Agency director helped on loan

Official is on board of Arundel group that received the money

October 02, 1999|By Laura Sullivan and Matthew Mosk | Laura Sullivan and Matthew Mosk,SUN STAFF

A director of the Anne Arundel Economic Development Corp. helped arrange an $11,000 loan to a police support group on whose board he also serves, records released this week show.

The loan had nothing to do with the agency's stated mission of helping disadvantaged businesses.

Records show the county-funded agency lent the money to the Anne Arundel County Police Foundation to "help fund-raising efforts" and serve its mission of "community outreach."

The law enforcement group raises money for an annual banquet and provides funds for such expenses as veterinary bills for police dogs, said Joseph Conte, the group's president.

The foundation used the loan to buy $10 model police cars with Anne Arundel colors and decals from a New Jersey toy company. The cars were sold for $15 each, with the profit going to the foundation.

"It was a small loan to help the police department that was paid back in two months," said Andrew R. Lombardo, who proposed the loan in 1997 and was treasurer of both groups at the time. "How is that a problem?"

Of more than 50 taxpayer-supported loans made by the development corporation since 1993, this was the only one that strayed entirely from the agency's stated goals -- to spur development, create jobs and launch businesses.

Lombardo abstained from voting on the loan and said he disclosed his relationship to other board members. However, he gave a presentation on the prospective loan immediately before the vote, according to board meeting minutes.

William A. Badger Jr., chief executive of the development corporation, said openness is the corporation's chief concern.

"If there was a relationship, we expected it to be disclosed," he said. "Our board members are leading citizens in the community. We are dependent on them to use their judgment to disclose when they are involved with our borrowers."

Even with full disclosure, a new policy set in place this month to prevent conflicts of interest at the corporation would not permit directors to approve a similar loan.

The policy changes stem from the revelation in August that Lombardo was charging the development corporation for accounting work done by his Annapolis firm. Another director charged the organization for legal work, and two others billed the corporation for products such as stationary and computer software.

County Executive Janet S. Owens deemed these activities a conflict of interest. Since she took office in December, Owens has replaced Lombardo and several other board members.

Under the loan program rules set by the County Council, the purpose of the program is to disburse loans to help "start, expand, retain or relocate" businesses in the county.

The company must first demonstrate that it cannot get a loan from a commercial bank.

Lombardo said he doesn't remember if he attempted to get a loan from a bank.

Pub Date: 10/02/99

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