Small-business aid

Saturday, Jan. 3, 2009 | 2:06 a.m.

A nonprofit corporation that Congress authorized to help veterans start or grow small businesses seems to have had no trouble spending $17 million in taxpayer money since 2001. But only 15 percent of the funding has been spent on business resource centers that are supposed to provide services to veterans, a congressional investigation concluded.

A Dec. 11 report prepared for the Senate Small Business and Entrepreneurship Committee found that the National Veterans Business Development Corp. wasted money on excessive compensation for executives, on expensive dinners for employees at high-priced restaurants in Washington, and on questionable charges on company-issued credit cards. The compensation for the top two executives in fiscal 2007 ate up 22 percent of the funding for that year, more than was spent on the business centers.

Those salaries certainly weren’t earned, at least judging from the corporation’s fundraising efforts that year, when it spent more than $240,000 to attract private donations but raised only $64,000.

Sens. John Kerry, D-Mass., and Olympia Snowe, R-Maine, the committee’s chairman and ranking member respectively, were understandably outraged by the report’s findings.

“This investigation made me angry as someone who has worn the uniform of my country,” Kerry said. “It’s appalling that an organization created to aid our nation’s heroes would instead squander taxpayer dollars, wining and dining their executives instead of helping veterans.”

The corporation’s board chairman, Jeffrey Gault, told The New York Times for a Tuesday story that the organization’s expenses “were very reasonable,” but he declined to comment further. Gault had written to the senators that nearly three-fourths of its 2007 budget went to program expenses. But the report found evidence of gross mismanagement.

With the business centers in St. Louis, Boston and Flint, Mich., facing the possibility of shutting down, we agree with Kerry and Snowe that no more federal money should go to the corporation.

Instead, the senators have made a sound recommendation that future federal money be directed to the Small Business Administration’s Office of Veterans Business Development, where it should do far more good.