New York Times; By: Elizabeth Olson

WASHINGTON — A nonprofit organization that Congress set up to help veterans start and expand small businesses was criticized in a recent Senate report for spending federal dollars on expensive dinners, luxury hotels, first-class travel and high salaries.

Since 2001, the organization, the National Veterans Business Development Corporation, has received $17 million from the federal government to operate walk-in small-business centers for veterans, according to the report, which was released this month.

Of that amount, only 15 percent a year on average was spent running the centers, the report said. The percentage fell to 9 percent in the 2008 fiscal year, threatening centers in Massachusetts, Michigan and Missouri, the report said.

In addition to the centers, the Veterans Corporation has given grants to the Jewish Vocational Service Centers in Boston and Chicago and programs for service-disabled veterans in San Diego and Syracuse to offer similar assistance.

The report took the group to task for its other spending. Besides the hotel stays, meals and salaries, money was spent on programs that were not part of the group’s original mandate, the report said, including a youth essay contest and the promotion of a film on a disabled veteran.

The Veterans Corporation’s board chairman, Jeffrey W. Gault, said by telephone that the organization’s expenses “were very reasonable,” but declined to comment further.

Two senators who investigated the organization — John F. Kerry, Democrat of Massachusetts, and Olympia J. Snowe, Republican of Maine — called for the money to be given instead to the Small Business Administration, which has an Office of Veterans Business Development. Mr. Kerry is chairman of the Senate Committee on Small Business and Entrepreneurship, and Ms. Snowe is the ranking minority member... 

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