him on the state plane to Chicago instead of D.C. so he could catch the plane we were on because the other direction was weather delayed,” Thrasher said, “and I’d do it a hundred times again.”
Thrasher acknowledged that Hedrick also stayed over in China a day longer than the rest of the group to network — “really, I think to promote interest in the shale hub.”
“Come on, man, we’re trying to get a shale hub in West Virginia. We’ve got some Chinese interested in investing. By all means, Steve, stay on. So I was certainly encouraging of that.”
Hedrick — and MATRIC — wound up being asked to repay $23,000 in total expenses for several flights on state aircraft.
Brian Abraham, general counsel for the Governor’s Office, continued to say the decision was wrong.
Contacted on Friday, he said it reflected poorly on Thrasher’s judgment.
“The issue with Hedrick was one of self-dealing. Then that became a question of his ability to spot conflicts and manage those,” Abraham said.
Abraham characterized Hedrick’s additional day as an effort for his own business.
That’s a tricky issue. The hub is estimated to cost $10 billion. Hedrick has been in a business partnership to pursue it, but the project has had political and financial backing from government.
The vehicle for the project is a nonprofit consortium called the Appalachia Development Group, which was incorporated in Delaware in 2017. Hedrick is the chief executive officer.
“It wasn’t that he stayed the extra day, but that he stayed the extra day and tried to get a loan for his personal businesses when he had gone over there representing himself as a member of the West Virginia delegation, “Abraham said.
“If you go wearing your own hat, good. You can’t go in the door wearing a government hat and then switch out once you get in there.”
Thrasher also hatched an idea to directly involve experts from West Virginia’s private business sector in development efforts by the state.
“Which I thought was my best damn idea,” Thrasher said when the subject came up.
It was called the Excel program and embedded executives from private businesses in the agency
Thrasher said it came about when he took over Commerce and evaluated surrounding states as competitors.
“And I saw the staffing they had. And I looked at the staffing we had and I saw we were woefully neglect. So I said, ‘OK, how am I going to get the racehorses I really need to make a difference?'” he said.
He recruited loaned executives to work outside their sphere of influence with another set of retired, expert executives.
“This is great stuff. This is how we move forward,” Thrasher said last week. “These are people who love West Virginia. They’re so talented.”
One was Clay Riley of Thrasher Group, which was owned by Thrasher, although he had entered into a blind trust.
Participants were supposed to work outside their normal realm. Riley worked on identifying available sites for development, an ongoing challenge for West Virginia.
Thrasher noted that the group also had engineers from competitors, Potesta & Associates and Terradon Corporation.
“There was one associated with my business, Clay Riley. Also two competitors, Terradon and Potesta, because I reached out to my competitors,” he said.
“Let’s work together to improve West Virginia,” Thrasher said. “I thought, and still think, it was a brilliant idea.”
Abraham said Thrasher was operating with ethical blinders on. He made reference to Clay Riley’s brother Chad, who is chief executive of Thrasher Group.
“The issue with the embedded executive loan program wasn’t inherently a bad idea,” Abraham said. “The addition of the brother of the CEO of Thrasher engineering was probably not a good idea because of the potential conflict.”
One more thing
While Abraham was on the telephone, he brought up yet another aspect of the controversies.
He objected to the way Thrasher handled the departure of Josh Jarrell, who had been deputy secretary for Commerce and the agency’s general counsel.
When the Governor’s Office became suspicious of all these activities, it employed outside counsel, former federal prosecutor Carey, to investigate.
As Abraham conveyed what happened, the investigation team asked Jarrell about Hedrick’s status on the China trip. The basic question, it seems, was whether Hedrick was officially functioning as a member of the loaned executive program.
Jarrell was perceived as not being straightforward about Hedrick’s status.
“In my mind that was an egregious act for an attorney who had messed up the situation to start with by not making sure Hedrick had filled out the proper documents regarding conflicts of interest,” Abraham said Friday.
Reached on Saturday, Jarrell declined to comment on that characterization.
Thrasher also declined to discuss these allegations, which were brought up after the initial interview.
At the time, the Governor’s Office confronted Thrasher about Jarrell’s statement.
“He was told, based on all those problems and during the investigation, the person who was the counsel gave a false statement to our investigator regarding Hedrick’s conflict form,” Abraham said.
He said Thrasher was ordered to terminate Jarrell’s employment.
But Jarrell already had received a waiver from the state Ethics Commission to seek new employment and accepted an offer from a private law firm
So it got back to the Governor’s Office that Jarrell had resigned instead.
Abraham characterized the distinction as amounting to Thrasher disobeying a direct order.
“When we told him to do something, he told us he did it,” Abraham said. “Then he, Woody, allowed him to do something other than what he told us.”
Abraham said that, too, reflected on Thrasher’s judgment.
“I think it shows he was directly disregarding instruction given from the governor’s office,” Abraham said.
Thrasher was forced to resign, Jarrell was out and the Development Office director, Kris Hopkins, moved out of state for reasons unrelated to controversy.
And, with that, West Virginia’s economic development agency spent months with leadership questions at its very top.