ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, December 13, 1996 TAG: 9612130065
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
The Clinton administration awarded a $3.2 million grant to a Democratic fund-raiser's company after rejecting another firm that had placed first in the bidding, government documents indicate.
The grant, the largest ever from the Commerce Department to run a minority business assistance center in Los Angeles, was awarded to Cordoba Corp. after government auditors twice warned that the company did not appear to be financially fit, the documents show.
Cordoba is run by California businessman George Pla, who for two decades has raised money for Democrats and was a member of President Clinton's finance board in 1992. Pla also served on the Democratic Party's 1992 convention site selection committee and has donated $39,350 to Democratic causes.
The 1994 grant is being investigated by the House Commerce Committee as part of its inquiry into whether the Commerce Department has been used to reward Democratic donors.
The department has informed Congress that its own internal review, spurred by stories in the Los Angeles Times, uncovered several allegations that are being further investigated by its inspector general.
Pla has said he had not asked anyone for favoritism, though he had been friends with then-Commerce Secretary Ronald Brown.
In addition to the grant, Cordoba spent more than $500,000 of its own money on the center, which was intended to help minority businesses compete for government contracts and financing. But after a year of operation and extensive criticism by Commerce auditors, Cordoba closed the center.
``For those who would read and write about benefiting personally or steering contracts, it is nonsense,'' Pla said. ``The project cost me a half-million dollars. And I did it because I thought I could help minority businesses.''
In recent weeks, several career government officials have told a Commerce review that Clinton appointee Gilbert Colon intervened to redirect the federal money to Cordoba after another firm, Grant Thornton, had won the procurement competition and was being processed for the grant, according to department documents.
Colon served as acting director of Commerce's Minority Business Development Agency, or MBDA, under Brown.
The director of the San Francisco regional office, Melda Cabrera, quotes Colon as telling her in fall 1993, ``I need to find a way to disqualify Grant Thornton as the highest-ranked applicant,'' according to an agency summary prepared for congressional investigators.
A procurement panel had scored Grant Thornton's first proposal a 97.6 out of a possible 100 points - 11 better than Cordoba's.
Colon's former deputy, Loretta Young, recently told the Commerce review that Colon then ordered workers to ``stop the processing'' of the Grant Thornton grant.
Young and a third Commerce employee, Shirley Jackson, told the department that Colon had rejected the panel's recommendation of Grant Thornton. Colon then instructed that Cordoba's second-rated bid be processed, the two women said.
When Cordoba's bid was found to have technical problems that disqualified it, Colon ordered a second competition. New bids were submitted, and a new procurement panel rated Cordoba six points better than Grant Thornton.
Colon, who left Commerce in 1994, hung up on a reporter who sought comment last week. ``I don't want to listen to or say anything,'' he said.
But in written answers to congressional and Commerce officials, Colon insisted that Grant Thornton had not been initially selected or processed, and that he had no choice but to order a second bidding.
In its response to congressional investigators, the Commerce Department noted that Colon's answers conflicted several times with those of others involved in the grant. The department also stated that while it was not usual for a top-ranked bid to be passed over, Colon as acting director would have had discretionary authority to pick a lower-ranked applicant if he could have provided sufficient reason.
Agency memos suggest Colon advocated Cordoba's selection even as subordinates questioned the company's fitness.
For instance, after Cordoba won the highest score in the second bidding, the agency's inspector general raised questions about the company's ``negative cash'' position, citing debts that included an Internal Revenue Service lien.
Colon's office called the tax agency to check on the status of Cordoba's IRS debt, and he wrote a memo Jan. 26, 1994, providing explanations for the company's problems and urging its selection.
Commerce lawyer Stacia Davis LeBlanc wrote Colon that same day, saying she would support giving the grant to Cordoba. But in the margins, she scribbled a note suggesting she felt pressured and had doubts.
``MBDA can go either way,'' Le Blanc wrote. ``This is what Gil Colon asked for from me - I had about 20 mins to consider.''
Even after the grant moved forward, the inspector general issued a second warning and proposed that special conditions be imposed ``if the department decides to make the award to Cordoba anyway and despite their financial condition.''
Pla said he never talked to Colon before announcement of the award in March 1994.
``What I know about it is there was a national selection panel. I don't know who they are. But they made a selection of us. They did ask us to resubmit. And we did. And we were selected.''
Shortly after the award was announced, Cabrera proposed that Cordoba be required to file a quarterly financial report in July 1994 and be audited regularly to address the investigator general's concerns.
Colon again intervened, telling Cabrera to drop the early reporting requirement.
``The success of the MEGA Center is extremely important to me and to MBDA. Therefore I certainly do not wish to create any unnecessary or undue burden,'' Colon wrote June 30, 1994.
Colon went further, recommending an additional $1.4 million for Cordoba without competitive bidding. But he was overruled.
Within months, an interim investigator general's audit concluded the project suffered from ``financial instability, unsatisfactory financial management and unsatisfactory performance.''
This spring, the investigator general recommended that Cordoba be forced to repay the government $314,107.
Pla dismissed the audit, saying it was done before the center got up to speed and that the audit ignored that the center helped more than 200 minority businesses in getting $30 million in contracts and $40 million in financing.
Pla said one of the center's big successes was securing financing for a theater venture by former professional basketball star Magic Johnson.
LENGTH: Long : 119 linesby CNB