LOS ANGELES : Audit Hits Management of Small Business Loans

The Business and Economic Development Office under then-Los Angeles Mayor Tom Bradley kept poor track of some delinquent loans and wrote off others without proper justification, an audit has found.

The city controller’s office concluded that about a third of the small businesses receiving loans during Bradley’s last six years in office have either fallen behind on their payments or defaulted.

Some loans were improperly written off without City Council approval. Others were not tracked, even when payments were late. And the $32,000 debt of a restaurant was forgiven when the business reportedly went bankrupt--a report that proved to be untrue.

The controller found that poor management of the loans could lead to “inadequate control or loss of city assets.”

Officials in Mayor Richard Riordan’s office have said they have confirmed the audit’s findings in an informal survey of their own. An accounting firm hired by the Business and Economic Development Office is scheduled to begin a more detailed review of the entire loan portfolio on Monday.