Governor Mike Braun’s audit of the Indiana Economic Development Corp. has exposed a series of troubling issues within the quasi-public agency, which has long faced criticism for its lack of transparency. The 127-page “forensic review” conducted by FTI Consulting Inc., released on October 2, delved into IEDC activities from 2022 to 2024, during the tenure of Governor Eric Holcomb. The report also examined related projects and entities such as the Indiana Economic Development Foundation, Elevate Ventures Inc., Applied Research Institute, and the LEAP district.
The audit revealed a significant lack of internal controls and inadequate management, along with conflicts that raise concerns about potential favoritism and misuse of public funds. It emphasized the need for reforms to ensure that state funds are used in a transparent and accountable manner.
Despite these findings, some defenders of the IEDC’s approach during the Holcomb administration have suggested that the audit may be politically motivated. One reason for this perception is that much of the period under investigation coincided with Brad Chambers, former Indiana commerce secretary, leading the IEDC. Additionally, Braun had previously criticized the IEDC’s lack of transparency during his 2024 campaign.
Here are six key takeaways from the audit:
Luxury Travel and Excessive Spending
One of the most notable aspects of the Holcomb administration was the frequent international travel undertaken for economic development purposes. These trips spanned locations such as Brazil, Egypt, and Japan, with a total of 38 trips funded by the Indiana Economic Development Foundation, the IEDC’s nonprofit arm.
However, the audit found that these trips incurred “frequent and high costs.” While the expenses were processed through the foundation, taxpayers ultimately bore at least part of the burden. The audit noted that $4.5 million, or 38% of the foundation’s funds between 2022 and 2024, came from the IEDC for travel and entertainment reimbursements.
Between 2022 and 2024, the foundation spent:
– $4.3 million on flights
– $2.8 million on hotels
– $2 million on event planning and hosting
– $1 million on travel agencies
– $800,000 on meals and catering
These expenditures accounted for 82% of all the money the foundation spent. Some of the spending was deemed “excessive,” including thousands for VIP airport services, high-end hotels like the Four Seasons, and $5,000 to $10,000 plane tickets. The audit also highlighted travel expenses for family members, not all of which were reimbursed.
Donors and Financial Incentives
Nearly half of the donors to the Indiana Economic Development Foundation, the private fundraising arm of the IEDC, also received payments or tax credits from the IEDC. This “symbiotic relationship” raised concerns among critics, particularly Democrats like state Rep. Ed Delaney of Indianapolis.
Delaney questioned whether the IEDC and its donors were “washing each other’s hands.” The audit found that these donors collectively gave $2.8 million to the IEDF but received more than $238 million in tax incentives or payments through contracts or grants.
Conflicts of Interest
The audit uncovered dozens of potential conflicts of interest, though not all details were fully disclosed. Thirty entities that received money from the IEDC had connections to an IEDC board member or employee, yet only one reported their relationship as a potential conflict of interest to the Indiana State Ethics Commission.
Auditors reviewed conflict of interest forms for over 150 people employed by the IEDC between 2022 and 2024 and identified at least 10 instances where employees did not submit required forms.
A particular concern involved Dave Roberts, the former IEDC chief innovation officer, who did not formally disclose his potential employment at the Applied Research Institute (ARI) to the state ethics commission or receive a post-employment waiver, even though approximately 82% of his salary at ARI was tied to the IEDC contract.
Roberts denied having control over the contract, stating, “I did not have signatory authority for either entity.”
Inherent Conflict at Elevate Ventures
Elevate Ventures, the nonprofit selected by the IEDC to manage its investment funds, was found to have “not reliably tracked” returns on its investments of state dollars. The auditors noted that it also failed to provide regular financial reports to the IEDC as required by its loan agreements.
Further, the same managers overseeing the investment of state funds also managed two other private funds. This created an “inherent conflict” because Elevate had a financial incentive for those private funds to perform well, potentially at the expense of state funds.
The offer letters for Elevate’s managers of the state Growth Fund indicated that they could earn interest off the Growth fund as part of their compensation, but this potential financial gain was not disclosed to the IEDC during negotiations over the Growth Fund.
Calls for Further Investigation
While the audit carefully avoided naming names and used terms like “potential,” it has sparked calls for further investigation. Although the governor’s office has referred some findings to the Office of the Inspector General, the report does not mention any intentions to further investigate the findings.
Delaney believes the General Assembly should hold hearings and formally investigate the matters in the report. Sen. Fady Qaddoura, D-Indianapolis, has asked the attorney general to step in. Senate President Pro Tempore Rodric Bray stated that the legislature will review the audit and determine if legislative action is needed to achieve more transparency and accountability.
The attorney general’s office is also reviewing the audit to determine next steps.
Uncertain Future for IEDC
The future of the IEDC under Governor Braun and future administrations remains uncertain. The audit’s release marks a turning point, as Braun has broken ranks with three previous Republican governors who supported the IEDC’s approach to economic development.
There are already changes underway. The Indiana Economic Development Foundation has ceased accepting new contributions and is moving toward winding down its operations, according to Commerce Secretary David Adams.
Braun has not yet commented on specific audit findings, but his administration appears focused on overhauling the IEDC to become more transparent and accountable to taxpayers. It remains to be seen how much of this will come to pass and what it will mean for economic development in the future.
