The directors of the 42-year-old D.C. Chamber of Commerce, acknowleding that the association of mostly small and minority businesses is bankrupt, have voted to move the organization out of its rented offices into donated quarters and to reduce its staff to two by the end of the month.
The actions were taken at a closed door session of the board Wednesday night. As the Chamber begins what many believe will be a long and arduous task of reestablishing confidence supporters, the organization will leave its suite of offices at 1319 F St. NW and take up temporary quarters in a Morton's Department Store at 1220 F St. NW, according to one board member.
The Chamber's closing will cap months of internal turmoil and dissension among Chamber directors following the discovery last February that the 326-member organization faced debts of about $150,000 including $90,000 in unpaid city and federal withholding taxes for its employes.
Subsequent newpaper articles reported that then Chamber president James L. Denson had misappropriated thousands of dollars in Chamber funds in 1979 and 1980, according to Chamber records.
Denson, who also was chairman of the D.C. Board of Elections and Ethics, had used the financial resources, image and name of the Chamber over a year's time to further his personal business interests, Chamber records showed.
Denson has maintained that he never did anything intentionally illegal. He resigned as Chamber president on May 7, and as ethics board chairman on May 9.
A U.S. grand jury, the D.C. Inspector General and an internal Chamber audit committee all are investigating Denson's activities and handling of Chamber funds.
Margaret Stewart, the Chamber's acting president, could not be reached for comment yesterday about Wednesday's meeting.
However, one board member who attended, but asked not to be indentified, gave this account:
The chief action of the board was to dismiss the half-dozen remaining members of a staff that once numbered more than 30 persons. The employes were to have received their last checks today, but there is only about $900 or so left in one Chamber bank account.
Among the last staffers dismissed was Edward J. Van Kloberg, a former dean at American University who had clashed with Denson during Denson's last months of control over the Chamber's finances.
Van Kloberg said yesterday he would have no immediate comment. However, the director said that Van Kloberg had notified the directors that the board could not dismiss him because he holds an employment contract with the Chamber that is valid until this fall.
Van Kloberg was hired by Denson 14 months ago to help broaden the interracial membership of the Chamber, which historically has been a predominantly black group, and to act as a fund-raiser for Chamber activities. p
Van Kloberg emerged this spring as the victor in a leadership struggle with Denson's protege, Allison Bryant, a U.S. Department of Housing and Urban development official on loan to the Chamber under a government exchange program.
However, Denson eventually alleged that Van Kloberg's attempts to wrest control of Chamber finances were personally and racially motivated. Van Kloberg denied this and a majority of board members reportedly discounted racial motivations as the root of the Chamber's internal battles.
Van Kloberg's friends and associates say that he feels betrayed by a board he maintains gave him a mandate to bring order to the Chamber's chaotic financial condition.
In another move, the Chamber board dispatched a letter to Mayor Marion Barry asking the city government to assume the financial responsibility for Bryant, the HUD official who had been on loan to the Chamber and who served as executive vice president for nearly a year.
Under the loan agreement, the Chamber was obligated to pay half of Bryant's $39,000-a-year salary. The agreement recently was renewed for another year.
The two remaining staff members are Jerri Warren, who earlier was named by the board as acting executive vice president, and June Young, an office manager. It is not clear how the two will be paid. The District of Columbia government has frozen Chamber bank accounts and placed tax liens against public funds going into the Chamber because of the outstanding withholding tax payments.
During recent years, the once sleepy Chamber had grown in membership and financial strength to support a staff or more than 30. In 1980, the organization was slated to receive nearly $500,000 in public funds under the Comprehensive Employment and Training Act, a HUD grant for commercial revitalization and a minority tourism grant from the D.C. government. Most of those funds have now been cut off.
At Wednesday's meeting, the Chamber board asked developer Theodore M. Hagans Jr. to head a special committee to attempt to reestablish ties with the Washington banking community.
Some board members fear that the Chamber as it now exists is on a terminal financial course that will end in a formal declaration of bankruptcy and subsequent disolution.
Some observers see the functions of the Chamber being absorbed by the larger Greater Washington Board of Trade, whose members cover the entire metropolitan area.
However, a number of board members feel strongly that the Board of Trade cannot serve the small and minority business communities within the District of Columbia in the same fashion as an in-town chamber.
Other board members hope that if the Chamber succumbs in the current crisis, an alternate business association would be formed under a new name to assume many of the same functions.