CI failed to collect borrowers' financial statements

The state's quasi public investment arm Connecticut Innovations failed to collect financial statements from businesses borrowing money to develop clean energy technologies, according a new report released Monday by state auditors.

The audit report shows that in 2009 and 2010 CI failed to collect required quarterly financial reports on all five loan agreements under a Connecticut Clean Energy Fund program, hampering the agency's ability to determine if the borrowers' could repay the loan.

Instead, CI obtained the financial information through discussions and meetings with the borrowers.

"The managers of these loans are in contact with projects' people all the time," said George Ballas, CI vice president for finance and administration.

After the auditor's report was released, the CI loan managers started collecting all the missing financial statements from the borrowing companies, Ballas said, although CI didn't have all the required financial statements as of Monday morning.

To resolve the problem in the future, CI will remind all borrowers of their financial reporting requirements; and develop an electronic monitor system to record all the data and send a notice to borrowers when their reports are due.

CI is a state investment authority with $84 million in total liabilities and net assets running a number of programs. The agency loans money out to start-up technology businesses, designed to grow invention and industry in Connecticut.

CI also is the administrator of the former Connecticut Clean Energy Fund, which was replaced in June by the Clean Energy Finance & Investment Authority. While administering the Connecticut Clean Energy Fund, CI loaned money to five different businesses to develop new technology in clean energy, such as wind projects.

All five of the loans were made within the past five years, and CI doesn't have any new loan agreements at the moment, although the financial reporting requirements would be the same. Ballas didn't have the dollar amount for the five loans immediately available Monday morning.

CI's many other loan programs have similar reporting requirements for financial statements, and all of those have been collected as required, Ballas said. That includes the more than 50 companies included in CI's investment portfolio.

The commissioner of the Connecticut Department of Economic and Community Development, Catherine Smith, is trying to greatly expand the loan capacity of Connecticut Innovations and wants to bring in a new president and CEO to administer the fund. The CI board of directors has not approved the changes yet.