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Iowa gov: no email record of $200 million gift to Egyptian firm

3/25/2013

DES MOINES – Gov. Terry Branstad’s attorney claims that no emails from the governor over the past nine months contain key words that could pertain to the controversial deal to lure an Egyptian company by providing more than half a billion dollars in tax incentives.

Iowa Watchdog requested access to all emails sent or received by Branstad from June 2012 through March that contained the words “Orascom,” “Debi Durham” or “Lee County.”  Attorney Larry Johnson responded to the request saying there were “no documents responsive to this request.”

He directed further questions to Tim Albrecht, Branstad’s spokesman. Albrecht did not return calls seeking comment.

The record-breaking deal with Egypt’s largest company Orascom to build a fertilizer plant in Lee County includes more than $200 million in state and local tax incentives, paid for by Iowa taxpayers. Roughly $1.2 billion in federal disaster loans, which carry no interest, were also awarded to the company, saving it a potential $300 million, according to state records.

ORASCOM: Email records regarding Iowa’s new telecom company don’t exist in Gov. Terry Branstad’s office, officials say.

ORASCOM: Email records regarding Iowa’s new telecom company don’t exist in Gov. Terry Branstad’s office, officials say.

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In return, Orascom promised to create 165 jobs, each with a salary of just more than $20 an hour.

While Iowa worked to land the company, one of Orascom’s subsidiaries faced a federal lawsuit for defrauding U.S. taxpayers. It has faced allegations of fraud in other deals, as well, and has come under fire this month in Egypt for tax evasion. The lawsuit wasn’t made public until months after the deal was finalized, prompting criticism from lawmakers and Iowans, who say the Iowa Economic Development Authority failed to adequately vet the company.

Debi Durham, director of the economic authority, told lawmakers during a legislative hearing in February that her staff kept her in the dark about the lawsuit. Officials at the agency, though, knew of the company’s problems, she said.

The economic development authority was created two years ago shortly after Branstad took office. He pushed for the creation, saying it would help Iowa attract more businesses. Critics, however, said it would create less transparency in an area where the state needs more openness.

The authority quickly landed multi-million dollar projects that ended up costing taxpayers millions in tax credits and interest-free loans, according to state documents. Branstad proposed nearly doubling money spent on economic development in his fiscal year 2014 budget, requesting $62.2 million. His total proposed budget is more than $6 billion, according to records from the governor’s office.

Branstad publicly criticized lawmakers for what he called the “bullying” of Durham during the legislative hearing and defended the project, saying the criticism is just political overkill.

Contact Sheena Dooley at dooley@iowawatchdog.org. Sheena Dooley is the Iowa bureau chief for Watchdog.org, where this story first appeared.

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