The Empire State Development Corp. needs to set clear performance standards to determine whether its four remaining foreign trade offices — in the United Kingdom, Canada, Israel and South Africa — are fulfilling their missions and helping New York’s economy through overseas business and investment, according to a new audit by state Comptroller Thomas DiNapoli. ESDC contracts with representatives who operate offices in foreign countries to help New York businesses develop or expand export sales and attract foreign investments, the comptroller said.
ESDC paid a total of $2.7 million to seven foreign representatives between April 1, 2010 and March 31, 2012 for costs associated with operating 10 foreign trade offices. Because of budget constraints, the state recently closed its international offices in Mexico, Turkey and China, plus three offices in Australia, Brazil and Chile that are operated through the Council of Great Lakes Governors.
“Lack of more rigorous performance monitoring may have contributed to poor results from certain international offices,” said the audit, which covered the period April 1, 2010 through Oct. 17, 2012.
State auditors found that ESDC’s performance reporting and monitoring efforts for the foreign trade offices were “informal” and “ad-hoc.” ESDC provided DiNapoli’s office with some information about specific international trade and investment successes, but the information was only for the most recent year and appeared to have been created specifically for state auditors, the comptroller said.
“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. Improvements and greater consistency in monitoring how taxpayers’ dollars are spent is needed,” DiNapoli said in a statement. “You can’t measure improvement if you don’t track how you’re doing. Having significantly downsized its international presence, ESDC should now be able to focus its resources on more effectively overseeing and monitoring efforts to generate economic benefits with these offices.”
Some of the international offices did not meet expected results, and others had few recorded results, the audit said. The Toronto office, for example, had projected export sales totaling $1.2 million, but it reported just $175,000 in actual export sales. The Turkey office reported no export sales at all. ESDC officials told auditors that internal management reports to document monitoring efforts had been discontinued in late 2007 at the request of a deputy commissioner.
Auditors found that ESDC had made significant improvements in managing payments to foreign representatives and fixing deficiencies after a 2011 review by DiNapoli’s office. The comptroller recommended that ESDC ensure foreign representatives are reimbursed only for actual and necessary expenses incurred in operating international offices.
ESDC officials generally agreed with the audits findings, DiNapoli said.