Au­dit: Firms of state ven­ture fund’s ad­vis­ers got $21 mil­lion

The Washington Times Daily - - METRO - BY BRIAN WITTE

AN­NAPO­LIS | Mary­land’s tech­nol­ogy de­vel­op­ment arm cre­ated a three­mem­ber ad­vi­sory com­mit­tee to pro­vide in­vest­ment ad­vice for a state ven­ture fund with­out cre­at­ing ad­e­quate po­lices to pre­vent con­flicts of in­ter­est, and the firms of two mem­bers of the com­mit­tee re­ceived more than $21 mil­lion through the Mary­land Ven­ture Fund, ac­cord­ing to a state au­dit re­leased Fri­day.

The re­port on the Mary­land Tech­nol­ogy De­vel­op­ment Corp. cov­ers a pe­riod from Jan­uary 2015 to April 2018. TEDCO was cre­ated in 1998 by the state to com­mer­cial­ize tech­nol­ogy de­vel­oped at Mary­land uni­ver­si­ties, the pri­vate sec­tor and fed­eral lab­o­ra­to­ries.

“Our re­view dis­closed that two of the three com­mit­tee mem­bers were as­so­ci­ated with ven­ture firms that re­ceived ap­prox­i­mately $21.3 mil­lion in fund­ing through the MVF, ac­cord­ing to TEDCO’s records,” said the re­port by the Of­fice of Leg­isla­tive Au­dits.

The au­dit noted that TEDCO had not es­tab­lished any poli­cies or pro­ce­dures gov­ern­ing this com­mit­tee.

“Specif­i­cally, com­mit­tee mem­bers were not re­quired to be in­de­pen­dent, or file fi­nan­cial dis­clo­sure state­ments with the State Ethics Com­mis­sion, as is re­quired of TEDCO in­vest­ment em­ploy­ees,” the au­dit said. “Fur­ther­more, TEDCO had not es­tab­lished a for­mal con­flict of in­ter­est pol­icy for the ma­jor­ity of the MVF’s in­vest­ment ini­tia­tives and pro­grams and had no pro­ce­dure to re­view Fi­nan­cial Dis­clo­sure State­ments that were filed by its in­vest­ment em­ploy­ees.

In a re­sponse in­cluded in the au­dit, TEDCO said its board of directors cre­ated a com­mit­tee of TEDCO board directors in De­cem­ber to pro­vide in­vest­ment over­sight. The panel will pro­vide ad­vice and con­sult with TEDCO in con­nec­tion with the ad­min­is­tra­tion of in­vest­ment pro­grams.

TEDCO also said all three mem­bers will file yearly fi­nan­cial dis­clo­sure state­ments with the State Ethics Com­mis­sion and meet quar­terly with TEDCO to re­view in­vest­ments. TEDCO also said the com­mit­tee will re­place the Mary­land Ven­ture Fund Au­thor­ity, which is now de­funct.

“We met af­ter the first round with our au­di­tors, we met with them faceto-face, and they gave us pretty good as­sur­ances that what we were do­ing would sat­isfy the au­dit,” said Ge­orge Davis, who be­came TEDCO’s CEO at the end of 2017.

The au­dit does not men­tion the names of the com­mit­tee mem­bers or the firms. TEDCO is gov­erned by a 15-mem­ber board of directors, which in­cludes the sec­re­tary of the Depart­ment of Com­merce.

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