Corruption and Cronyism
In what would have shocked Time magazine readers of 1973, Minnesota has suffered numerous episodes of corruption and cronyism. Type the words “Minnesota cronyism” into Google and literally the first result involves the Iron Range Resources and Rehabilitation Board (IRRRB). Founded in WWII as a vehicle for distributing iron mining tax revenue to northern Minnesota communities, the troubled agency has gained a reputation as the employer of last resort for failed DFL congressional candidates.
Unsuccessful 2018 congressional candidate and former state legislator Joe Radinovich was hired by the agency in February 2019 for a senior position. The IRRRB posted the six-figure position for less than 24 hours, passing over a more qualified female candidate in tailoring the job description to fit Radinovich’s resume and listing him on its official org chart before the opening was even advertised. After the backdoor deal was exposed by The Timberjay newspaper, Radinovich was gone before the winter snow had a chance to melt. But the brazen incident produced nothing more than a letter of mild rebuke from Governor Tim Walz to his IRRRB Commissioner Mark Phillips.
It’s not just questionable personnel moves. The agency has been called to account for a number of dubious investments of taxpayer dollars. From $3 million blown on a failed chopsticks factory to $44 million lost through ownership of the isolated and little used Giants Ridge championship golf course, the agency has a lengthy history of failed economic development efforts.
None have been as openly partisan as the IRRRB’s handling of a $625,000 loan to a Dialing for Democrats phone bank. Under the guise of creating 70 call-center jobs in Eveleth, the agency loaned money to a private firm whose business was fundraising for Democratic candidates. The business fell short on job creation and shut down during the 2014 campaign, resulting in a $250,000 write-off. To keep the dollars flowing to Democrats, the IRRRB sold the call-center equipment back to the company’s former owner for ten cents on the dollar.
Endemic cronyism goes far beyond a single state agency. The guest list in 2016 to two luxury suites controlled by the Minnesota Sports Facilities Authority (MSFA) at the $1 billion U.S. Bank Stadium read like a “Who’s Who” of DFL bigwigs and donors. The MSFA was already in hot water for employing two well-connected DFL insiders, Executive Director Ted Mondale and Chair Michele Kelm-Helgen, for a combined $300,000 to oversee one stadium. In the backlash over the scandal involving the $200,000 per season suites, the agency was only able to claw back $21,000 from event attendees to reimburse taxpayers.
In another scandal involving familiar DFL names, former Party Treasurer Bill Davis was sentenced to four years in federal prison in May 2017 for defrauding state agencies as head of the nonprofit Community Action of Minneapolis. Davis misspent taxpayer money meant for the non-profit’s low- income clients on trips to the Bahamas, spas, golf and excess bonuses. Not providing adequate oversight was the non-profit’s celebrity board which included then-Congressman Keith Ellison, State Senator Jeff Hayden and several Minneapolis city council members. A related ethics complaint filed against Senator Hayden for his role in the scandal was never resolved.
Restoring the Good Life
No wonder the Center for Public Integrity, a left-leaning good government group, downgraded Minnesota from a D+ to a D- in its most recent rankings, noting the state’s “squeaky clean image hides a nest of ethical problems.”
“The budget process, the structure of the state agencies, and how we legislate reflect a set of values and ways of doing things that are becoming, if not already, obsolete,” Schultz said. “In many ways, Minnesota still operates with a set of institutions and processes designed for a horse and buggy era, seeking to make them work in a global, Internet-connected era.”
To bring Minnesota government into the 21st century, state leaders will need to get behind a comprehensive reform agenda. However, based on the results of our Thinking Minnesota Poll, there appears to be no sense of urgency among voters.
To make state government live up to the high regard voters still hold it in, reform needs to become a priority. Without pressure from the public, it’s unlikely government will act to fix itself. It falls to the media, policy organizations like the Center and elected officials to educate the public on the need for more accountability and transparency in state government and to create the environment for reform to flourish.
Tom Steward is Center of the American Experiment’s Government Accountability Reporter. Tom’s “News Alerts” generally focus on government waste, spending, transparency and policy issues. He also finds ways to get American Experiment’s message out to all Minnesotans through a range of media, including newspapers, radio, television, Facebook and other social media.