Audit Finds Failed Sugar Mill Cost Taxpayers $71M
BATON ROUGE, La. (AP) -- Louisiana lost more than $71 million in taxpayer money on a failed sugar cane mill in Jefferson Davis Parish that was sold for scrap late last year, according to an audit released Monday.
Legislative Auditor Daryl Purpera's office looked at the tangled history of the building, leasing and selling of the Lacassine mill, which was completed in 2006. Louisiana spent $76.7 million on the sugar syrup mill and recouped $5.7 million through its sale in October, the auditor's report said.
The project was pushed by former Agriculture Commissioner Bob Odom as a way to help Louisiana's sugar industry, and its financing was approved in 2003 by the State Bond Commission. But it was a failure from the start and left current commissioner Mike Strain saddled with debt at his agency.
"There was no formal, comprehensive, and independent study performed to support the economic or financial feasibility of the mill project," auditors wrote.
Built for a group of cane farmers, the mill overshot its budget, never yielded the profit Odom projected and was idle for several years before it was sold for parts. Odom, who died in May, used agriculture department employees to build the facility, sidetracking them from other agency work.
The mill was only operational for one month during the 2007 and 2008 harvest seasons. The state still is paying off the construction debt. The final debt payment of nearly $1.7 million is scheduled to be made in the current budget year, according to the audit.
To even sell the defunct mill for scrap, Strain had to borrow money to take control of the mill because it was teetering on default of its debt payments and threatened with foreclosure by the bank.
The agriculture department sold the mill the year it was completed to Lake Charles Cane-Lacasinne Mill LLC in an all-financed deal with no cash changing hands.
Lake Charles Cane was controlled by a Colombian company that agreed to build an ethanol plant at the site. But that plant was never built and Lake Charles Cane was officially put in default after missing loan payments to a bank that had a mortgage on the mill as collateral for the loan.
Strain borrowed money in 2012 to take over the mill and try to find a buyer. The mill was sold on Oct. 31 for $7 million, but part of that was taken as commission by the company that marketed and structured the sale deal, according to the audit.
The report is online at: http://1.usa.gov/1nxeunL