AUDIT CLEARS DEAL; FEE, EX-VEDC HEAD FOCUS OF PROBE.

Byline: Gregory J. Wilcox Staff Writer

An audit of the Valley Economic Development Center has found nothing illegal about a business deal involving former president John Rooney, who quit the group earlier this year after a dispute about the matter with some board members, officials said Wednesday.

The independent audit was ordered by Mayor Richard Riordan's office in late summer after questions had been raised about a $5,700 fee that Rooney received for his role in helping a Canoga Park company secure a $1.2 million venture-capital investment. The development center is a nonprofit agency that receives some of its public funds through the mayor's office.

``I'm happy that people now know for certain that I operated with integrity and that the VEDC always . . . operated professionally and did things by the book,'' Rooney said. ``It's rare that you see (an) audit under this kind of intense scrutiny have no (adverse) findings, so this speaks highly of the VEDC. It's too bad that all of this happened.''

Rooney, who had worked at the center since 1987, is now a small-business consultant. ``At the end, the VEDC and I come out looking pretty good, I think,'' he said.

Officials in the mayor's office said they received the first draft of the audit Wednesday but declined comment until they could review it.

Development center chairman Marvin Selter said that he expects to have a full report in about 10 days. And he characterized it as a routine matter.

``It's an audit that the city normally does on programs,'' he said. ``My belief is that they found nothing (amiss).''

Roberto Barragan, the development center's interim president, said the probe did not produce any blockbuster conclusions.

``I've been told by the auditors . . . that there are no findings,'' he said. ``John did not commit any illegal acts. The audit found that John . . . did not violate any policies or any contractual terms.''

However, the audit was not just a routine examination of the agency's books. Barragan characterized it as a fiscal audit and policy audit ordered in response to news reports that detailed Rooney's role in helping an unidentified Japanese businessman secure a substantial investment in Signs 2000 of Canoga Park and the subsequent fight that erupted between Rooney and former VEDC board chairman David Honda.

Rooney was also criticized for taking a consulting fee at a time when the development center, which conducts small-business training seminars and helps arrange loans, had to take out a line of credit to meet its bills.

Both Rooney and Honda eventually resigned. And some board members criticized Honda, a Northridge contractor, for micromanaging the business assistance group. Three other directors also resigned after the flap became public.

Honda could not be reached for comment on Wednesday.

Barragan declined to comment on whether this audit answers the question of whether Rooney did anything wrong, but added that it will allow the center to focus on the future.

``Basically, it does put the issue to rest. The (center) can now proceed with its programs and reconstitute its board and expand in the areas where it has had some success - i.e., lending and training,'' he said.