Audit: NY has Struggling Development Offices Around the World

10:24 AM, Jul 2, 2013   |    comments
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By Joseph Spector

Albany Bureau Chief

ALBANY A state audit Monday was critical of the overseas operations of the Empire State Development Corp., the state's economic development arm, saying the offices haven't been producing results.

The audit from Comptroller Thomas DiNapoli said the state agency's international division had until recently 10 overseas offices, yet the branches struggled to bring in business for the state.

"New York can profit from expanding business opportunities in foreign countries, but when budgets are tight, every dollar spent on these efforts has to pack an economic punch," DiNapoli said in a statement.

Between April 2010 and March 2012, Empire State Development paid $2.7 million to seven foreign representatives for the expense of running the 10 offices, the audit said. Budget cuts recently led to the closure of offices in Mexico, Turkey and China, as as well as offices in Australia, Brazil and Chile operated through the Council of Great Lakes Governors.

The agency still has offices and state representatives in the United Kingdom, Canada, Israel and South Africa, the audit said.

The audit said that the program has struggled and determining its results were difficult to assess. DiNapoli said the monitoring by the state was "informal and ad-hoc."

In some cases, results weren't met or were not existent. The agency was recently run by James Rubin, a former top federal State Department official.

Auditors found that some offices did not meet expected returns, while others produced no tangible benefits for the state's development. An office in Toronto projected export sales of $1.2 million, yet netted only $175,000 in sales over the two-year period. The office in Turkey reported no export sales.

DiNapoli contended that the state agency indicated it had stopped reports about its operations in 2007. A report about the international division's 2011 accomplishments appeared to be created specifically for auditors, DiNapoli said.

The agency said in response to the audit that it has begun to develop a new reporting system on its results. The agency said some of the struggles dealt with international economic factors.

"It's important to emphasize that ESD evaluates its international endeavors in a larger context, mindful of the ongoing changes in trade policies, foreign markets and protocols unique to each nation's specific corporate and financial environments," wrote Ed Hamilton, a senior official at the agency. "This evaluation method is not easily measured by an audit."

 

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