Rooney

The board of the Valley Economic Development Center Inc., an entity credited with funneling millions of dollars in federal aid to local businesses after the Northridge quake, has called for a full audit of the agency, and its president has been asked to resign. Sources confirm that the VEDC’s five-member executive committee voted to seek the ouster of agency President John J. Rooney during a May 13 meeting, and then on May 20 the full board called for an audit of the organization’s finances. Among the items that may be looked at in the audit, according to sources, is how money is being spent, including compensation that some staff members receive for acting as outside consultants to small businesses. As an example, one source cited a deal brokered by a VEDC consultant on behalf of a Japanese billionaire, who invested $1.2 million in a Valley company. The consultant received 55 percent of the $57,000 fee that was to go to VEDC on that deal, the source said. Rooney, head of the VEDC, declined to comment on the board’s executive committee decision to call for his resignation. He said he went on vacation immediately after the committee’s vote, but said it was strictly a coincidence. David Honda, VEDC chairman and head of its executive committee, said, “All I can tell you is, he’s on vacation for the time being. He’s still president, and I’m chairman of the board, but there’s going to be an audit and review of certain allegations.” The Van Nuys-based VEDC serves as a small-business development entity, providing professional management consulting, business financing and training for chief executives and employees. The group operates out of 11 offices scattered from Huntington Park to Santa Barbara and has a $2 million annual budget and a staff of about 40 people. It relies on local, state and federal grants for better than 90 percent of its revenue. Its largest source of funding is the U.S. Department of Commerce, which provides a $6 million revolving loan for quake-damaged businesses. The VEDC also receives about $300,000 annually from the city of Los Angeles to run the Los Angeles Business Assistance Centers in Pacoima, Van Nuys, Reseda and Chatsworth and administers a mico-loan program on behalf of the U.S. Small Business Administration. It was the complex nature of the VEDC’s financial dealings that prompted Bonny Herman three months ago to step down from the agency’s board. Herman, whose full-time job is as executive director of the Valley Industry and Commerce Association, said she resigned when she became concerned that she didn’t have adequate time to devote to the VEDC. “With that many dollars going through (the VEDC), I felt I didn’t have the time to do the job right,” she said. Herman said she has been out of the loop concerning the recent controversy, but added that board members in general don’t have the time to effectively oversee such non-profits, making it all the more important for such entities to have a strong executive committee that keeps track of day-to-day operations. As for the vote to oust Rooney, insiders said it has been clear for some time that the president was on the outs with his executive committee because members refused to let him attend their meetings. Bob Meyler, former president of the United Chambers of Commerce and a member of the executive committee who has been critical of Rooney, declined to confirm reports of friction between the president and the committee. Meyler did say he is concerned that the center is too dependent on government grants, and echoed comments by others that the VEDC needs to become more self-sufficient as government funding dries up. In addition, he said the center’s mission statement is vague, though he did say Rooney had been “working on it.” Rooney declined to go into detail, but said there are indeed problems at the VEDC, and expressed concern about adverse publicity. “I’m really proud to be associated with the VEDC. It breaks my heart to hear this stuff going on when we’re really making a difference,” he said. Like most non-profit business organizations, the VEDC sought to comprise its board with well-known business leaders who could bring prestige and respectability to the agency. But the current flap has VEDC board members running for cover, with many refusing to speak publicly out of concern that their reputation or that of their companies might be tarnished. Walt Mosher, president of Precision Dynamics Corp., said he and other board members will have nothing to say publicly until they have a chance to get together and discuss matters. “We’ve been apprised of the situation that has been going on there, and we’ll be taking at look at it,” he said. Mosher said the VEDC has done an excellent job, especially in the aftermath of the quake, but he conceded it’s time for the center to refocus its approach. “The earthquake-recovery project is pretty much over, and we have to figure out where we go from here,” he said.