Media Truth

Tobacco Commission Sykes Fiasco Reveals Government Waste

compiled by Lewis Loflin

The Virginia Tobacco Commission has lost its mind. In this case it's Sykes again. This company is notorious for moving and closing call centers and sucking up "incentives." Worse is they spent between $25 to $30 million to locate an "industrial park" in the middle nowhere and they don't even have any water access.

Here are the minutes to their own hearing which is odd they even let this out. Most of the time it's in closed session and the information is banned from the public.

It reveals that most of their deals fall through and they can't even check the ones that claim to.


To date we've seen about 350 Tobacco Region Opportunity Fund (TROF) transactions as it appears today in your book on page 53. Forty percent of those that have come to us and the deal never makes it.

Localities go through the dance, make applications, you approve it and send it all up and for whatever reason it never happens. Of those that do happen and are disbursed, about half of them deliver what they promise.

The other half either repaid some money because they fell short or they negotiate some relief or they flat out default on their obligations. These are not good numbers but I want you to know that this is what's happened in the TROF program but its gotten better...

(Mostly it was negotiated' away. But nobody on the outside knows for sure because...)

MR. FERGUSON: This is a problem with TROF grants because unlike the other grants that is provided by the Commission, that is done in a closed session or it's done by a small committee and it doesn't have the publicity involved because of the nature of the TROF.

(And they work to keep these giveaways from the public:)

One last item Mr. Chairman, when we make approval for a TROF transaction, we issue a written approval with certain terms in it to the recipient and those written approvals contain this sentence and I'll read it to you, "The Commission requires that any announcement regarding this grant may be made only with prior authorization from the Commission." That's a condition under which the award is made...

(Secrecy aside, now we get to Sykes and more problems are revealed. This concerned a call center in Buchanan County built in the middle of nowhere. They were downsizing one facility while a new one with cheaper labor was ramped up.)

MR. HORN: Wise County number of employees that work for Sykes for the same quarter went down when ours went up over a year's period of time. We went up 245 according to VEC, those are the numbers that Ned got going down 199 at the same time. We're about an hour and 35 or 40 minutes apart.

Route 83 through Dickenson County is the only county in Virginia that doesn't have four lanes. We don't think we affected Wise County numbers but we understand the agreement we signed three years ago may affect that. We feel that there probably is 400 and most likely maybe 350 sometime within a couple of months...

The TROF contract provides that you cannot get the TROF incentive for moving employees from one location in Virginia to another. When we look at employment, we look at the net employment in Virginia. If you take them out of one county and put them in another one, it doesn't count.

SENATOR PUCKETT: Mr. Chairman, I've driven that road more than I'd like to. Unless somebody can show me from VEC or somewhere these are actually employees, I understand Ned's figures, the net number but there's no way in the world if you go to look at the site today in Buchanan County 300 plus, that's exactly what is there.

The people up on the hill and you can go up and count them. To say Buchanan County shouldn't get credit for 325 or 300 or whatever it is, is not fair to Buchanan County to say that you all took them from Wise County.

They didn't do that; you can't get there from here. They don't make enough money to afford to drive like that, a round trip everyday. It's physically impossible and they would not do it because of what it would cost them to do it. I'll sort of confess I don't understand that language in that contract. It says if you move them around because that literally just has not happened in Buchanan County.

They should be given credit for the number they have in Buchanan County and I don't believe Sykes has transferred them. If I'm in Wise and Sykes comes to me, and says we're going to move you to Grundy, I'm going to say thank you and I'll look somewhere else because I'm not driving to Grundy round trip five days a week.

Keep in mind the hours that you drive, you don't have an 8 to 5 job. I don't know how we got 46 but like Craig told you all, these numbers and they're accurate. I'm going to tell you that they don't steal employees from Wise. If the VEC can document that, say that other than just looking at numbers, then I would accept it but they can't do that. They don't know.

MR. STEPHENSON: That is correct. VEC doesn't know where they're located...

Senator Wampler:

How much has Buchanan County received or put in as an investment as a result of Sykes being the anchor tenant? That green there where you call southern gap, what do you think the total investment of that facility at that park would be?

MR. HORN: So far we've got about $25 million...

A Ms. Carter says,

I had a conversation last week about the site in Wise. What they do in Wise is totally different from what they do in Buchanan County, totally different. I don't think there's any job shifting along those lines.

DELEGATE KILGORE: The total investment by Sykes is $6.5?

MR. HORN: $6.4 (million).

DELEGATE MARSHALL: You told us about the investment but how many jobs have been created other than Sykes in the park?

MR. HORN: In the park, nothing else...

(One person observed what did happen:)

MR. STEPHENSON: Mr. Chairman, I observe that in some cases, and I don't know if it's true of Sykes but in some cases it is possible to move the company's work from one location to another without moving the company's people from one location to the other and maybe only Sykes would know the answer to that. If they downsize one area and cranked up the other, the people didn't move but the work did...

MS. CARTER: I would agree with what Ned says. In Wise County they have a very, very tight scripted contract. Everyone in Wise County work for one contractor. The criteria for hiring people there is almost to the point of extreme. They require heavy, heavy background checks. You can't hire these people without background checks and they have to be certified.

(Thus they are more expensive and get better pay.)

The fact that any of that would occur is unlikely. I do know they just purchased another company, I think it's 30,000 or 35,000 additional jobs. They're extremely pleased with the workforce they have in Wise and Buchanan. I personally, especially after being able to talk to them in Wise County...

(If they are so happy with the workforce why all the layoffs?)

MR. STEPHENSON: - Mr. Chairman, in this particular case, which is unusual, Sykes is not party to the contract and it's difficult to demand any information from them...

Conclusion: the taxpayers spent $25 million on this company, but we are not even allowed to know if they even hired anyone and at what pay? This fiasco has cost about $208,000 per job and is not unusual here. It's time to sever business from government.

Terry Kilgore and the Tobacco Commission.

 



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