McAuliffe hones China’s crony-capitalism model in U.S.

By   /   April 23, 2013  /   2 Comments

Part 11 of 74 in the series Terry McAuliffe - Carmogul
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ON TOUR: Terry McAuliffe points the way for Haley Barbour, center, and Bill Clinton at GreenTech facility in Mississippi last year. McAuliffe now says he resigned from the company on Dec. 1.

By Steven Greenhut| Watchdog.org

As he runs for Virginia governor, Terry McAuliffe has touted his efforts to start a “green car” company in Mississippi as a prime example of his old-fashioned American entrepreneurial know-how. Yet McAuliffe really is a master of the Chinese-style “crony capitalist” model. It’s a system where political connections, government favors and even some thuggery determine the success of an enterprise.

The politically well-connected McAuliffe – a former Democratic National Committee chairman described this week by the Washington Post as someone who “made a fortune in an array of businesses, often by using his political contacts” – apparently purchased GreenTech Automotive in 2009 from the Chinese government, which seems like a match made in heaven.

McAuliffe quietly resigned as chairman of the company in December — so quietly the public only learned about it on April 5 —but was still championing his role with the company as recently as this month, when one of its funding sources turned into a campaign disaster. That financing mechanism is the EB-5 program, whereby foreigners are offered green cards in exchange for investments in U.S. companies.

In short, McAuliffe, who helped Bill Clinton raise campaign cash by selling $100,000 sleepovers at the White House, was building a car company based on $500,000 “investments” from foreigners seeking to live in the United States. “GTA counts among its allies Hillary Clinton’s brother, Anthony Rodham, who shares an office with GTA and is CEO of Gulf Coast Funds Management, an EB-5 center that raises visa-investor money for GTA,” according to a Watchdog.org story.

The Associated Press featured a photograph of Bill Clinton at the unveiling of the MyCar at the Horn Lake, Miss., facility where thousands of cars would supposedly be produced in its first year of production. Crony capitalism is bipartisan, of course, and Mississippi’s used-car-salesman-like governor, Haley Barbour, former Republican National Committee chairman, was in on the action, too. His development authority pledged more than $8 million in taxpayer-funded freebies so that GTA could build a plant on a still-vacant parcel in Tunica County.

In a real market enterprise, investors pledge private dollars based on the hopes of making profits on the sale of the product. That tends to focus the mind more on, say, the fundamentals of the product than on the political connections and subsidies surrounding “the deal.”

It’s hard to envision a huge market for $18,000 “neighborhood electric vehicles” with a top speed of 35 miles per hour and the appearance of a circus car. For perspective, that’s roughly the same price as my new V8 pickup truck that could probably – and accidentally, I note – drive over a few of these mini cars without even noticing.

McAuliffe and his fellow GreenTech executives went to job-desperate Mississippi after Virginia officials scoffed at the plan. In 2009, a Virginia economic development official, Jeffrey Anderson, reviewed the project for then-Gov. Tim Kaine’s administration. His conclusions were devastating.

“Since GTA will need the funds to develop the plant, it will need the funds largely upfront,” he wrote. “The EB-5 program requires that the jobs be created within about 2.5 years. … Even with a significant multiplier, it is unlikely that GTA will put enough folks to work quickly enough to satisfy the requirements of the EB-5 program.” He also questioned its cronyism: “We believe that having the principals of the regional center be the same as the principals of the company benefiting from the investment creates a conflict of interest.”

Not that much is happening in Mississippi. GTA was late on its property tax bill in Mississippi because it hadn’t started construction of its permanent plant. A Memphis Business Journal reported visited the leased facility and noted that there were only six cars on an assembly line. Automotive News said the project “doesn’t add up” and declared it “dead on arrival.”

This gets is to the “thuggery” part of the picture. The Chinese may have opened up their economy, but their political system remains repressive. Chinese journalists who report on these self-enrichment deals are harassed by the authorities. Their publications are censored or shut down.

Even though McAuliffe imported the Chinese business model, he still has to contend with First Amendment issues. After Watchdog.org, produced investigative reports about GreenTech and its reliance on EB-5 financing – and quoted analysts who made the same points as those made in the media and by Virginia officials – GreenTech slapped Watchdog’s parent company (the Franklin Center for Government and Public Integrity, where I am vice president) with a massive lawsuit, for $85 million.

The goal is to stop us from writing our stories. GreenTech sent a copy of the suit to other news publications as a warning. They figured they would pick on a small media outlet and try to tamp down on the story elsewhere. It’s pure intimidation, but it hasn’t worked. We are gearing up for a legal battle and have stepped up our coverage. Other media outlets have stood up for us.

But what does this approach say about the man who hopes to be the next Virginia governor?

In China, the children and grandchildren of Communist China’s revolutionary leaders, called “princelings,” used their family and political connections to become the country’s new robber barons and use political force to shut down critics. In America, political princelings such as McAuliffe are trying to copy that strategy. Let’s hope a free press can at least expose what’s going on.

Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at steven.greenhut@franklincenterhq.org.

Part of 74 in the series Terry McAuliffe - Carmogul
  1. VA: As he runs for governor, McAuliffe wheels and deals electric cars in Mississippi
  2. VA: Media echo Watchdog exclusive on McAuliffe’s electric car maneuvers
  3. No news here: PolitFact brands Terry McAuliffe’s electric-car claim ‘false’
  4. Experts question source of McAuliffe car-company funding
  5. Terry McAuliffe on business ventures: ‘Some work, some don’t’
  6. How McAuliffe’s car company failed the Virginia test, landed in Mississippi
  7. Virginia official wants probe of McAuliffe company ‘visa-for-sale’ program
  8. McAuliffe car company sues Watchdog in libel claim
  9. Barack Obama’s GreenTech connection: Rick Wade
  10. Silence, secrecy, cops follow GreenTech’s China deal
  11. McAuliffe hones China’s crony-capitalism model in U.S.
  12. Promises keep Tunica County afloat
  13. McAuliffe company’s China hook-up: Will it work?
  14. McAuliffe car lags in Domino’s delivery
  15. McAuliffe car co. parent in off-shore tax shelter
  16. Lawmaker gives feds one more week for EB-5 answers
  17. Bolling: McAuliffe’s Mississippi package ‘attractive’
  18. Inside, execs knew McAuliffe plan had ‘substantial risk’
  19. Union darling McAuliffe and his non-union car company
  20. Did Clinton aid the birth of ‘McAuliffe’ car company?
  21. McAuliffe feels heat over GreenTech resignation
  22. TV report: One year later, ‘party is over’ at GreenTech
  23. Months after he said he left company, McAuliffe kept talking GreenTech
  24. Clinton connection: More money for McAuliffe
  25. Terry McAuliffe used loophole to avoid key SEC oversight of his car company
  26. VA officials: McAuliffe green car more politics than biz
  27. McAuliffe car company announces it’s ready to roll — again
  28. Before Watchdog, McAuliffe blamed federal officials for money trouble
  29. McAuliffe gets cash from GreenTech exec, board members
  30. Watchdog report on McAuliffe spurs FOI request to Homeland Security
  31. McAuliffe leaves GreenTech questions hanging at debate
  32. Totally wired: McAuliffe went to Napolitano to expedite company funding
  33. McAuliffe bragged about GreenTech’s cash position while begging feds for faster processing of ‘cash for visas’
  34. Investigation targets Homeland official’s relationship to McAuliffe company
  35. Even before news of federal probe, McAuliffe ducked GreenTech questions
  36. McAuliffe company pressed Homeland official on 81 investor visas
  37. Rodham company sought visa for controversial Chinese exec
  38. Immigration official says he met with McAuliffe to discuss visas for foreign investors
  39. Whiners: Mayorkas says Gulf Coast ‘continues to complain’
  40. VIDEO: Ex-GreenTech employee says little happened at Horn Lake plant
  41. Online ad to Terry McAuliffe: Drop your lawsuit
  42. National security on ‘hold’: Lawmakers press McAuliffe for answers
  43. Citizens United documentary film delves into McAuliffe, GreenTech
  44. VIDEO: Terry McAuliffe’s 15 million-square-foot car plant … in China
  45. Feds call McAuliffe car company’s use of investment program ‘possible fraud’
  46. GreenTech courted Obama’s Solyndra aide
  47. GOP legislators call for McAuliffe to answer GreenTech questions
  48. McAuliffe ‘desperate’ over documentary, Citizens United says
  49. GreenTech weighed Fisker-style federal loan
  50. Group tells Terry: Follow ‘McAuliffe Standard’ on disclosure
  51. Car and Driver races into GreenTech controversy
  52. Congressman: McAuliffe owes Virginians explanation about White House meeting
  53. Feds loosen oversight as McAuliffe car company makes mysterious management change
  54. GreenTech execs use Times and ABC to throw McAuliffe under the (non-electric) bus
  55. Aide in union contribution swap hosts California fund-raiser for McAuliffe
  56. Despite denials, docs show McAuliffe company asked feds to fast-track visa for investor tied to spy list
  57. Former Democrat Party director was on GreenTech payroll
  58. More bad news for McAuliffe car company as GreenTech China venture stalls
  59. Clinton Foundation posts deficits on McAuliffe’s watch
  60. VIDEO: GreenTech record dogs McAuliffe at energy forum
  61. Auto industry expert labels McAuliffe electric car ‘preposterous’
  62. Democratic leaders have their own Bain pain in Mideast private equity deal
  63. Hillary PAC adviser served as GreenTech spokeswoman
  64. New emails add evidence McAuliffe pressed U.S. officials to approve GreenTech funding
  65. After endorsement, Post shrinks facts to cover Terry McAuliffe
  66. Ties that bind: Following the McAuliffe-Clinton money trail
  67. McAuliffe tilts at windmills; Chinese venture goes bust
  68. Federal investigations cast shadow over McAuliffe on Election Day
  69. DHS inspector over GreenTech-McAuliffe case is under investigation
  70. McAuliffe names former GreenTech employee secretary of commonwealth
  71. McAuliffe lawyers, accountants sort GreenTech stock amid federal investigations
  72. Nuking filibusters, Dems clear way for Mayorkas at Homeland Security
  73. U.S. judge hands Watchdog a victory over VA governor’s green-car company
  74. Attorney: McAuliffe is ‘100 percent divested’ of GreenTech

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  • http://twitter.com/GHalv Greg Halvorson

    And this jerk is not in prison, why?

  • James

    Why aren’t you giving any credit to Kenric Ward, who wrote the original series of articles on this issue???? There is no news other than what has been reported by Mr. Ward.

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