By Leisa Zigman I-Team Reporter
Moberly, MO (KSDK) - It was supposed to be a sweet deal, a new manufacturing plant leading to 600 good paying jobs in Missouri.
Instead, the Chinese company Mamtek has been a bitter failure, leading to multiple state and federal investigations into how it all collapsed.
Wednesday marked day two of testimony in a Missouri state house committee investigating Mamtek's failure.
Missouri's Department of Economic Development Director David Kerr testified that Missouri should not be too aggressive in looking at companies that want to locate here if it doesn't want to scare them away.
In an effort to hold everyone accountable, here is some context.
The SweetO plant was supposed to be up and running and producing artificial sweetener in the town of Moberly. That is about 30 miles north of Columbia.
In 2010, the state of Missouri and Moberly city officials were touting the project that would bring hundreds of jobs and pay about $17.50 an hour.
The city of Moberly floated $39 million dollars in bonds to help finance the project and the state of Missouri offered $17 million dollars in tax credit incentives.
This September, Mamtek's financing fell apart and it failed to make its bond payment. Construction stopped, and now Moberly may be on the hook for all the bad debt.
At a hearing into what some call the colossal failure of this Chinese investment project, documents reveal Missouri economic development officials were made aware of concerns about Mamtek several months before they announced they had awarded the company millions of dollars of incentives to build a factory in Moberly.
The emails raising the red flags were publicly released Tuesday.
According to email records obtained by the House Interim Committee on Government Oversight and Accountability, state economic development officials asked for a background check to be conducted on Mamtek by Armstrong Teasdale attorney Edward Li, who is a Chinese trade consultant for the Missouri Department of Agriculture.
In an April 13, 2010 email to two Department of Economic Development officials, Li said that Mamtek's plant in Fujian Province, China, had never started to manufacture artificial sweetener. Although the facility was nearly complete in 2008, the local conservation department protested that it was not properly zoned, and Mamtek agreed in 2009 to move out of the facility, Li said.
In May, Department of Economic Development project manager Lynne Shea asked Li to check out other potential addresses for Mamtek in Hong Kong, noting that the company claimed to be producing a product in China. Li responded that there were no manufacturing plants at those addresses.
Documents also reveal on the same day the state finalized its incentive offer to Mamtek, state officials learned Mamtek's global Headquarters in Hong Kong was "a business center which provides many small cubes to different companies."
Corey Mehaffy, President of the Moberly Area Economic Development Corp., testified Tuesday that department officials never shared Li's emails with Moberly officials who were pursuing the Mamtek project. Asked by committee chairman, Rep. Jay Barnes, whether that email would have raised a red flag, Mehaffy responded: "Absolutely."
Moberly officials testified they did their due diligence but relied a lot on the state and private sector financial and legal advisers.
Governor Jay Nixon told the I-Team's Leisa Zigman the state did its job in promoting Missouri and defended trying to bring Mamtec to the state.
"On the state incentives you watch those very carefully but when you talk about local governments and local economic development agencies we don't tell them how to vote. We don't spend their money," said Nixon.
Zigman asked whether the Mamtek debacle was the fault of Moberly city officials. The governor said, "I think each of the sectors, the city sector, the county sector, the state sector, each have responsibility for their dollars."
The governor points out the state's piece of the incentive package were linked to jobs. The project collapsed before state aid was triggered.
In the meantime, the city of Moberly may be forced to go into default.
The SEC, Missouri's attorney general, and the state house and senate are all investigating the Mamtek debacle.
KSDK