JEFFERSON CITY • Missouri's economic development director defended the state's role Wednesday in the failed Mamtek project in Moberly, arguing that local officials were the ones who pushed the plan forward.

David Kerr, director of the Missouri Department of Economic Development, appeared before a House committee looking into the Mamtek deal, which involved the construction of an artificial sweetener factory in Moberly with the help of around $17 million in state incentives and $39 million in bonds backed by the city.

The project eventually collapsed, and lawmakers say they hope to find out how a deal seemingly fraught with red flags made it so far. While no state incentives were ever paid out, when Mamtek missed its first bond payment, the city's credit rating was downgraded, a move that will cost the city money on any borrowing it does in the future.

On Tuesday, Moberly Area Economic Development Corp. President Corey Mehaffy told lawmakers the state had withheld concerns within the Department of Economic Development about the project, specifically whether the company actually had a factory in China, as it claimed.

Kerr said his department shared its concerns with Moberly and several other communities interested in the Mamtek project. Department staff planned to investigate the matter further when they discovered Mehaffy had contacted Mamtek independently and promised financing for the project if the company chose his community.

The department reiterated its concerns about the project, but Mehaffy informed the state that Moberly was hiring professionals to conduct its own investigation, Kerr said.

"It's not the state's policy to dictate to local government what they offer businesses to lure them to their community," he said.

Subsequently, a Los Angeles-based patent attorney hired by Mamtek - Michael Wise of the Perkins Coi law firm - said in a letter that he visited the Chinese factory two times and tested product that was produced there.

The eyewitness account from Wise, along with a positive bond rating from Standard & Poor's for the project, eased concerns within the department, Kerr said. The state was satisfied that Moberly, with the help of paid consultants, were doing their due diligence to protect the city's investment, he said.

Republican state Rep. Jay Barnes of Jefferson City, the committee's chairman, questioned why the department never showed Moberly officials an email from a state consultant in China that called into question whether Mamtek actually had a factory in China.

The consultant told state officials that he was unable to locate the factory. But Chris Pieper, general counsel for the department of economic development, said the consultant's report was preliminary and consisted only of an online search. The department did not pass along the specific emails to Moberly, but they did pass along their difficulties in locating the factory, he said.

Kerr admitted that other than Wise and Mamtek executives, the state had no confirmation that the factory existed.

"It appears no one independently verified a single shred of information provided by Mamtek," said state Rep. Todd Richardson, R-Poplar Bluff.

Kerr responded that "vetting for vetting’s sake" sends a bad message to businesses that they aren't welcome in Missouri. 

"We can't guarantee a business will succeed, but if we assume every business that walks through the door is a criminal we'll see a lot fewer businesses walking through the door," he said. 

A more thorough screening process for companies applying for state incentives would be a waste of taxpayer money, Kerr said. That's because those incentives are performance based, meaning a company would have to meet job creation requirements before any tax incentives are received.

The state must walk a fine line between scrutinizing companies who want to do business in Missouri and applying tough standards that would likely scare those businesses off, Kerr said.

"If I were a company hoping to receive an incentive package and a criminal background check of the CEO is required, I'd take my business elsewhere," Kerr said.

State Rep. Rory Ellinger, D-University City, said he felt there was plenty of evidence that something was wrong with the Mamtek deal from the beginning.

"I think there might have been enough information to blow a whistle and say, 'Everything stops,'" Ellinger said.

Barnes questioned whether the push to create jobs, and the positive publicity that comes with it, has created a culture within the department that ignores potential warning signs.

"I think that's a product of their environment," Barnes said. "I think there is a pressure to create jobs and that employees fear repercussions if they slow things down or cost the state a project.

"You want to be the gas at all times, and rarely if ever do you want to apply the brakes," he said.

Kerr said he wants to be clear that his only job is "the bring the maximum number of jobs to the state at a minimum cost to the state." But while his staff must be objective with every possible project, they must also be critical of every project.

"If it's not a good project, then we shouldn't be doing it," he said.

The House committee plans to reconvene in January in the hopes of speaking the Wise, the patent attorney who says he visited the factory in China. Barnes said he has yet to respond to previous requests to appear before the committee.