Two pieces of news in the last week focused on the R.I. Economic Development Corporation make it abundantly clear that only the most risk-loving leaders of the Ocean State’s business community should volunteer to serve on public-entity boards of directors.
In a ruling issued Aug. 28, Superior Court Judge Michael A. Silverstein said that nearly all of the state’s suit against 38 Studios LLC executives, former EDC officials and outside entities can proceed to the next stages. This is the suit that essentially says that there was a criminal conspiracy to defraud the state out of the $75 million that was given in guarantees to the now-bankrupt video game company.
And earlier in the week, the current EDC board voted to allow the bankruptcy trustee to use assets recovered from 38 Studios of up to $150,000 to explore potential legal action against “former directors, officers and others” tied to the company, according to the EDC’s attorney.
If it was not clear before, it certainly is now that the state intends to hold those people who served on the board and voted to approve the deal culpable.
Never mind that this looks like an ambulance-chaser’s tactic of suing whoever has the money (in this case the insurance carried by the volunteer board members’ employers for serving on boards of directors). Who would want to take the chance that a deal they voted for based on the information at hand that then went south could end up costing not just money but public shaming? This scorched-earth approach cannot be a good thing for the state’s business climate. •
