WASHINGTON—Today Senator John Kerry (D-Mass.) called on the Bush Administration to provide a detailed explanation about why they chose to withhold from public scrutiny large portions of a recent Inspector General’s report on fraudulent loans made by Business Loan Center, LLC. The Small Business Administration (SBA) took the highly unusual step of requesting that the Inspector General redact large portions of its report, including the majority of its recommendations, the agency’s responses to those recommendations, and the Inspector General’s comments on the agency’s response.
“The Bush Administration’s failure to provide proper oversight of this lender, or take wise action when they detected problems, resulted in years of undetected fraud. We can’t get to the heart of the problem if the Administration keeps hiding the facts from public view,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. “The Administration must explain their rationale for suppressing the Inspector General’s recommendations and their response. In order to combat future fraud and protect the integrity of this vital small business loan program, the American people need access to all the relevant information.”
According to the Inspector General’s report, 19 individuals, including a former executive vice president of the Business Loan Center (BLX), were charged with fraud for allegedly making more than $76 million in fraudulent loans to unqualified borrowers. After the SBA Inspector General conducted an audit of the agency’s oversight of BLX from 2001 to 2006, the SBA asserted that the Inspector General can’t fully disclose parts of the report because of exemptions in the Freedom of Information Act (FOIA) that protect trade secrets, deliberative process privilege, and banking examinations.
In his letter to the SBA Administrator Steven Preston, Senator Kerry requested that the agency provide their “handbook” or documents that guide the agency on FOIA exemptions, fully explain the basis of each redaction, and give details about how the agency will respond to the report’s recommendations. Senator Kerry will also hold a hearing on this issue in the near future.
To read the letter that Senator Kerry sent to SBA Administrator Steven Preston click here.