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Beltway Confidential

State corporate welfare agencies foster cronyism

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Beltway Confidential,Timothy P. Carney,Connecticut,Corporate Welfare,Cronyism

Earl O'Garro is a Connecticut businessman and an insurance broker for the City of Hartford. Investigations now swirl over his head, and the state is seizing his luxury cars after he failed to pay back a loan from the State of Connecticut, and he may have lost Hartford's money.

How did O'Garro get the gig as Hartford's insurance broker? Was it related to his renting space in a building owned by the family of Adam Cloud, the treasurer of the City of Hartford? Or was it related to O'Garro's hiring Chris Cloud, brother of Treasurer Adam Cloud? Maybe these are coincidences.

If there is cronyism and impropriety involved in O'Garro getting this deal — and none has been proven — what are the root causes?

In part, O'Garro's opportunity was created by the city's decision to hire a private broker. This may be prudent, creating efficiency. Or, like much government privatization, it may be an inefficient process that mostly rewards politically connected businesses.

But there's another aspect to the O'Garro mess: the six-figure loan O'Garro got from Connecticut's Department of Economic and Community Development -- and which O'Garro hasn't paid back.

These economic development agencies — and they are everywhere — seem like the low-hanging fruit if a state wants to crack down on cronyism. If you put politicians and bureaucrats in the business of giving loans and subsidies to businessmen, this money will end up in the hands of the politically connected. This is a petri dish for corruption and cronyism.

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