The Michigan Economic Development Corporation, or MEDC, has been in the news for an alleged scandal. A probe by the Attorney General focuses on Fay Beydoun, a Metro Detroit businesswoman active in Democratic politics, for allegedly misusing a $20 million state grant, administered by the MEDC. And the real question is: Why didn’t this happen long before?
Let’s face it: The MEDC — and its sidekick, the Strategic Outreach Attraction Reserve (SOAR) — are looking like nothing more than legal slush funds. They’re a big pile of money sitting there to give to …. whom? On what basis? With what metrics? Let’s not forget that Ms. Beydoun’s $20 million may have come through the Democratic Administration of Gretchen Whitmer, but legislative Republicans approved it. This is a bi-partisan issue.
The premise of the MEDC is simple: If companies want to come to Michigan with their jobs and tax base, we need to offer them lucrative deals in order to compete with other states and countries. Our competitors like Indiana, Ohio, and Illinois offer packages, so why unilaterally disarm in the recruitment war?
But here’s the problem: What all this leads to are big bidding wars, with companies playing the states off each other for goodies. If you give, say, a hypothetical ABC Inc. a nice package, everyone will now demand the going rate.
There’s also the possibility of corruption. If, say, XYZ Tech wants a $20 million sweetener, why not pay off a few key legislators or friends and family? This is how it’s done in lots of places, so the wonder is that it’s not widespread here.
But even if there’s no overt crookedness, the very system is itself suspect, according to former state Rep. Chuck Moss (R-Birmingham), who chaired the House Appropriations Committee back in 2011-12 when Republican Rick Snyder was the governor. Who decides what industries deserve public money? The governor? A committee of experts? If Whitmer or Snyder are so good at picking economic winners and losers, they should be running mutual funds. Former Gov. Jennifer Granholm was so enamored with the concept of Green Industry that she showered millions on eco-friendly firms. She continued her romance as Energy Secretary in the Biden Administration. The payoff? Slim to none. Government officials should not be picking economic winners and losers, mainly because they haven’t proved they have any qualifications for it — even if they’re honest.
And where does all that money to subsidize the favored companies come from? From the existing Michigan businesses who aren’t the favored ones. Why should Joe’s Body Shop pay taxes to subsidize out-of-state ABC Tech? And why should we have to bribe businesses to come here in the first place? Why aren’t they coming here on their own? Despite cheery chirping on our economic climate, especially from MEDC, our relative position is tepid. We don’t have the boom, go-go places like Texas or Florida. Our educational system is spending more but educating less, according to Whitmer herself in this year’s State of the State. Right now, we’re mediocre at best, if not downright poor.
Maybe Michigan should work on making businesses line up to come here. Make it good for all, not just tax some to subsidize others.
MEDC’s current embarrassment should prompt a hard question: Why have MEDC at all?
(Editor’s Note: Next week’s article will be published not on Sunday, but on Labor Day, Monday, Sept. 1.)
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As bad as things appear at MEDC, it’s nothing compared to the extortion and rank political favoritism in D.C. these days. Free market Republicans are now super happy with the government owning equity in private companies, or forcing companies to pay millions to either the government or President to avoid being litigated or fined out of business.
And lately the only states that get timely positive responses to requests for emergency assistance are the red states, even though those states are federal welfare cases while California, New York, New Jersey, Massachusetts, Connecticut, Illinois, Washington and Delaware provide the bulk of tax revenue for D.C. to redistribute to red states.
Walt, the corruption in the MEDC is very similar to Donald Trump‘s national socialism in demanding shares in companies
“Walt, the corruption in the MEDC is very similar to Donald Trump‘s national socialism in demanding shares in companies”
The Federal investment (not a “demand”) in Intel is an extension of the Strategic and Critical Materials Stock Piling Act. The ChiComs are going to blockade Taiwan, from whom we receive 45% of all logic IC chips and all the really sophisticated sub 10 nanometer line spacing IC chips. This will revert the U.S. economy to 1960 and shatter the U.S. military.
Drooling Joe’s administration actually initiated the Intel investment after the USITC circulated a frightening 2023 study titled: ‘U.S. EXPOSURE TO THE TAIWANESE SEMICONDUCTOR INDUSTRY’. It is their Economics Working Paper 2023–11–A and you can download it for free on line.
“Walt, the corruption in the MEDC is very similar to Donald Trump‘s national socialism in demanding shares in companies”
Trump’s [Jewish] Secretary of Commerce Howard Lutnick just voided out Drooling Joe’s $ 7.4 billion giveaway to Natcast, a bogus semiconductor technology consortium staffed by Democratic operatives. The Democratic giveaway to Natcast could validly be compared to 1930’s German support of makeshift National Socialist enterprises. No compensation to the government and total control by political operative.
The 1939 Strategic and Critical Materials Stock Piling Act used to support MP Materials and Intel, on the other hand, was the very first anti Nazi legislation passed by Congress and signed by FDR. It is delusional to claim that Trump’s invoking the terms and conditions of America’s first explicitly anti Nazi public law is a form of National Socialism.
“….California, New York, New Jersey, Massachusetts, Connecticut, Illinois, Washington and Delaware provide the bulk of tax revenue for D.C. to redistribute to red states.”
This is not true because this deceitful factoid excluded all COVID spending. When you include all COVID spending, only Massachusetts and New Jersey are donor states. California runs a $ 36 billion annual surplus with the Fed and New York runs a $ 13 billion annual surplus with the Fed. Connecticut, Washington and Delaware run surpluses in the vicinity of $ 5 billion while Illinois runs a $ 14 billion surplus.
The Federal tax collection from states is heavily skewed by 1) capital gains taxes and 2) corporate income taxes. These two taxes tend to pull in revenues that are ostensibly ‘earned’ in single states, but are actually income from all of the 50 states due to the multistate nature of corporations’ sales and stocks. As corporations pull out of California, New York, New Jersey, Massachusetts, Connecticut, Illinois, Washington and Delaware; you will see these numbers level off.
“….And lately the only states that get timely positive responses to requests for emergency assistance are the red states….”
Wondered where this gem came from. Then Politico ran a story today titled ‘FEMA staffers accuse Trump of weakening disaster programs’ by Zach Colman.
What is really being said here is FEMA is no longer discriminating against victims of natural disasters based upon their race or political preferences, a cruel practice of many (now ex) FEMA employees. As in Florida and North Carolina.during the aftermath of Hurricane Helene.
You might want to refresh your memory of Drooling Joe’s own FEMA Administrator, Deanne Criswell’s statements and HR actions, after their dilatory response to Helene. FEMA did nothing for the bright red western Appalachian region of North Carolina until President Trump was inaugurated.
Walt – FEMA is probably not the hill you want to die on. Not only are they rigidly politicized, but they are grossly incompetent as well:
Homeland Security Secretary Kristi Noem just fired 24 workers at the Federal Emergency Management Agency (FEMA) after a cyber breach threatened national security. FEMA’s chief information officer, chief information security officer, and 22 other IT employees allegedly responsible for the security failure were immediately terminated.
Secretary Noem accused these longtime FEMA employees of working to prevent DHS personnel from healing the cyber breach and downplaying how bad the breach was when DHS stepped in to fix the issue.
This is superb and speaks not only to Michigan but government in general throwing our money all over the place and leaving unelected bureaucrats to decide how our taxpayer dollars are spent. And we wonder why we are $37 trillion in debt?
I, unfortunately, drafted the documents that created the MEDC under the urban cooperation act. Governor Engler and his staff wanted to create an economic development agency based more on private business practices than a government agency. Bad idea since all the money is taxpayer money. But the MEDC was able to pay corporate level compensation rather than civil service. The present case with the zMEDC fighting the AG’s subpoena reflects how screwed up this is. If lit was a state agency the governor would be hard pressed to stonewall the AG. Maybe there will be a bipartisan effort to transfer the H. agency back in the State government. It could happen with a simple paragraph in the boiler plate of the budget, if they ever dropped a budget.
The funny thing here is that “Global Link International” was not even a private business but a non-profit entity. It was described as a “business incubator” for international startups. Nobody really seems to know what it actually accomplished of any significance.
It seems that $10 million had already been spent by the time the first required MEDC audit had been due to be conducted.
Beydoun is a former vice-chair of the Michigan Democratic Party – and a previous donor to Dana Nessel’s campaign committee. More conflicts of interest.
Fay Beydoun’s seat on the MEDC executive committee did not expire until April 5, 2024.
Mr. McLellan, the desire “pay corporate level compensation rather than civil service” is the problem. If it was a state agency, this would not be a problem. The information would be there and MEDC would be subject to oversight. But John Engler did not want that because, in my opinion, he did not want oversight. Except from himself.
No offense, but MEDC weas designed to fail.
My reform suggestions will be found a wee bit later. Dinner is calling.
You mean to tell me that a mere meal is of more importance than WSB? Perish the thought!!
Thanks for this article!
I was at a meeting of GOP activists last Thursday in Bloomfield Township hosted by Bruce Moss. Bruce was not only a state representative but also has served as mayor of Birmingham. This very issue was discussed with the meeting’s guest speaker, Aric Nesbitt. Nesbitt has led the charge to have a federal investigation of the Global Link grant.
One aspect was the fact that conflicts of interest existed as Fay Beydoun sat on an MEDC committee and further reportedly had friendly ties to MEDC chief Quentin Messer – and this is why cellular phone records of Messer are being sought by the Michigan A.G.’s office – and possibly why he (Messer) has retained legal counsel to fight the subpoena of these records.
Messer, an Ivy League grad with vast political connections, has been caught up in a swirl of controversy for the last several months over his leadership at MEDC.
Ms. Beydoun of Global Link formerly headed the Arab-American Chamber of Commerce following the tenure of Nasser Beydoun – who had run in 2022 for the U.S. Senate as a Democrat before being disqualified from the ballot by the Michigan Secretary of State.
Fay Beydoun had been a prolific donor to Democratic causes and specifically had ties to Governor Whitmer – which has reportedly been confirmed via e-mail traffic between the two.
Why this grant was issued and the level of oversight of grant funds once paid over to Global Link will be a key source of inquiry. Right now GOP leaders – such as Nesbitt and other key officeholders – are licking their collective chops at finding out what Whitmer and other prominent Democrats knew and whether corners were cut to help grease the skids for Beydoun to receive this grant.
Fay Beydoun was undoubtedly an MEDC insider and a heavy Democratic Party donor – and those facts alone has raised eyebrows on why this grant was approved in the first place.
I meant to say “Chuck Moss”. There is another lawyer in Oakland County named Bruce Moss, and I mix up the two often. Chuck was the host last week.
Idiot government types not capable of running a candy store are passing out taxpayer money to the well connected. The next budget for the MEDC should be ZERO.
Over the past five years, complacent state lawmakers on both sides of the aisle and a self-serving Executive Committee appointed by the Governor, have allowed CEO Quentin Messer to turn the MEDC into a secretive & corrupt swamp filled with unethical behavior and conflicts of interest. The first step in draining the swamp is to end the SOAR (slush) fund‼️The second step should be to either dismantle the MEDC entirely or remove the CEO and Executive Committee from office for gross negligence and let the next Governor elected in Nov 2026 to start fresh.
I agree.
And it should be a campaign issue for Gretchen Whitmer or any other elected official who contributed to this mess with “Global Link International”.
Bill, you are one of the best at bringing this travesty of justice out in the open. No, you ARE the best. Big tip o’ the hat.
So here we have what makes politics at both the state and national level stinketh to high heaven.
Here are the players:
The Stakeholders (Employees who hire Marxist leaders (unions) to represent them), who hate the evil capitalists even though it is the capitalists who provide their jobs in the first place and give them their stake in the game.
The Shareholders (Owners), who are too often greedy sons o’ guns taking excessive cuts of the profits at the Unknowing’s expense.
The Unknowing’s (know nothing ostriches with their heads firmly stuck in the sand) who wouldn’t know a profit from a loss if it bit them. Often called customers.
And so, we get this kabuki dance of Marxist stakeholders vs greedy shareholders. And invariably we get this situation all over the US where corporate taxes are way too high, so the crooked pols can say they are soaking those evil corporations for doing nothing more than providing the Unknowing’s a service. For the millionth time, corporations don’t pay taxes! The unknowing customers do. The corporations just pass the tax along. So, what happens? Taxes are too high but then unscrupulous politicians either claim they are doing the public a service by making those evil corporations pay heavily, or, we get the flip side, 1000 flavors of how the capitalists pay off the crooked Marxists through third parties, a la MEDC.
So ultimately, we get a dog-eat-dog telephone booth knife fight between the states on how to pay off the corporations to come to their states without letting the Unknowing’s know about it. Once in a great while the process gets fouled and gets into the news where the Unknowing’s get wind of it. Then there is a mad scramble in the courts to sweep the whole matter under the rug, like we see playing out here with the MEDC.
Although I am generally conservative, here is where I often concur with the Marxists. I’d rather side with the team that tells me to my face they will screw me at their earliest convenience, than a hypocrite politician tells me they are gonna fight like hell for me then set up a system (a la MEDC) rife for corruption to screw me behind my back. I hate liars like that. I’ll take the truth telling killers.
Pols, please, put your cards on the table, admit this is the system we are up against, lower Corp taxes to lower, or equal to, our closest neighbor state levels, set up a corporate bribing coffer under a legal sounding name (MEDC is as good as any), but make it TRANSPARENT so as to education what we can of the Unknowing’s.
Amen, Bill
Nice article, Bill, with a de facto part 2 appearance by Chuck Moss. And a good appearance on OTR.
Is MEDC a colossal boondoggle? As structured, absolutely! But it might be fixable as my subsequent comments in the upcoming paragraphs will try to do.
As Mr. McLellan noted in his earlier response, MEDC was designed as a work around civil service. Governor Engler wanted to find a way to use taxpayer money to “attract business” while simultaneously paying folks running the agency who should be in the civil service at corporate-level compensation, and just as importantly, avoid public scrutiny. Now this is important to note because John Engler effectively owned the Civil Service Commission. As a retired state employee and former chief steward in UAW Local 6000, one could not tell when the OSE farted or the CSC sneezed. (We all thought that it was fitting that OSE moved into the CDC building to make it easier to give the CSC and Department of Civil Service instructions, editorial comment). If they were a state agency, the director would be outside the control of Civil Service, but the remaining staff would not. The governor could put some of them into the Senior Executive Service (SES), but even then, they will be under the CSC Rules and Regulations. But as I noted, even when John Engler would have controlled the MEDC through the CSC, that was a bridge too far. He wanted no real oversight; he got it; and we’re reaping the consequences now.
You are right that our education system sucks and is seriously underproductive. The recent Bridge Magazine articles on education by Mike Wilkinson and Ron French show that the only thing consistently going up with the increases in funding are the number of administrators school districts are hiring. Truancy as well. Not so achievement scores. We have not recovered from COVID lockdowns and whatever achievements the extra funding was supposed to get, we haven’t seen them. Getting rid of school and school district report cards has not worked. Universal school breakfast and meals (free meals for the children of the wealthy) has not worked. We now look UP to Mississippi for school achievement. Governor Whitmer, fed up with the State Board of Education, created MI-LEAP, an effort to circumvent the SBE. That hasn’t worked either. The only words that describe our recent educational reforms are failure, disaster and catastrophe. Hint for those folks who want to be governor, serve on the SBE or in the legislature after the 2026 elections, HAVE A PLAN!
We don’t generate enough electricity, have relatively high utility rates, high insurance rates, and regulators whose performance suggests they are using their current jobs as an audition to work for the entities they are supposed to regulate. Mike Duggan suggested on the last OTR that is something he may be campaigning on. Companies want reliable and cheap power. And water. Especially if we want some of these data centers and AI facilities here. They suck up lots of water and electricity. You have to have both and they have to be cheap.
But not wanting to be totally negative, I am offering a fix to this problem that is the MEDC. I may be the only one who likes it, but it is my suggestion.
MEDC BECOMES A REAL, ACTUAL, HONEST-TO-GOODNESS AND REAL STATE DEPARTMENT OR TYPE ONE AGENCY. This means there is a Director named by the governor. THE OTHER STAFF FALL UNDER THE JURISDICTION OF CIVIL SERVICE. As a State Agency, the workers, they would most likely fall in the Business and Administration unit and not be unionized. This means that the staff is paid under the Equitable Classification Plan (ECP). This is important because using the ECP means that Civil Service sets the compensation level for these positions and how they classify those positions – the weight given each specific task that they award points to that determines compensation – can be used by other workers in other departments if, and when, they challenge their own classifications. And with the current make-up of the Michigan Supreme Court, we might, just might, have some justices who feel that the Michigan courts have been way too deferential to the CSC and its classification decisions. Classification appeals might actually see the light of day. And for those worried that somehow the MEDC staff wound up in an organized bargaining unit, the CSC would deem those positions outside the scope of unionizing as they have done in the past, most notably to the clerical staff in Civil Service because, as everyone knows, all major classification and compensation matters decided by Civil Service are done my mail and file clerks.
FUND ONLY THE MEDC STAFF IN THE ANNUAL BUDGET: The legislature would only fund the staff, office supplies and the like. Lansing and Detroit have plenty of state owned and rented space. Put them in a government office building. Save the people some money. What a novel thought! Michigan Rehabilitations Services should try it.
MEDC GRANTS FOR SPECIFIC PROJECTS WOULD REQUIRE LEGISLATIVE APPROVAL FOR EACH AND EVERY GRANT. Any grants MEDC wants to give out would require separate, individual appropriation(s) from the legislature. This would entail hearings. And testimony, hopefully under oath. Then we find out how much money the business entities want and how many jobs they promise to get that money. The grant can then be tailored so that if the promised jobs do not appear, money is clawed back. The grant becomes an enforceable contract. This is what oversight looks like. This is what transparency looks like. This is what accountability looks like. For the executive and legislative branches. After all, it’s the people’s money. If a private entity wants some of the people’s money, the promises they make to us to get the money are written down and enforceable. If businesses find this unacceptable or intolerable, they probably inflated the number of jobs they were going to create. But if our elected representatives decide to give them money anyway, we have the opportunity to un-elect them in the next election. And that is also what oversight, transparency and accountability look like.
Thank you all for reading my suggestion and or rant. And yes, dinner was nice.
Royal says
(Edit)Thank you Mr TS! Good details of the Michigan particulars.
Something just occurs to me sparked by what you say . . .
Wouldn’t it be novel, and lucrative, to take a page from the Trump admin and have the state take shares in each company that asks for and accepts business grants from the state? This way, if the company can’t pay back the grant, which has occurred, oh, time and time again, the state can at least sell the shares and get a modicum of their investment back . . . for the people? Better than those Granholm solar give aways.
Would this not check the,” oversight, transparency, accountability”, as well as the safeguard (insurance) boxes?
I agree that MEDC is corrupt but, as Walt Sorg says, the corruption in Washington far outpaces anything happening in Michigan. Republicans need to denounce the corruption including grift and bribery to save their souls.
Oh, and I suppose you and Walt think GM paying back $6B in TARP debt with leftover TARP money is considered a grand bargain? Leaving the US Treasury still owning about 61% of GM stock which represents the remainder of the $49.5B total bailout package. So, as long as we pass the inflated bailout money through a few government organizations first then we can give as much company stock to the government as we like? But if Trump just says, “lets skip the middle government men and give the stock collateral directly”, then this is extortion, favoritism and corruption?!
The biggest extortion (pay to play), favoritism (blue court lawfare), and corruption (Russia, Russia, Russia), that I see at the national level was incubated first in Blue City/States.
Who is Fay Beydoun?
ANSWER: She negotiated this grant while being a representative of the Arab-American Chamber of Commerce – and other leaders in that group expected that grant funding would go to that organization.The Arab-American Chamber of Commerce has 1,500 members.
Fay unexpectedly had the grant funds directed to Global Link International – which was created shortly AFTER the grant was approved.
Why would Democratic leaders bend over backwards to help her get this huge grant?
ANSWER: Because her access to wealthy business leaders meant she could raise funds for Democratic candidates in the 2022 and 2024 elections. It was a way of saying “Thanks!”
Who did she help?
ANSWER: Fay was a finance co-chair for Elissa Slotkin’s U.S. Senate campaign committee until two days after the Detroit News story broke in May of 2024. Slotkin actually did well in Arab-American areas such as Dearborn even though Rashida Tlaib and Slotkin had sparred over the Gaza War.
She also was a heavy donor to campaign committees of both Gretchen Whitmer and Dana Nessel.
Who has been representing her as legal counsel?
John Dakmak of Clark Hill. A story in the Midwesterner in late 2024 indicates that Clark Hill had received $270,000 in fees from grant funds. Dakmak reportedly offered to have Global LInk repay the MEDC $5 million.
Does John Dakmak have any prior ties to state government?
ANSWER: John Dakmak previously served as Assistant Attorney General for the State of Michigan.
Sounds like Michigan is catching up to Washington in the corruption category?!
The Detroit News just reported today that the results of a FOIA request have revealed that MEDC chief executive officer Quentin Messer was having dinner over the Farmington Hills home of Fay Beydoun on June 30th, 2022 as the Michigan Legislature was hashing out the final details of a spending bill containing the controversial $20 million-dollar grant funding that Ms. Beydoun was seeking.
This may not be surprising in that Fay Beydoun served on the advisory council to the MEDC – but the timing is a bit questionable.
WXYZ_TV Ross Jones this week interviewed Neil Thanedar of the Michigan Campaign Finance Network who indicated that Fay Beydoun’s newly-minted “Global Link International” did not incentivize a single start-up business with grant monies – all expended grant funds were applied to operating costs.
Jones also interviewed Ahmed Chebbani of the Arab-American Chamber of Commerce – who was stunned when Beydoun told him the chamber was not getting any of the funding – “It’s mine” he quoted Ms. Beydoun as stating.
Wow, just wow!
Fay Beydoun is the second major Muslim-American Democrat leader from Michigan that has been targeted by Attorney General Dana Nessel.
Nessel’s office investigated Bangladeshi-American Democrat Mohammed Hassan before recusing herself and permitting another prosecutorial agency to charge Hassan with election law violations.
Hassan is a Hamtramck City Councilman. Another Hamtramck councilman – also charged – has publicly slammed the prosecutions as discriminatory in nature.