When the Press Asks Uncomfortable Questions

Public officials should pay attention, as a town in Missouri learned the hard way. If an economic-development deal seems too good to be true, maybe it is.
by | November 1, 2012 AT 11:00 AM

Janet Morales was born and raised in Moberly, a town of about 14,000 in north-central Missouri. After being away for about 20 years, she and her family moved back and she went to work for the local newspaper as a reporter. Eventually, after she left the daily, folks came to her and complained there was no longer much local news in that paper, so she started her own weekly, the Moberly Mirror & County Observer. She wasn't looking to be Woodward or Bernstein, just to put out a little paper about the doings of local folks.

Then, on July 9, 2010, Gov. Jay Nixon, former Gov. Bob Holden and a dozen or so local leaders held a huge press conference to announce an economic-development victory. By racing to put together a package of $63 million in incentives, including $37 million in bonds issued by little Moberly, these officials had snared Mamtek, a Chinese artificial-sweetener manufacturer that said it would build a factory in Moberly and hire 612 people by Christmas.

Or 312. Or 168. Or 116. Morales noticed that the press releases being handed out by the various players had different numbers, and her interviews with the principals produced still more different numbers. She began to ask questions. She asked the Mamtek officials why, for example, they had to build a new building when there were existing structures sitting vacant in town that might be suitable. These questions might have had reasonable answers, but rather than answer them, the Mamtek folks complained to the Chamber of Commerce. The chamber's executive director then called Morales into her office and told her to stop asking questions or Moberly might lose Mamtek.

A few days later, the Columbia Daily Tribune published an article, entitled "One Sweet Deal," that laid out in laudatory terms the process that had been used to land Mamtek. There are long quotes from and heroic photos of local officials: the economic-development director, the mayor, the city manager. Each one brags about how Moberly beat out other towns by aggressively putting together a huge economic-development package in just 73 days.

Other than asking some uncomfortable questions, Morales hadn't spent time researching the Mamtek deal. Nevertheless, later that fall she heard that the chamber had had a "big meeting" about her paper in which the merchants were told that she was doing "investigative reporting" into Mamtek and were urged not to advertise in her paper.

After it became clear that the boycott was real and that it was going to drive her out of business, Morales decided that she really should do some investigating. Her final edition, published on March 31, 2011, blasted huge holes in the Mamtek deal. She reported, for example, that other towns had turned the deal down because it seemed too shaky. She found that it was unclear who the owners of Mamtek were, that there apparently was no Mamtek sweetener plant in China as the company had claimed, that there was a glut on the market of the sweetener that the company was supposed to produce in Moberly, and that the production process it proposed to use involved toxic chemicals.

By then, it was too late for Moberly. The half-built plant now sits idle, Mamtek has defaulted on its debt, which was guaranteed by the town, and Moberly's bond rating has been severely downgraded. Mamtek's CEO faces charges of theft and securities fraud from the attorney general of Missouri and the U.S. Securities and Exchange Commission. Among other accusations, he allegedly diverted hundreds of thousands of dollars of the bond proceeds for his personal expenses, including trying to keep his house in Beverly Hills from being foreclosed on.

It takes money to put out a newspaper, even a small-town weekly. And yet, while journalism is a business, it is unlike any other in that it is essential to good government. In that final article, Morales wrote, "It is really up to the Moberly residents to start going to Moberly City Council meetings, ask questions, pay attention to what is taking place that was not mentioned in the public meetings whether on this issue or any other."

That would be ideal, but it is unrealistic. Ordinary folks are busy with their lives, and what she describes is what they rely on journalists to do to keep the rest of us informed. What happened to the Moberly Mirror could--and does--happen too often. Whether they know it or not, citizens really do depend on a free and independent press.

As for Morales, she doesn't get much comfort from the fact that she was right. She's doing a little substitute teaching, preparing for her daughter's wedding and, she says with a laugh, trying to save up enough money to declare bankruptcy. And she wishes she had her little newspaper back.