A Triangle-based business executive who specializes in business restructurings has been named the interim chief executive officer of the state’s new, private economic development arm.
Richard Lindenmuth started Tuesday in the position atop the nonprofit Economic Development Partnership of North Carolina under a $120,000 personal service agreement with the Commerce Department, Commerce Secretary Sharon Decker said during a conference call with reporters.
The private agency will take over from the public department the task of recruiting new companies and jobs to the state and marketing the state’s film, tourism and sports industries.
The contract runs through Dec. 31, with a possible six-month extension. Decker said Lindenmuth would have the title of interim chief executive officer as the partnership gets off the ground, but that he is “clearly our candidate for the long-term leadership of the partnership.”
Lindenmuth said he has no plans to resign from the company he co-founded, Verto Partners, a management consulting firm that specializes in corporate restructuring and crisis management. Immediately, critics raised questions about potential conflicts of interest. Lindenmuth said he is no longer involved in the company’s day-to-day operations and that his full attention would be on the partnership. “While I’m doing this, I’m 110 percent here,” he said.
Lindenmuth said if he was to get paid by Verto in the future it would be for work in the distant past that he hadn’t been paid for yet. “It wouldn’t be for something that I had just recently done or will do in the future,” he said. He added: “I’m not working actively, doing anything at all with Verto other than occasionally cajoling with my friends.”
Former Commerce Secretary Keith Crisco said leading the state’s business recruiting effort is a full-time job. “If it dilutes his time, it’ll be an issue,” he said of Lindenmuth’s role with Verto Partners. “If it doesn’t dilute his time, then it may not be an issue.”
Rob Schofield, director of research and policy development for the liberal NC Policy Watch, said he has concerns about Lindenmuth’s two positions. “If someone is going to work for the public or a publicly funded entity like this, then they ought to work for the public,” he said. “They ought not to be serving two masters.”
Schofield said transparency would be the key to determining whether Lindenmuth’s private business conflicts with his new position. He described economic development as a “murky, deal-making world” and said Lindenmuth appears by his resume to “come from the same world.”
Recruiting and transition
At the outset, Lindenmuth will work with a five-member interim board of directors for the partnership, which the McCrory administration has touted as a way to provide a more coordinated, nimble approach to recruiting new businesses and aiding existing businesses looking to expand, as well as helping boost the state’s exports. Critics say that the public-private partnership approach has a mixed record in other states and that the structure has led to abuses, including misuse of taxpayer money, conflicts of interest, excessive executive pay and little public accountability.
Lindenmuth will implement the transition of several Commerce Department divisions to the Economic Development Partnership, which will assume job recruiting and retention and marketing functions of the department some time this year. Among his first tasks, Decker said, would be working on staffing the partnership and ensuring legislation defining the partnership’s role is approved during the 2014 legislative short session.
In the first half of 2014, he is expected to oversee the movement of the Business Development and Marketing divisions to the partnership, followed by other divisions, including Travel & Tourism, Film and Sports Development, later this year, Decker said.
‘One of the hardest things’
Lindenmuth has more than 30 years of management experience in domestic and international business, state officials said. He has worked as chief executive officer of more than 10 companies and a corporate performance adviser for several others. His resume shows he has moved around from company to company for more than 30 years, often serving as a short-term adviser to company management or an interim CEO. Most recently, he has been a managing partner with Verto Partners.
Lindenmuth said he is “not a fan of most politicians” and has never contributed to a political campaign. He described himself as a conservative politically but added: “I don’t know anybody who was not a liberal when they were a freshman in college.”
Lindenmuth, a resident of North Carolina since 1981, acknowledged in the conference call that he had been critical about the lack of state support for bringing companies to the state, and he recognized that difficulties lie ahead. “Change, and particularly changing a system, is one of the hardest things that can ever be accomplished,” he said. He stressed the importance of bringing manufacturing back to the United States.
Asked about economic incentives to businesses, Lindenmuth said an area’s cost of living, real estate prices, workforce availability and other factors are more important. “Incentives are important only in the sense of trying to get very specific help to a particular company,” he said.
Commerce officials have said they plan to lay off dozens of state employees working in the affected Commerce Department divisions and that some of them likely would be hired by the partnership.
Former Commerce Secretary Keith Crisco said he doesn’t believe the state has had a clear economic development strategy in place since McCrory took the reins of state government at the start of last year. “It’s progress that we’ve got someone to head it up,” he said.
Crisco added that the job would require someone who can build relationships and trust inside the development community. “I wish him luck in doing that,” Crisco said.
Staff writer John Frank contributed.
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