Troubled by reports of conflict of interest, County Executive Janet S. Owens ordered the Anne Arundel Economic Development Corp. yesterday to toughen its disclosure rules to block future abuse of its multimillion-dollar loan fund.
Owens said she also plans to discuss with board members Jay I. Winer and Scarlett Breeding whether they should resign over apparent conflicts of interest.
"I want to prevent any further conflicts," Owens said. "I need to be able to trust this group and hold them to the highest level of accountability. Every public dollar this county has is so important. We need to make sure they are all accounted for."
Owens had instructed the agency to change its bylaws this summer to require board members to disclose any potential conflict of interest. But yesterday, after an article in The Sun revealed that four board members had financial interests in five companies that had received agency loans since 1993, Owens demanded stronger language to prohibit such financial relationships.
County Council Chairman Daniel E. Klosterman also called for changes, saying the board should reconsider whether Winer and another board member who voted in February to reinstate themselves after their terms had expired should be allowed to remain on the board.
"It doesn't take a genius to see you didn't have accountability over there," Klosterman said. "There needs to be checks and balances in there, and those controls weren't there. It's time to break up this good old boy network."
The agency, which operates as a county-financed private corporation, has functioned largely behind closed doors for six years. It receives taxpayer money but until recently refused to open its books, claiming that it was a private company, until a County Council-ordered audit forced them open.
A review of its records revealed six instances in which the agency lent money to companies with financial connections to board members or agency attorneys. In one case, the board approved a loan to a company building a veterinary clinic in Annapolis with financial ties to Breeding. She helped arrange the $300,000 loan, although board minutes do not reflect that she disclosed to the board that her architectural firm -- Alt Breeding Schwarz LLC -- had been hired to design the building.
Winer was chairman of the agency board in 1995 when it approved two loans to an Annapolis restaurant with which he later went into business, and helped orchestrate a loan to an Annapolis couple with whom his company sought to do business.
The board approved a loan to a Glen Burnie bowling center although one investor was an attorney who worked for the agency.
In that case, the board granted a $190,000 loan to Robert E. Thompson after the agency had turned down the same proposal a few months earlier. The loan was approved after attorney M. Willson Offutt IV invested almost a half-million dollars in the bowling center and helped him through the agency's loan process.
Yesterday, the corporation's chief executive officer, William A. Badger Jr., noted numerous changes at the agency. In addition to Owens' five new appointments to the nine-member board, he said, the board approved revisions to its credit policy this week that will prohibit loan money from going to board members or agency staff members.
He said he plans to recommend to the board that it consider requiring the agency's attorneys to file disclosure statements of their financial interests, and that it consider adopting a written ethics policy.
"I have taken action to remove even the appearance of conflicts of interest in all [agency] business," said Badger, who took over in August. "With the help of the board of directors, the [agency] is moving forward in a positive direction."
Questions about insider dealings have dogged the agency for months, starting with revelations that board members paid themselves thousands of dollars for such things as accounting and legal work, and computer and stationery supplies. Yesterday, many county officials blamed those actions on the old administration's way of doing things, something many of them say they hope is behind them now that Owens is county executive.
'Cleaning up the bylaws'
Konrad M. Wayson, the board's chairman and one of Owens' appointees, said it is imperative that people believe that.
"The corporation does a lot of good things for this county, from bringing in new business to creating jobs. We don't want to lose that," he said.
"It's a matter of cleaning up the bylaws to make sure that disclosures of any type of relationship are brought to light so that the board knows exactly what's going on and can make sure the bylaws are followed."