Contract fraud betrays us all


April 28, 1992|By Wiley A. Hall 3rd

A city grand jury has found "widespread, systemic abuse" of the state Minority Business Enterprise program, including evidence of rampant fraud on the part of both white contractors and minority businessmen willing to serve as their fronts.

In fact, the panel found that violations of both the spirit and the letter of the law have become so commonplace that many contractors have come to believe that their evasions are condoned by state officials.

What's worse, said the panel, that perception is not too far off.

Acknowledging that some officials work diligently to overcome the program's problems, the grand jury charged "that others within the state system lack a commitment to the vision of the program."

"As a result," continued the grand jury in its March report, "they are often willing to give lip service to the program while overlooking what should be obvious -- that meaningful minority participation has diminished as a result of collusion between unscrupulous contractors and MBE 'front' and 'pass-through' companies."

Meanwhile, the governor's Office of Minority Affairs has reported that although the state's efforts to support minority businesses look good on paper, individual department heads probably have inflated their actual performance by at least 4 percent.

If so, the state probably has fallen far short of its goal of 10 percent minority participation in state procurements.

What does all of this mean?

It means we've been betrayed again.

We've been betrayed by indifference, betrayed by incompetence, betrayed by people who never believed in the program, never supported its goals, and never really tried to make it work.

Idealism collides once again with realism.

The legislature set up the MBE program in 1978 and yes, it was, in effect, an affirmative action program for minority business people.

But the MBE program was not intended as a crutch for the incompetent.

The idea was to break the pattern of minority exclusion from state procurements.

Good business people would take advantage and outgrow the program. Poor business people would fail.

The program did not circumvent the market place law of survival of the fittest; it simply provided the opportunity for minorities to participate.

This effort is especially important for the city.

Groups such as the Greater Baltimore Committee, searching for an economic niche as a way to revitalize the region's economy, have identified biotechnology as the area's focus for the future.

But I believe the city's future particularly depends on the development of a strong, economically diverse black middle class, along with the institutions that serve it.

It is blacks who remain the most loyal to the central city.

It is blacks who remain most concerned about urban issues.

Study after study has demonstrated that black businesses are nTC most likely to hire qualified black employees.

Black lending institutions are most likely to invest in black neighborhoods.

Black politicians are most likely to be inclusive, rather than exclusive in their policies.

Demographically, the city is becoming increasingly black, Asian, and Hispanic.

The city's future relies on a strong economic and political alliance among these three groups.

And here's an irony: a stronger, deeper, broader black middle class eventually would help reverse the current flight of the white middle class.

There would be less fear of crime, a lessened sense that institutions such as the school system were in irreversible decay.

The state's MBE program was established based on this understanding -- that what is good for minorities is good for everyone.

But the program will not work unless the people in charge take it seriously.

As the grand jury report indicates, the people who seem to be taking it most seriously now are the black and white business people who dream up fraudulent schemes to frustrate the law's intent.

State officials seem satisfied with what the grand jury described as "paper compliance."

They are content to let smart but unscrupulous business people literally pick our pockets. And all of us -- blacks and whites, men and women, Hispanics, Asians, and Native Americans -- are the poorer for it.

As I said, we've been betrayed again.

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