We don’t do a whole lot of long investigative pieces … but when we do they can be really really good. (I had absolutely no role in in this). Here’s the first of a big investigation our I-team did on the $21.4 billion money trough:
The 9/11 tragedy brought out the best in most of us — the countless acts of heroism, the passionate outpouring of volunteerism and the unprecedented generosity of a grieving nation.
It turns out that the huge and sudden influx of billions of dollars in federal disaster recovery aid also brought out the worst in others — to a degree that is sad and disheartening.
To be sure, the financial assistance given to New York City after the Sept. 11, 2001, terrorist attacks delivered tremendous benefit to countless citizens and businesses, small and large.
But a four-month Daily News investigation of the $21.4 billion disaster recovery package reveals that major elements of the aid process were procedurally flawed — from the determination of how much money was supposedly needed, to how it was distributed, to how it was actually spent and ultimately, to how little oversight there was over the spending. In effect, no one was watching.
According to this related story, one company got $300,000 grant even though on Sept. 10, 2001 it had told the S.EC. it had closed its door a month earlier, unable to pay its bills. And messenger company Dart Courier Service received a $645,000 grant and a low-interest loan of $435,500, even though it is based on East 16th Street.
Asked to explain why his Gramercy Park company received grants that were limited to companies located south of 14th St., owner Greg Weiss said: “Cortlandt St. is one of our offices,” before abruptly cutting the call short, citing static on the line. Weiss said he would call back. He never did.
To have received as much as it did under the grant formula, Dart needed to have 138 full-time employees working out of the Cortlandt St. second-story walkup. (The entire floor, including an unrelated spa, is 1,900 square feet).
But the $300,000 grants were nothing compared to the millions doled out to Fortune 500 companies, supposedly to keep them from moving downtown. American Express, for example, got $25 million — 6,200 for each of its 4,000 employees — six months after it had publicly declared it wasn’t moving from downtown.
Meanwhile, many small business owners and individual entrepreneurs were receiving a pittance in grant money, the story says. One fashion designer who used risked his life savings of $20,000 for his line of women’s clothing got $38, for example.
Derek, this is one of the reasons why governments are lousy mechanisms for distributing largesse for any reason.
I mean, it’s pretty much the situation like giving presents to someone.
There are four “kinds” of this:
1) Person A selects and gives a gift to person B
2) Person A gives money to Person B and they spend it on what they want.
3) Person C takes money from Person A and gives it to person B to spend on what they want.
4) Person C takes money from Person A and buys a present and gives it to person B.
Clearly, #4 is the worst case for both A and B — not only does “A” have no say in what is bought and how much is spent, but “C” does not necessarily know anything about what “B” wants or needs… “C” may not even CARE about how wisely “A”s money got spent, or if “B” appreciates the gift given.
There’s no feedback mechanisms to make sure that the money is spent wisely and appropriately.
*Most* government transactions are class 4
The moneys taken from us all get spent very poorly for the most part, because “person C” doesn’t give a rat’s ass about the whole thing.
If you want to encourage appropriate “giving”, it should be done with tax credits, not with direct government takings.
Yeah, there will be abuse of this, too, but not as much. It takes a giant governmental bureacracy like the UN to get an abortion as bad as Oil-for-Food, or this fiasco of which you speak.
Nick, I think that’s a fair point. Did you read the NYT story last month on how the Katrina aid has been mishandled?
Unbelievable.