Daniels' Support of Jones Business Ventures Under Fire

The Indianapolis Business Journal's Peter Schnitzer picks up on Taking Down Words' pointed criticism of the Daniels' administration's support of technology fund grants for certain business ventures of entrepreneur Scott Jones and questions whether the support is a quid pro quo for the big cash Jones has helped raise for Gov. Mitch Daniels' re-election campaign. Schnitzer writes:

For a preview of how Indiana’s 2008 gubernatorial election will play out, look no further than the emerging tussle over entrepreneur Scott Jones’ $4 million in awards from the state’s 21st Century Research & Technology Fund.

In September, Jones’ automatic-lawn-mower business, Precise Path Robotics, landed $2 million from the fund, which doles out awards to spur high-tech job growth. On Nov. 14, Jones announced his human-assisted Internet search engine startup ChaCha had attracted $2 million of its own from the program.

In between, on Oct. 9, Jones held a highly publicized political fund-raiser at his Carmel mansion for Gov. Mitch Daniels, generating more than $1 million in contributions for the Republican’s re-election war chest.

Indiana Democratic Party spokeswoman Jennifer Wagner is making political hay out of the time line. Her blog, www.takingdownwords.com, has hosted a scathing public discussion, questioning whether there’s a connection between Daniels’ campaign cash and Jones’ 21st Century Fund awards. She also questioned whether a wealthy businessman like Jones needs this type of help, or if it should be reserved for entrepreneurs who lack his financial firepower.

Thus an election issue was born. And now it’s being test-marketed online. “Isn’t it just a bit too convenient that Jones raised a million smackers for the Guv and then got twice as much in return?” she wrote in a typical Nov. 14 post titled, “Double the Fun: A Million Bucks for the Guv, Two Million for ChaCha.”

Indiana Secretary of Commerce Nathan Feltman, whose Indiana Economic Development Corp. oversees the 21st Century Fund, bristled at Wagner’s suggestion of political favoratism. Every applicant—including Jones—has to go through the same rigorous process, one with numerous checks and balances, Feltman said. He called the idea of quid pro quo between Daniels and Jones impossible.

“From day one, we’ve operated this place as a business and never have or would make any decisions based on campaign contributions,” he said.

Until weeks ago, Taking Down Words' Jen Wagner would have been walking a tightrope even discussing this issue. Her husband, Gordon Hendry, formerly ran the Indy Partnership, in which role he would have been four square behind supporting Jones' business ventures in this manner. His recent departure from that job freed up Wagner to talk about issues of this nature without fear of retaliation against her husband's employment.

As a person who used to work as general counsel for a local IT company, I appreciate the important role state and local governments can have in developing struggling young companies. During the O'Bannon administration, I found state government to be particularly hostile to local IT companies. Almost all the contracts went to out-of-state firms, particularly anything that had to do with the state's web portal, which a single out-of state firm completely monopolized. I'm actually pleased to see the state is embedding Jones' ChaCha search engine into its web portal.

Looking at Scott Jones, he is the closest thing we have to our own Bill Gates. Given his past track record of success, the state would be foolish to turn its back on him. One of these ventures could develop into a huge success employing tens of thousands of Hoosiers in high-paying technology jobs our economy badly needs to overcome its fading role in heavy manufacturing. Personally, I don't like the government handing out direct subsidies to business, but if it is going to happen, I would rather the money stay in the hands of local businesses.

Having said that, someone in the Daniels' administration should have given some consideration to the political cronyism charge before it decided to allow Jones to host Daniels' million-dollar fundraiser at Jones' palatial home in Carmel. When Jones offered to host the fundraiser, someone should have said thanks but no thanks. Our untainted support of your business ventures is more important than a few extra bucks in our already well-stuffed campaign war chest. Instead, it is with almost certainty that Jones will become the target of 30-second attack ads by Daniels' Democratic opponent in next year's governor's race. And it didn't have to be that way.