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Governor Says $300M Withdrawn Due To 'Revenue Situation'

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Governor Says $300M Withdrawn Due To 'Revenue Situation'

By Phil Williams. CREATED Apr 25, 2014

NASHVILLE, Tenn. -- Tennessee Gov. Bill Haslam appeared to offer a new explanation Friday for the sudden withdrawal of a $300 million offer to Volkswagen, citing "the state's revenue situation."

Now, the state's top Democrat is calling for a legislative investigation.

The question at the center of the controversy is whether the governor used taxpayer money to try to keep the United Auto Workers out of the VW plant in Chattanooga.

First, the Haslam administration had claimed that the incentives offer had simply expired.

Then, this week, NewsChannel 5 Investigates obtained a confidential email where an administration official told Volkswagen in January that the multimillion-dollar deal was being pulled because "circumstances had changed."

"When he says 'circumstances have changed,' did that have anything to do with the UAW?" we asked the governor before the start of the parade at the annual Paris, Tenn., fish fry.

"I don't think so," he answered.

At issue are statements made by Haslam's economic development commissioner, Bill Hagerty, who first told reporters that the proposal to help Volkswagen expand its plant was a 90-day offer that had simply expired.

But in the Jan. 31 email to Volkswagen, leaked to NewsChannel 5 Investigates, Hagerty actually withdrew the offer, telling a top Volkswagen official that "circumstances have changed." He did not elaborate on those circumstances or mention anything about a 90-day deadline.

"First of all, the state's revenue situation has changed, ok?" Haslam said Friday. "As you know, we ended up having to change the state's budget at that point in time, as well."

Three weeks ago, the governor had suggested it was more a matter of timing: "We need an answer here. We've got a developing budget situation. We need the legislature to approve this. We need to drive this toward a conclusion."

In addition, Haslam said on Friday that "number two, the circumstances have changed in that we haven't heard back from the company. That's a very different circumstance."

But NewsChannel 5 Investigates obtained another email in which a Hagerty aide thanked a Volkswagen lawyer for submitting the first draft of a memorandum of understanding -- the legal document necessary to close the deal.

The Haslam administration released a statement Thursday that the attorney offered the proposed agreement "in the interest of saving time" should a deal be reached.

But that attorney had suggested he was doing it "in an effort to advance the deal with Tennessee," according to an email that the administration gave to the Associated Press.

The attorney also stated that VW understood that "there are some 'non-deal' issues that are causing a delay in the TN solution." According to the AP, the email indicates that Volkswagen had reached agreements to locate a new SUV production line at other locations outside of Tennessee.

That came at a time that the administration was voicing its opposition to the United Auto Workers being allowed to represent workers at the plant.

Documents obtained by NewsChannel 5 Investigates revealed that the original $300 million offer was contingent on the Haslam administration's "satisfaction" with VW's deal with organized labor.

Yet, the governor continued Friday to put all the blame on Volkswagen.

"I think they've said they want to make it work, we want to make it work," he said. "But we've also said until you guys come with a 'here's who's speaking for the company, we'll sit down and negotiate a deal,' we're not going to keep waiting with an offer out in thin air."

Which is why Tennessee Democratic Party chairman Roy Herron is now calling on legislative leaders to launch a full investigation of how the Haslam administration has used the offer of $300 million in taxpayer money.

"More than a thousand jobs were held hostage," he said. "Simply put, the administration has told a number of conflicting stories. It's not clear what the truth is, but it's clear the truth hasn't been told yet."

The Haslam administration has refused to give NewsChannel 5 any emails relating to the negotiations with Volkswagen, saying they were confidential.

But the Department of Economic and Community Development (ECD) gave that email from the company's lawyer to the Associated Press on Friday, according to the AP report.

NewsChannel 5 Investigates asked for a copy of that same document, but officials in both ECD and the Governor's Office ignored that request.

Back to NC5 Investigates: Tennessee's Secret Deals
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Phil Williams

Phil Williams

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Phil Williams is chief investigative reporter for NewsChannel 5's nationally award-winning investigative team. His investigations have earned him journalism's highest honors.