The FBI is investigating a $400,000 D.C. job training grant to a private corporation that allegedly used more than $100,000 of the money for such purposes as "Happy Hour Training" at two local restaurants, limousine trips to and from National Airport and the purchase of a $178 leather briefcase.
An audit of the questionable expenditures by the D.C. Institute for Careers in Tourism, a subcontractor that used the city funds in 1977 and 1978 to train 28 tour guides, was revealed yesterday at a congressional subcommittee hearing. The purpose of the hearing was to evaluate the federal government's efforts at accounting for job training funds spent under the Comprehensive Employment and Training Act (CETA).
"Happy hours at the Red Lion and Black Tahiti, limousine trips to and from the airport for [the] executive director's trip to Jamaica -- it's hard to believe this could be allowed to happen," Rep. M. Caldwell Butler (R-Va.) said.
He and his colleagues on the House manpower and housing subcommittee concluded that the U.S. Department of Labor is doing a "dismal" job in accounting for CETA money.
The D.C. Institute for Careers in Tourism no longer is receiving government grant funds. Its contract was terminated in October 1978, after allegations by job trainees of wrongdoing. The group was formerly headed by D.C. businessman Eric Sewell.
After the termination of the city's relationship with Sewell's group, the D.C. Department of Employment Services gave the contract to the D.C. Chamber of Commerce, which continued to train tour guides under the name of the D.C. Institute for Careers in Tourism.
The current grant of about $291,000 to the chamber was canceled 10 days ago after reports that the head of the chamber, James L. Denson, has allegedly misappropriated chamber funds. The grant to the chamber-sponsored D.C. Institute for Careers in Tourism is among various chamber-related financial affairs now under investigation by the city's inspector general and by federal prosecutors.
Robert Watkins, Sewell's attorney, said last night that Sewell would have no comment on any questions about his conduct with the D.C. Institute for Careers in Tourism. Watkins emphasized that the $127,818 mentioned in the auditor's report amounted only to questioned costs, and have not been found to be improper. Watkins declined further comment.
The D.C. Department of Employment Services has not ruled whether the questioned costs were legitimate and is unlikely to do so pending completion of the federal investigation of Sewell's group.
Among other expenditures questioned by the auditors were:
$45,800 in payments to the Tourism Foundation, a separate company headed by the same people as the D.C. Institute under Sewell.
$2,875 in leasing costs for a new Mercury Monarch used by a D.C. Institute board member.
$5,799 in alleged excessive telephone and postage costs.
$1,755 in miscellaneous expenses including Christmas cards, alleged excessive staff salaries and custom photography work unrelated to training.
$590 for a speed reading course for Sewell and a board member.
$404 for courier deliveries to a Georgetown tobacco store and other sites unrelated to the work program.
The $178 briefcase was among $795.35 worth of items that auditors deemed to be questionable office expenses. The report did not list the recipient of the briefcase.
Harold Bardonille, a former consultant to the institute, said it provided a useful service by training tour guides and said he was unaware of any improprieties. He referred a caller to Sewell for any details.
The alleged abuses by the D.C. Institute were among several cited yesterday by the subcommittee in its criticism of the federal government's monitoring of the $10-billion-a-year CETA program.
The subcommittee's chairman, Rep. Cardiss Collins (D-Ill.) said the General Accounting Office reports "show that funds have been squandered all these years and nothing is being done to tighten up spending. It's a doggone dismal record."
Collins referred to GAO reports alleging that the Labor Department is not efficient in auditing those who receive grants, ruling on questioned costs in recovering money that has been spent improperly.
Labor Department officials said much of this responsibility lies with local officials, who directly administer the federal grants to local subcontractors.
Subcommittee members offered other examples of "Abuses and errors" in the CETA program from throughout the nation that were contained in the GAO report released Tuesday. They included:
$2,850 for a wedding and reception on the Queen Mary, categorized as an "employe morale boost."
$4,734 for the lease of Audi and Porsche automobiles.
$1,485 for employe Christmas gift certificates, also catergorized as "employe morale" expense.
$15,000 in loans to friends of an executive director.
$100,000 to purchase land and build a house.
These were among $1.1 million in examples of "errors and abuse" cited by the GAO.
"We have dealt out billions and billions to this program and these problems have been incurred over and over," said Rep. Olympia J. Snowe (R-Maine).