The Corner

State Audit: Hagan Stimulus Contracts Need ‘Further Legal Review’

North Carolina auditors called for “further legal review” of the way Democratic senator Kay Hagan’s family used grant money awarded through the 2009 stimulus.

“Of particular concern were issues associated with potential conflicts of interest related to contracts awarded by the grantee to contractors during the execution of the grant projects,” says a memo written by staff at the state Department of Environment and Natural Resources, obtained by National Review Online.

The memo questions the propriety of “a number of transactions that appear to be executed between JDC Maufacturing, LLC, [a company co-owned by Senator Hagan’s husband, Chip] and companies controlled or managed by members of the same family.”

For instance, JDC Manufacturing hired a company managed by Tilden Hagan, Chip and Kay’s son, to work on the stimulus-funded energy project even though Tilden’s company was “not the low bidder on the project,” according to the memo.

The grant agreement specifically banned the hiring of immediate family as a contractor or subcontractors.

“These contracts, along with other contracts, appear to be in conflict with the self-dealing provisions of the grant agreement,” the memo states.  

The issue has dogged Hagan’s reelection campaign in recent weeks, as a Politico report on “how Senator Hagan’s husband won stimulus cash” ultimately gave rise to attack ads accusing the senator of using her position to enrich her family.

“Kay Hagan claimed Obama’s failed $800 billion stimulus would help North Carolina, but now we know it was Kay Hagan’s family who profited,” one super PAC ad hitting Hagan says. “And what did the company do? It funneled the money to another company owned by the Hagans to do the work.”

The state environment-department staff concluded that the North Carolina Budget and Management Office should review the contracts. If that office concludes that the apparent self-dealing violated the law, it goes to the state attorney general.

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