House Panel to Probe Grant to L.A. Firm

The House Commerce Committee has launched an investigation into alleged contracting abuses and political influence involved in a Clinton administration grant of $3.2 million to a prominent Latino-owned Los Angeles firm for a minority business program that proved unsuccessful.

Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.) disclosed his decision to undertake the probe in a six-page letter he sent late Friday to newly installed Commerce Secretary Mickey Kantor. He said his inquiry was prompted by a Times article detailing how Cordoba Corp. had obtained the 1994 grant to operate a minority business center in downtown Los Angeles.

At the same time, The Times has learned that Commerce Department officials have halted payment of an additional $269,000 to Cordoba pending the outcome of a high-level review ordered by Kantor. The payment was halted before the action of the Commerce Committee.

Cordoba, a firm specializing in government contract work, is closely allied with Democratic City Councilman Richard Alatorre. The firm also provides a $150,000 annual salary to California Democratic Party Chairman Art Torres, who has assisted in the firm’s dealings with federal officials.

Cordoba is also one of a group of Los Angeles contractors that is bidding on a contract to oversee construction of the Red Line subway extension. Although the Metropolitan Transportation Authority staff has tentatively chosen the group that includes Cordoba, the contract award has been delayed until May 14 so officials can complete an internal investigation of allegations that the group lacks sufficient experience to do the work.

Bliley’s letter to Kantor demands virtually every document and electronic communication available within the Commerce Department involving the choice of Cordoba for the 1994 award.

” . . . The committee needs to determine if there were significant abuses in the department’s awarding of this contract,” Bliley wrote.

Commerce Department officials have acknowledged that Cordoba, which had intense political backing from California Democrats, won the award even though the firm’s initial proposal was not deemed to be the best one submitted. Officials who awarded the grant also overlooked strong warnings, which proved to be accurate, from the Commerce Department’s inspector general that the debt-ridden firm lacked the financial stability to do the job.

The minority business center was closed within a year because federal officials concluded that Cordoba had failed to successfully carry out the project. As a result, minority firms in California and six surrounding states do not get the same assistance as those in other regions.

Among those who assisted Cordoba in winning the contract were Sen. Dianne Feinstein (D-Calif.), Rep. Matthew G. Martinez (D-Monterey Park) and then-Deputy Los Angeles Mayor Al Villalobos, a Republican appointee of Mayor Richard Riordan. After the grant was awarded, Villalobos; his son, Eric; and Martinez’s son, Matt, were employed on the project.

Cordoba officials have declined to discuss how they won the award. Neither Torres nor Cordoba President George L. Pla have returned repeated telephone calls from The Times.

Cordoba’s federal contract called for the company to operate a so-called MEGA Center, funded by the Commerce Department’s Minority Business Development Agency. Unlike smaller centers in other cities, the Los Angeles facility was the biggest single project ever funded by the agency and was expected to provide an expanded menu of services--including advice on capital development, franchising, export sales and management.

Records show that even though Cordoba received the $3.2-million grant to carry out a three-year project, the company was not forced to return any of the money when the center folded. In fact, Pla has acknowledged that Cordoba is still seeking an additional payment of $269,000 from the Commerce Department to cover “close-out costs.”

Although Commerce Department officials recently approved payment of the additional money, according to knowledgeable sources, the reimbursement check to Cordoba was halted last week until top department officials can complete their inquiry.

Ann Luzzatto, spokeswoman for Kantor, said that Commerce Department officials agree the government still owes Cordoba at least $141,000 for the project, but they have also concluded that the company owes the government an even larger sum of $314,000.

Not only does Cordoba’s debt exceed what it is owed, she said, the company still owes the Internal Revenue Service for unpaid federal taxes that were an issue when the grant was initially made. Luzzatto said Commerce Department officials are deciding, among other things, whether the IRS will be permitted to claim any money still owed to Cordoba by the department.