Oversight stymied on 38 Studios, lawmakers charge
The bipartisan group of Rhode Island House lawmakers that pushed unsuccessfully for an independent counsel to look at the state-guaranteed loan for ex-Red Sox pitcher Curt Schilling's company say they did so because an oversight panel has been stymied in its own efforts.
Rep. Patricia Morgan, R-Coventry, introduced an amendment during Thursday's marathon budget debate calling for an independent prosecutor to probe how video game startup 38 Studios got a $75 million loan. That would include the role of the General Assembly, which in 2010 hurriedly authorized the program under which the loan guarantee was made. Rhode Island's economic development agency is suing Schilling and 13 others, claiming its board was misled into approving the deal.
"The people want to shine a light on what happened with this bond - why it happened, who did it, who had their hand in the money pot," said Morgan, referring to the bonds that financed the loan.
"The oversight committees have been throttled," she said. "They have not been given the powers that they need to get the answers."
House Oversight Chairwoman Karen MacBeth, D-Cumberland, supported the measure and likewise criticized the House leadership for not allowing subpoenas.
She said she believed she would have that power when she was appointed chair in March by the new speaker, Nicholas Mattiello. MacBeth and others have accused the former House leadership of lying to representatives at the time the loan guarantee program was passed; it was not disclosed that 38 Studios stood to get $75 million.
"When I took over as the chairperson of Oversight, I really believed at that time, with our speaker, this was going to become the people's House," she said, invoking a phrase Mattiello uses often. "I haven't seen that yet."
Vice Chair Spencer Dickinson, D-South Kingstown, said residents "don't want a shoddy, slow-paced, maybe cut-off-at-the-knees Oversight Committee, they want a real Oversight Committee, they want subpoena power."
Mattiello has said previously the House is a legislative body, not an investigative one, and called subpoenas an "extraordinary" step. Spokesman Larry Berman said Friday Mattiello wants to first let investigations by the state police and attorney general play out, as well as the civil suit.
"It is not in the public interest to raise unrealistic expectations that issuing subpoenas is somehow a magic bullet that would be more effective than a state police or attorney general's investigation," Berman said.
Federal authorities long ago closed their investigation.
MacBeth's predecessor as Oversight chair said he too didn't have the proper tools to conduct a probe. Rep. Michael Marcello, D-Scituate, who ran for speaker against Mattiello, used public record requests to get tens of thousands of pages of documents. But he noted that such requests apply only to public bodies.
"Mr. Speaker, you're right, maybe no speaker has ever signed a subpoena," Marcello said in an impassioned floor speech late Thursday. "Be the first one, Mr. Speaker. Be the first speaker to tell this public that we're going to investigate this.
"We created this debacle and yet we're not going to get to the bottom of it in this chamber? Come on!"
Majority Leader John DeSimone, D-Providence, called the push for an outside counsel "salacious" and a "diversion" from the question of repaying the 38 Studios bonds. The House-approved budget includes $12.3 million for that purpose.
He said "all the facts" would come out in the lawsuit over 38 Studios' collapse.
The measure for an independent prosecutor failed, 11-61.