Miami-Dade Sees Failure in Company It Favored
MIAMI — When Banah International Group, a sugar company, agreed to establish its headquarters in Miami-Dade County — lured by $430,000 in state and county tax breaks — the announcement was trumpeted from County Hall to Capitol Hill.
The county’s mayor, Carlos Gimenez, last year named a stretch of road in Hialeah as Banah Sweet Way. A former Florida congressman issued Banah’s chairman a Congressional certificate. Business groups lauded the company’s commitment to staying in Miami-Dade County and vouched for its economic health.
But after falling under a load of debt, the company filed for Chapter 11 bankruptcy protection on Friday, just over a year after the tax incentives were approved. That development has raised new questions about how thoroughly the company was vetted by Enterprise Florida, the state agency that decides who should receive tax breaks here.
In addition, Banah’s chairman, Alexander I. Perez, is a convicted cocaine trafficker who served a four-year sentence in federal prison and was released in 2007, a fact that Banah did not disclose when the company applied for a tax break from the state. Mr. Perez’s probation ended in 2009.
“Taxpayers have already footed the bill for his time in jail,” said State Representative Mike Fasano, a Republican who sits on the subcommittee that oversees Enterprise Florida. “Let’s not reward him for a business that winds up going belly up. There needs to be a lot more vetting and transparency here.”
Banah’s bankruptcy filing comes as Enterprise Florida, a private-public agency that serves as the state’s chief economic development agency, faces increased scrutiny from watchdog groups and lawmakers. Gov. Rick Scott, a former health care executive, has made job creation the centerpiece of his administration. This year, he has asked the Legislature to more than double the budget for Enterprise Florida to $297 million from $111 million.
But some lawmakers are skeptical about the request. This month, Integrity Florida, a watchdog group, issued its second report calling into question Enterprise Florida’s effectiveness and criticizing it as lacking transparency. The report raised concerns about how board members are chosen and how their bonuses are awarded, and pointed out potential conflicts of interest.
Banah is one of several companies that ultimately failed to live up to its end of a tax-incentive agreement, which was to create jobs and invest in Florida.
“Things haven’t changed,” said Daniel B. Krassner, the executive director of Integrity Florida. “They are not vetting these companies well enough to ensure that tax resources are protected.”
Responding to news of Banah’s bankruptcy filing, Enterprise Florida said the company had not received any of the tax breaks, which were to be rolled out over time if it met its job-creation obligations.
Enterprise Florida has also criticized Integrity Florida, saying it is financed by Americans for Prosperity, an advocacy group that the agency said was philosophically opposed to tax incentives.
Gray Swoope, the head of Enterprise Florida, has defended the agency, saying tax incentives had created 103,000 jobs since 1995 at a taxpayer cost of $335 million. Many of those contracts are shielded from the public.
Mr. Swoope said last month: “The story is more jobs, better wages, better return and less money going out. It’s a strong story.”
Still, the questions have caught the attention of leading Republican state lawmakers. They wonder whether too much incentive money is going to large corporations like Wal-Mart Stores Inc., as opposed to smaller Florida businesses. Because the agency lacks a searchable database, it is difficult to know how grant money was allocated.
“I’m personally planning on really critiquing them, because it’s hundreds of millions of dollars we’re spending on these programs,” State Senator Joe Negron, the chairman of the Senate Appropriations Committee, said this month. “If these companies are going to come here anyway and expand here anyway, then they don’t need parting gifts from the Legislature.”
Enterprise Florida, which was created in 1992 to take the place of the Commerce Department, is the first place companies go to ask for tax incentives. The group is charged with assessing companies and passing a pared-down list of candidates to the State Department of Economic Opportunity for a decision.