3 put on EDC; auditors visit 38 Studios

PROVIDENCE, R.I. (WPRI) - Governor Chafee on Thursday nominated three new board members to the R.I. Economic Development Corporation and ordered an independent outside review of the agency after its $75 million loan guarantee to 38 Studios went sour.

"This was a colossally bad decision as it stands now," he said. "Let's move on."

Chafee's three nominees to the EDC board are Marcia Blount, Pablo Rodriguez and Alison Vareika. The Senate will be asked to confirm them. They would replace three of the five board members who are stepping down after the 38 Studios debacle.

Chafee said the new appointments would move the board from "a group of high-powered CEOs" to "a little more of people who run their shop" and know "the pressures of making payroll every week." He acknowledged other potential appointees turned him down.

Jamia McDonald, the governor's deputy chief of staff, visited 38 Studios' headquarters on Thursday with a newly hired team from the firm Deloitte who will conduct a forensic audit of the company's finances stretching back to its founding by Curt Schilling in 2006. They were joined by 38 Studios' chief financial officer and a few of its directors.

McDonald said it appears all the company's documents and intellectual property are still in place. There is no timeline for Deloitte to finish the audit. A portion of it will be made public but other parts will be kept under wraps due to confidentiality concerns.

Chafee has tasked the Rhode Island Public Expenditure Council, a business-backed think tank, to conduct a thorough review of the EDC's functions and operations. RIPEC will convene working groups and is expected to deliver its findings by Sept. 1.

Chafee said he wants the EDC to reflect his economic development priorities. "I don't like big deals," he said. "I like to invest in education and infrastructure."

Just three years ago, the EDC was harshly criticized by a task force led by former Hasbro CEO Al Verrecchia which was convened by former Governor Carcieri. Its findings led lawmakers to make changes at the agency and Carcieri to make new appointments to the board, which soon after approved the 38 Studios loan.

Asked how this RIPEC report would differ from previous ones on EDC, Chafee chuckled and replied: "We're going to keep doing it until we get it right."

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi