Amazon’s secret play

[Editor’s Note: This week, LEO was leaked Greater Louisville’s pitch to Amazon. In an article first published on Monday, we offered details, and we asked a local advertising agency pro for their thoughts on the presentation.]

There is a big problem with Amazon’s request for proposals for where to build its second headquarters.

Amazon demands it be done in secret.

A brief background: The Amazon HQ2 RFP required that cities and regions that submit bids sign confidentially and nondisclosure agreements.

Louisville, Kentucky and Indiana officials and others who created the Greater Louisville proposal agreed to sign. After the proposal was submitted, GLI CEO Kent Oyler and chief of Louisville Forward Mary Ellen Wiederwohl said in a joint statement, “Due to a non-disclosure agreement with Amazon, we are not able to release any details of the bid.”

But, alas, LEO got the details. In fact, we were leaked the entire proposal.

To be clear, this is not TMZ-type reporting. This is much more akin to a whistle blower who recognized the bid contained information vital to the public’s interest.

For instance, a $2.5 billion incentive package over the next 20 years. That’s $125 million worth of incentives per year, from Louisville and the participating metro area organizations.

This is the type of information that, apparently, Amazon wants to be kept private.

We disagree.

This type of back-room dealing is what leads to government abuse of public money, public trust and unfair business practices.

Amazon apparently has not been required to sign a reciprocal nondisclosure agreement with any of the 238 bidders.

Here is why this is a problem: One of the most powerful, valuable companies in the world is sitting on over 200 of the best offers the largest cities in North America can conjure. Only Amazon knows what every bid contains, and it can use them to drive up the price against the other.

For instance, Louisville offered $2.5 billion over 20 years. Meanwhile, Chicago has offered $2 billion over 17 years, according to The Chicago-Tribune. Now, Amazon is free to use Louisville’s bid to drive the price up on Chicago without Louisville knowing about it. Amazon may have already made up its mind to go to Chicago, but now it has over 200 other bargaining chips. And the same could be said of Louisville.

What’s worse is, if nobody is supposed to know the others’ bids, Amazon could claim anything in a negotiation.

This is not the first time Kentucky taxpayers have been used in a business negotiation under the guise of nondisclosure agreements— and it will not be the last.

The Courier-Journal reported in March that in the last hours of the legislative session, lawmakers authorized Gov. Matt Bevin to float up to $15 million in bonds for an economic development project. Terry Gill, secretary of the Economic Development Cabinet, declined to provide specifics, the newspaper reported.

Why? Because of nondisclosure requirements. It turned out that Kentucky became a major investor in Braidy Industries, an aluminum company, by using that $15 million to buy stock in the company.

Bevin, who pushed the investment, professes to not know who else has invested in the company, the state’s new business partners. Braidy CEO Craig Brouchard recently revealed the identities of two Kentucky investors, and while he wouldn’t name the rest, he acknowledged that they are from outside the state, and may even be from outside the country. So, yes, Kentucky could be helping foreign investors.

Then, there is the UofL Foundation mess. The lack of transparency, including confidentiality and nondisclosure agreements, is how the UofL Foundation got away with loaning $52 million to one of its subsidiaries. It is how, according to an audit, it could invest nearly $10 million in endowment funds and “high risk startup companies.” It is how the Foundation was able to buy eight properties at a total of $10.3 million above market value, and purchase over $30 million in non-revenue generating properties.

Kentucky needs to be competitive with other states for economic development opportunities. But more than that, the public has a right to know what’s being offered, and what taxpayers will be responsible for in the year 2030.

We cannot fault Louisville for going after the Amazon deal. But we are happy that we were able to at least begin the discussion of what is being offered.

Government wasn’t going to do it.