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The McAuliffe Saga continues: Despite cronyism evidence, DHS won’t investigate

Thursday, October 6, 2016 16:14
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Gov. Terry McAuliffe’s GreenTech saga has kept CRC busy over the years. By the look of this week’s news, that story isn’t ending soon.

The Department of Homeland Security’s Inspector General reported that DHS Deputy Secretary Alejandro Mayorkas fast-tracked visa applications for the EB-5 program from McAuliffe’s company, GreenTech Automotive.

The IG report found that Mayorkas had asked a judge to fudge application rules, told his staff he wanted to review GreenTech’s decision, and at one point said, “Let me take it home and rewrite the report.”  This was after GreenTech’s application had previously been denied, and rejected on appeal.

The Daily Caller observed that, according to government rules, the director of the Office of Governmental Ethics “may recommend” that DHS launch an investigation, so long as the OGE director “has reason to believe” a violation occurred. Despite the information revealed in the report, DHS and OGE are acting as if no such reason was found.

GreenTech is a fascinating example of crony capitalism. Here’s a brief history, based on work by CRC’s Dr. Steven J. Allen):

Terry McAuliffe created GreenTech, an electric car manufacturer, in 2009 as a resume-builder before running for governor. He wanted to run as a successful businessman. But, although it would have been to his advantage to build his manufacturing plant in Virginia, he didn’t build there. (Perhaps, he couldn’t: The Virginia Economic Development Partnership suspected a “visa-for-sale scheme.”) Instead, he took the project to Mississippi, and received about $5 million in subsidies from Mississippi taxpayers. The expectation of Mississippi officials, and their rationale for the subsidies, was that the effort would create lots of jobs.

But GreenTech didn’t follow through. Its original projection was 1,500 jobs, which was later lowered to 350. Most recently, a photo of employees shows around 75 people.

The small number of jobs makes sense: Not much work is being done. GreenTech promised to produce at least 30,000 cars every year. Since 2009, the company has built only 25 cars—and sold zero.

GreenTech, it is clear, does not have a standard business model. Subsidies and handouts are part of that model. In addition, the company counts on revenue from the EB-5 visa program, conducted under the Immigration Act of 1990. EB-5 lets government agencies and private companies give green cards to foreigners who invest $500,000 in a rural or economically distressed U.S. company. It’s a niche business but a lucrative one: GreenTech raked in $67 million for procuring 100 visas—nearly triple its revenue from car production.

GreenTech was more than a resume-builder or source of income for McAuliffe. It also brought political support. Foreigners with visas can contribute to political campaigns—foreigners like Wang Wenliang, a billionaire who served in China’s communist government and donated $120,000 to McAuliffe’s gubernatorial campaign in 2013.

Also part of this story: ties between Hillary Clinton’s brother and an official, now on the lam, from former Soviet Georgia. The GreenTech saga is a quagmire, which you can explore in CRC’s full report on Gov. McAuliffe here, updated here.


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