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12/18/2015 Chairman Sheehan highlights Commerce Corporation overhaul at Oversight meeting
STATE HOUSE – Chairman of the Senate Committee on Oversight James C. Sheehan presided over a meeting of the Oversight Committee on Dec. 17 and heard testimony from representatives from the office of the Secretary of Commerce. The testimony gave a status update on the Commerce Corporation’s Jobs Budget and their efforts for statutory compliance on the 2013 Rhode Island Public Law Chapter 243 and Chapter 490 — the Commerce Corporation Transparency and Accountability Reform Law.

“One of the major problems with the previous EDC board’s handling of the loan guarantee program was the lack of clear and definitive lending guidelines and requirements, which in turn led us to the infamous 38 Studios deal,” said Chairman Sheehan (D-Dist. 36, North Kingstown, Narragansett).  “This newly enacted law requires such guidelines, along with a loan risk assessment, and an advance statement of how any loan or loan guarantee has met the board’s guidelines and lending standards, as well as, each year, the board will report back to the Senate and House Finance Committees on all loans and loan guarantees in their portfolio.  With these new safeguards in place, it is unlikely another 38 Studios will blindside the taxpayers of Rhode Island and the Commerce Corporation can help bring back fiscal stability and growth to the state’s economy,” added Chairman Sheehan.

The Commerce Corporation Transparency and Accountability Reform Law was enacted in response to the failed 38 Studios deal with the hopes of never repeating a similar disastrous business deal.  Reforms included in the change of law were rebranding the Economic Development Corporation into the Commerce Corporation and moving the agency under the Executive Office of Commerce with the newly-created Secretary of Commerce as the agency’s CEO; creating a Chief Operating Officer to run and improve the day-to-day operations at the RICC; adding the Chair of the Governor’s Workforce Board to the board to unify the state’s economic and workforce development efforts, which is central to the Governor’s “Real Jobs” initiative; and requiring the creation of a Capital Finance Subcommittee which is responsible for drafting guidelines, principals, and processes for all loans, loan guarantees and financing programs, including risk assessments and metrics which the board can use to determine the effectiveness of each program. 

Additionally, there are greater transparency and good governance requirements on the Commerce board, including the required adoption of a mission statement, performance measures, assessments based on those measures, a code of ethics, internal accounting standards, and clear and public guidelines for items such as employee travel, credit card usage and marketing expenses.  The law also requires important documents including mission statement, by-laws, regulations, fiscal information, financial statements, and other items be posted on the Corporations website so as to not only increase transparency but to also be more customer centric and user friendly.  Lastly, the corporation is now subject to a performance audit every five years to be conducted by the Bureau of Audits.

For more information, contact:
Andrew Caruolo, Publicist
State House Room 20
Providence, RI 02903