RIPR News
5:38 pm
Mon October 15, 2012

GOP should leverage 38 Studios mess

PROVIDENCE, RI – If ever there was a case study in what ails the Democrats who have run Smith Hill for eons, it is the 38 Studios video game fiasco. It is foolish to even ask what was right about this flawed, indeed desperate, lunge at growing jobs in a state in dire need of them.

Unless you have been living in a yurt for the past year, you by now know many of the gory details. Then Gov. Donald Carcieri, the state Economic Development Corporation and the Democrats who run the Assembly combined in 2010 to bet $75 million of taxpayer's money on a 38 Studios, the video-game company run by retired Red Sox pitching star Curt Schilling. Less than two years later, the company went belly-up, leaving Rhode Island taxpayers on the hook for as much as $102 million in state-guaranteed bonds.

Worse, all the major players in the deal went into virtual hiding. Carcieri was in his silent retirement bunker for months, leaving only to do one television interview.

House Speaker Gordon Fox, D-Providence and Senate President Teresa Paiva Weed, D-Newport have both resisted calls for a legislative investigation into 38 Studios. Fox says he doesn't want a look-back while litigation and bankruptcy proceedings, and perhaps a criminal inquiry, are underway.

Paiva Weed is doing her best imitation of an ostrich with her head in the sand.

Republican State Sen. Dawson Hodgson of North Kingstown asked for a legislative investigation. He was rebuffed by Sen. James Sheehan, a North Kingstown Democrat, who happens to be chairman of the Senate's Government Oversight Committee. Sheehan, who rarely misses a chance for publicity, was unusually mum about this request. Sheehan said conducting hearings ``during a politically charged campaign season could do more harm than good.''

Just what planet are these people living on? Maybe Hodgson said it best. ``The only thing you can conclude is that the General Assembly doesn't want the public looking at them'' Referring to the State House, Hodgson said, ``You walk around that building and it's like this never happened.''

Lawmakers ought to be able to walk and chew gum at the same time. There is plenty of precedent for legislative oversight and action even when a criminal and civil litigation is occurring. Do any of these people remember the Teitz Commission that probed the credit union collapse in the 1990s while federal and state criminal investigations were proceeding?

Let's assume that it was wise in 2010 for the Assembly to put $125 million in taxpayer-backed loans into local businesses at a time when our state had one of the nation's highest jobless rates. But you don't need to be an MBA to wonder why the governor, the EDC and the Assembly would then bet 60 percent of that money, $75 million, on one risky venture run by a ballplayer with no business record.

If Fox, Paiva Weed or Carcieri were investing their own money, does anyone really think they would have done this? Carcieri had a career as a banker; would he ever have made this loan were he still at Old Stone Bank? Does anybody planning investments for their future take 60 percent of their money and bet it on a business like 38 Studios?

Any why was such important legislation held until the middle of the night in the waning days of the Assembly session? What did the leadership know about the deal that they didn't tell their members?

The only lawmaker who voted against the 38 Studios enabling legislation was former Republican House leader Robert Watson of East Greenwich. Where were the other Republicans?

Now, Republican State Chairman Mark Zaccaria says the party hasn't used the 38 Studios disaster in a coordinated campaign manner statewide because it is a complicated, murky topic that doesn't fit on a bumper sticker. But voters are paying attention. Pawtucket Democrat Patrick O'Neill, who represents a district anchored by Oak Hill, has resigned from the House leadership. One of the reasons: He was peppered with negative comments on 38 Studios from voters in his primary campaign last month.

If Republicans are serious about winning some Assembly seats and loosening the Democratic State House grip, they better start talking about 38 Studios. Republicans only have three weeks to gain traction on an issue that's a winner.

Do you have insight or expertise on this topic? Please email us, we'd like to hear from you. news@ripr.org.

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