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EXCLUSIVE: Leaked Emails Raise Questions About Governor's $300M Offer

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EXCLUSIVE: Leaked Emails Raise Questions About Governor's $300M Offer

By Phil Williams. CREATED Apr 24, 2014

NASHVILLE, Tenn. -- New leaked documents raise more questions about Tennessee Gov. Bill Haslam's secret $300 million offer to Volkswagen.

The Haslam administration has claimed that the deal to help Volkswagen expand its Chattanooga plant never went through because the offer expired after the automaker failed to meet a deadline to respond -- and that it had nothing to do with the governor's opposition to the United Auto Workers.

But emails leaked to NewsChannel 5 Investigates -- emails that the state had refused to release -- show Volkswagen lawyers had actually drawn up papers for a potential deal to bring more than a thousand new jobs to Tennessee, but it was the Haslam administration who pulled the plug on the incentives it had offered in August 2013.

"A number of circumstances have changed or occurred since we delivered the August 23rd materials," Tennessee Economic and Community Development Commissioner Bill Hagerty emailed a top Volkswagen executive on Jan. 31. "The August 2013 incentive summary does not account for these changes and is no longer relevant."

That came the same day that a Hagerty aide emailed Volkswagen's representatives to thank them for submitting a proposed Memorandum of Understanding -- the formality necessary for the automaker to close the deal.

"As far as the emails that I'm looking at today, they just confirm what I think everybody already knew -- which is, these jobs, this package was pulled for reasons that have nothing to do with any deadline," said state Rep. Mike Stewart, D-Nashville, after reviewing the documents.

Administration officials were "essentially holding Volkswagen hostage and saying 'if you don't do what we want, based on our political agenda, then we are going to withhold hundreds of millions of dollars' -- which are, of course, taxpayer dollars," Stewart added.

In a written statement, Hagerty spokesperson Clint Brewer denied that the emails reflect a real effort by Volkswagen to close the deal.

He stated that a Volkswagen attorney "said the company wanted to work on a draft MOU in the interest of saving time should an economic incentive package get worked out between Volkswagen and the state."

According to the August 2013 proposal first revealed by NewsChannel 5 Investigates -- for what was called "Project Trinity" -- the state had offered Volkswagen $300 million with the expectation that a new SUV production line would create 1,350 new jobs.

Despite the governor's earlier denials that the money was linked to a UAW vote at the plant, the documents show that the offer of your money was contingent upon the Haslam administration's "satisfaction" with the company's deal with organized labor.

In fact, the emails confirm that the offer was withdrawn just as Volkswagen workers prepared to vote on whether to let the UAW represent them.

Commissioner Hagerty had first claimed, in an interview with the Associated Press, that it was a "90-day incentives offer" that had simply expired.

His spokesperson later told other media that the 90-day incentive package expired on Jan. 31.

Then, after NewsChannel 5 uncovered the August proposal, the spokesperson said the Haslam administration had actually "kept its incentive offer on the table for almost two months longer" than the 90 days.

"I would love to know if there is a single person outside the administration -- Democrat or Republican -- who believes in any such 90-day deadline?" Rep. Stewart asked.

In fact, Hagerty made no mention of such a 90-day deadline in his email to Volkswagen executive Christof Spathelf.

While noting that "circumstances have changed" in the five months since the offer was first made, the commissioner did not elaborate on the circumstances to which he was referring. Instead, he suggested that they arrange a meeting to continue the negotiations.

"We look forward to both your response on the face-to-face meeting, at which we would convey much of this message, and to renewing our dialogue and determining the appropriate level and terms of State support for this important project," the commissioner added.

Rep. Stewart said, "The only circumstance that had changed was the Volkswagen -- which is part of its business policy -- said it would cooperate with the workers in the plant."

In fact, that email came just four days after Volkswagen signed a friendly agreement with the UAW, calling for a union election. And it came the same day that an anti-union group out of Washington was protesting Volkswagen not letting opponents inside the plant to voice their objections.

Tennessee Republicans had repeatedly criticized Volkswagen for cooperating too closely with the UAW to create a workers' council to help run the plant.

"I just think it's the worst policy I've ever heard of -- essentially, again, you are holding a thousand jobs plus hostage," Stewart added.

More recently, on April 2nd, the governor suggested to reporters that it was Volkswagen's fault for not responding to the administration's offer.

"Part of our concern was we had an offer out there for a lot longer than what is typical -- and one of the things we were saying is we need an answer here," Haslam said. "We've got a developing budget situation. We have the legislature that needs to approve this. We need to drive this toward a conclusion."

But Hagerty aide Josh Helton also sent an email on Jan. 31 to Volkswagen lawyer Alex Leath and consultant Greg Lubar with the subject line: "RE: Initial Draft of Project Trinity Memorandum of Understanding."

"Thanks for the email and the first draft of the MOU," Helton wrote.

The ECD spokesman said the Volkswagen attorney told the department that "he was not authorized to talk about the incentive package," but Helton's email suggests that the lawyer included the Haslam administration's offer in his proposed agreement.

"As to your point about the numbers highlighted in the draft -- the markup we send back to you will have those numbers completely removed," Helton wrote. "As we have communicated with Wolfsburg, our incentive offer dated August 23, 2013, is no longer applicable or relevant."

The ECD statement does not explain what "circumstances" prompted the withdrawal of the incentive offer.

Alex Leath, the Volkswagen lawyer, did not return NewsChannel 5's phone call.

Haslam administration officials have repeatedly denied NewsChannel 5's request for someone to sit down and answer our questions on camera. 

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.