RICHMOND — The state is examining whether it was defrauded in a failed deal with an overseas company that was given $1.4 million to open a new plant in Appomattox County, according to Secretary of Commerce and Trade Maurice Jones.

“The issue of fraud is one that we are going to definitely pursue,” said Jones, who was called before the Senate Finance Committee on Wednesday to answer questions about how the deal went awry.

Jones said his staff is undertaking a multipronged review of the agreement it struck with China-based Lindenburg Industry LLC and is consulting with state lawyers in the attorney general’s office.

Lindenburg was awarded $1.4 million in taxpayer money in 2014 to support the opening of a new factory that never materialized.

A recent investigation by The Roanoke Times highlighted lapses in how the project and company were vetted. It found, in part, that state economic development staff relied on a company website with false information and accepted reassurances from a Lindenburg-paid consultant rather than independently evaluating the soundness of the company and its proposal.

The state is now seeking a refund on its money, but Jones said he’s concerned it will be an “uphill battle” to recover the full amount.

During Wednesday’s meeting, Jones apologized to lawmakers and said tougher questions should have been asked.

“Our challenge here was definitely human error,” he said, adding the state has tools to guard against this type of lapse but was seduced by a company that was working with a well-regarded U.S. consultant and was able to plunk down cash for the project site in Appomattox County.

Senate Majority Leader Thomas Norment, R-James City County, suggested at one point that human error seemed like a euphemism.

It “probably could be characterized in a little stronger terms,” he said of the handling of the project.

Jones sought to assure the committee that internal reforms are already being adopted, including forming a special panel to ensure that multiple people are scrutinizing project documents.

The state also will require audited financial statements from foreign companies seeking economic development incentives in the future, he said.

Sen. Emmett Hanger, who along with Norment co-chairs the Finance Committee, said he was glad the department was taking responsibility and putting new measures in place.

The state has been aggressively pursuing economic development opportunities, he noted, and there is an inherent risk in that.

“I think all of the members up here, many of whom have been in business, have had a deal go sour,” he said. “That’s the nature of it.”

But at the same time, Hanger, R-Augusta County, joined others in calling for a comprehensive study of the state’s economic development incentives — including its failures.

“Moving forward, we’ve got a lot of money that is going to be targeted at economic development,” he said. “I’m interested in looking, not just at this particular situation but at some of the previous administrations, too, where things did not pan out as intended, so that we can learn from it and put in place appropriate safeguards.”

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