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Tue June 25, 2013
Lack of Independent Monitoring Factored Into 38 Studios Debacle
Legislative testimony shows that independent monitoring wasn’t put in place for 38 Studios before bonds were sold to fund the ill-fated video company. The state Economic Development Corporation told investors that IBM would perform third-party monitoring of 38 Studios.
The issue of independent monitoring was discussed during a House Oversight Committee meeting earlier this month. In a document similar to a prospectus, the EDC told investors it hired IBM in September 2010 to monitor 38 Studios’ performance.
Yet Oversight Committee chairman Michael Marcello said testimony shows the independent monitoring wasn’t put in place.
By November 2010, 38 Studios said it had its own deal for IBM to monitor the company’s performance. Few details have emerged about what kind of outside oversight took place before 38 Studios went belly up last year.
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Scott MacKay Commentary