Clarence M. Pendleton Jr., chairman of the U.S. Commission on Civil Rights, bypassed objections from some federal personnel officers in hiring his special assistant, Sydney I. Novell, whose business ties to Pendleton have since become the focus of federal and state investigations.
In 1982, after the commission's personnel director and the Office of Personnel Management balked at Pendleton's plan to hire Novell at a GS-13 salary level, he won approval for her appointment by meeting with then-OPM Director Donald J. Devine.
In the last three years, Pendleton and Novell have submitted steadily increased billings for their part-time commission jobs, with Pendleton being paid $67,344 last year and Novell, $41,328.
Pendleton's hiring of Novell at the commission has been one aspect of the tangled financial relationships involving the two.
Both have consulting firms that share the same telephone number in adjacent offices in San Diego. Novell's firm, Novell & Associates, has hired Pendleton for consulting work, and she is a partner in Pendleton's firm, Pendleton & Associates.
While Pendleton was chairman of a federally funded nonprofit group in San Diego, he also helped arrange a lucrative contract for Novell to package loan applications to the Small Business Administration. That contract, under investigation by the SBA inspector general and the California attorney general's office, paid Novell $77,000 last year, on top of her $41,328 federal salary.
Pendleton and the seven other civil rights commissioners are to appear today before a House subcommittee to respond to a General Accounting Office report charging the agency with mismanagement and improper hiring of political appointees.
Pendleton and Novell, since promoted by Pendleton to a GS-15 position, were paid more than twice as much last year as the other commissioners and their assistants, the GAO said.
Pendleton could not be reached for comment, but he has denounced the GAO report as politically motivated and said his salary reflects his greater responsibilities as chairman.
Pendleton's attorney, James Lorenz, said allegations in the SBA probe "have absolutely no merit . . . . I am satisfied they're not going to find anything." Novell, who like Pendleton lives in San Diego, declined requests for comment.
Questions about Pendleton's hiring of Novell, first reported by Media General News Service, were raised in 1982 by Joseph A. Zambrano, then commission personnel director. Zambrano said that most commissioners hired low-paid students as aides and that he refused to approve a GS-13 salary for Novell for "basically low-level, administrative-type chores . . . . I just couldn't support it."
OPM officials also questioned the political appointment on grounds that no commission office is located in San Diego. But Pendleton appealed to Devine, who told him he had "no problem" with Novell's appointment, according to commission correspondence.
Devine said he did not recall the meeting but that a commission chairman's request for a special assistant "is certainly not unreasonable."
Commission spokesman Debra Burstion-Wade said officials who objected "just didn't understand what was involved . . . . It is up to the commissioners to decide what level their assistants will be."
In California, Deputy Attorney General James R. Schwartz said in a letter that he and the SBA are examining "serious allegations of self-dealing, conflicts of interest and breaches of trust" involving "the financial interrelationships" between Pendleton's and Novell's consulting firms.
Until he resigned in January, Pendleton was chairman of the San Diego County Local Development Corp., which helps local businesses seek SBA loans. Jeffrey Sturman, the nonprofit group's controller, said the group's minutes show that Pendleton was instrumental in awarding a contract to Novell for that work.
In October 1983, Sturman said, Pendleton proposed that Pendleton & Associates be paid $14,400 a year plus commissions to package the loans, with Novell and another Pendleton associate as the employes. The corporation had previously paid only commissions for such work.
The following month, Sturman said, Pendleton presented the board of directors with a revised contract to hire Novell alone, and the board approved it. In June 1984, Sturman said, the board approved Pendleton's written request that Novell's contract be increased to $60,000 a year plus commissions.
Sturman said that the corporation received repeated complaints about Novell's work and that he believes she received about $20,000 more over the last two years than she was entitled to under her contract. He said that Novell and Pendleton vigorously resisted attempts to reduce her compensation and that the contract "drained" corporation reserves and left it in financial trouble.
Novell resigned in January when Pendleton resigned as corporation chairman.
Lorenz, Pendleton's attorney, called allegations that Novell was overpaid "garbage." He said her work was so efficient that Pendleton proposed to the SBA that Novell take over the loan processing, which would have eliminated federal funding for the corporation and probably led to layoffs.
"A number of people who worked for [the Local Development Corp.] would have lost their jobs," Lorenz said. "They immediately yelled conflict-of-interest . . . because Sydney Novell had the relationship with Clarence Pendleton at the Civil Rights Commission."
Pendleton avoided conflict by abstaining from board votes on Novell's contract, Lorenz said. He said there was "absolutely no money going to Clarence Pendleton" under the contract.