Audit Faults $555,000 Federal Grant to King Center : Government: Award created ‘perception of wrongdoing,’ memo says. Money was destined for voter education project in South Africa. : For the Record

Clinton administration officials have admitted creating “a perception of wrongdoing” by yielding to political pressure to give $555,000 to the Martin Luther King Center in Atlanta to fund a questionable voter education project in South Africa.

The King Center received the grant from the U.S. Agency for International Development in January 1994, even though many agency employees judged the proposed project for nonviolent voter training to be unnecessary and poorly drafted. AID went ahead with the grant after being pressured by African Americans in Congress, sources said.

In a confidential memo written last week and obtained by The Times, AID’s Africa Bureau acknowledged that an internal investigation had found fault with the King Center grant. At the same time, AID Assistant Administrator John F. Hicks, author of the memo, defended the decision to fund the project.

“Although we do not believe that regulations were violated,” Hicks wrote on Nov. 30, “the . . . bureau’s enthusiasm may have created a perception of wrongdoing. But it is important to remember the reason for that enthusiasm: the desire to bring the center’s nonviolence principles to preelection South Africa.”

Criticism of the King Center’s work in South Africa is attracting widespread attention within the government.

The Office of Management and Budget is conducting a review to determine whether it violates federal policy, and the House International Relations and Senate Foreign Relations committees are looking into allegations of favoritism by AID officials toward the King Center and other politically influential African American groups.

King Center officials declined to comment on the allegations. Since its founding in the late 1960s, the organization has been run by the family of the slain civil rights leader to whose memory it is dedicated.

In response to inquires from Congress, AID Administrator J. Brian Atwood recently acknowledged that “questionable decisions and practices” were uncovered when the agency’s inspector general investigated these grants. But, so far, he has refused to make public the findings of the inquiry.

According to sources familiar with the investigation, the inspector general’s office found the King Center’s request for funds was denied in September 1993, because it did not meet AID standards. Before rejecting it, sources said, AID officials did everything they could in an unsuccessful effort to produce an acceptable proposal--including providing the King Center office space, clerical help and technical advice.

In denying the King Center’s initial request for funds, Leslie A. “Cap” Dean, who heads the AID South Africa mission, indicated that the agency had experienced considerable outside political pressure to fund the plan.

“I’m quite concerned about the political fallout and the repercussions of this decision,” Dean wrote on Sept. 19, 1993, “but I don’t see we have any choice. We can’t in good conscience proceed to fund an activity that we don’t think is well designed and all of our efforts to work with the King Center to redesign it have not brought about the changes we needed to be able to fund it.”

Dean added that the King Center, which has suffered financial setbacks in recent years, also barely passed the necessary financial review to qualify as a potential grant recipient. “I suspect the only reason it passed was because of a feeling of political necessity and timing,” he said.

Nevertheless, Hicks and Keith E. Brown, director of the AID office of Southern African Affairs, rejected Dean’s decision to deny the King Center request for funds. Replying to Dean on the same day, Brown said that he and Hicks “both think we need to try to go ahead” with the grant.

To salvage the voter education project, therefore, Brown instructed officials who were running AID’s programs in South Africa to give “a small planning grant” to the King Center to enable it to write an acceptable proposal. To that end, the King Center received $40,622, which it spent to hire Renee Yates, wife of an AID employee, to draft a new proposal.

AID officials say it was unusual--if not unprecedented--for the agency to finance the drafting of a noncompetitive grant proposal being submitted by a major nonprofit group. At the request of the inspector general, OMB officials currently are reviewing the so-called “planning grant” to determine whether it was consistent with government-wide procurement policy.

The revised proposal won the King Center a grant of $515,000, approved on Jan. 3, 1994, but even it had many critics within the agency. Nomea Masihleho, an AID employee, told the inspector general’s office that he opposed the new grant on grounds that “lots of similar projects exist already” in South Africa and that the King Center would be taking money that could go to those projects.

In approving it, however, AID publicly described the King Center proposal as “unique” and “innovative.”

Unlike some inexperienced nonprofit groups that were seeking AID grants to perform work in South Africa, the King Center was by no means a newcomer to the business of government grantsmanship. In 1993, according to tax returns filed by the King Center, it received $2.2 million in government grants.

With the $515,000 grant it received from AID, the King Center said it has conducted workshops that trained an estimated 220,000 of 22.7 million people who voted in last year’s South African elections in so-called “Kingsian” techniques of nonviolence. The government of President Nelson Mandela won that election, which marked the end of apartheid.

The King Center’s grant was less than half the $1.23 million that the organization sought in its original request submitted in April 1993. AID spokesman Mike Seigel noted that AID spent a total of $35 million to assist various groups in helping South Africa conduct the election.

Congressional oversight committees are also questioning other grants from AID to politically influential African American groups with plans to work in South Africa. Critics in Congress have suggested that AID chose unqualified African American groups for this work to fulfill the desire of black politicians to play a role in South Africa.

At the request of Congress, the AID inspector general is also known to be looking into a number of other grants to African American groups or companies, including $100,000 to the Congressional Black Caucus Foundation to provide South African politicians with information on housing and $300,000 to Soft Sheen Products Inc., a Chicago-based company, which trained South African blacks in hair-care techniques.

In his memo, Hicks acknowledged that the inspector general had identified “some procedural and managerial mistakes” made by AID officials in their haste to fund African American groups.

“The Africa Bureau acknowledges that mistakes were made by Washington and the mission staff,” he said. “At times, the mission may have been overly aggressive in its efforts to engage African American entities.”