Suspect payments reported in budget

Arundel officials affirm agency's disclosure of action was overlooked

August 18, 1999|By Laura Sullivan and Matthew Mosk | Laura Sullivan and Matthew Mosk,SUN STAFF

Anne Arundel County officials failed to notice that the county's economic development agency was paying its volunteer board members for goods and services, even though the practice was disclosed in reports to the county.

County Executive Janet S. Owens and other county officials have blasted the practice as a clear conflict of interest since it was revealed in The Sun on Monday.

But Anne Arundel Economic Development Corp. reported it was paying its board members in a footnote to its financial report, a document given to county budget officials each year for at least the past three years. Former County Executive John G. Gary could not be reached for comment. It was unclear whether he knew about the payments.

The disclosure also appeared in the county's audit of the agency released last week, but county officials didn't notice it.

"No one flagged it," Owens said. "It wasn't on our radar screen. The idea that something like this was going on was inconceivable to me."

Also yesterday, one of the four agency board members who was paid for supplying goods to the nonprofit group said he will return the $2,283 he was paid, Owens said.

Leonard A. Blackshear told county officials he would give back the money he took in payment for voice-recognition computer software he sold to the agency, Owens said. Blackshear could not be reached for comment.

A former board member who was also paid by the agency, Andrew Lombardo, defended himself in a lengthy interview yesterday, and said he has never considered returning the $14,534 his accounting firm was paid last year for its services.

Lombardo said charging the agency for his work was a reasonable practice because he often did so at a reduced rate. When asked how he decided when to give the agency a discount, he said it was done "on a whim."

Lombardo also said the payments to him and other board members were insignificant considering "all of us provided substantial pro bono work to the agency."

None of this was hidden, Lombardo said. The payments were disclosed in the agency's annual financial reports, which were shared with the county at the end of each fiscal year.

One report, sent to the county in 1998, notes: "The corporation has obtained certain professional services from firms that employ members of the Board of Directors."

It says the agency was charged at or below market rates for the services, totaling more than $40,000 over two years.

The county's audit released last week includes a nearly identical remark.

But Owens said she was unaware of the remark when she told reporters last week that the audit delivered the agency "a clean bill of health."

"Somebody should have caught this," said County Councilwoman Barbara Samorajczyk, "especially knowing that this is a nonprofit agency. It should have raised a red flag."

Pub Date: 8/18/99

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