In 1999, state lawmakers created a foundation to manage half the state's proceeds from a multi-billion-dollar national tobacco settlement.

The idea was twofold: set aside some of the money coming in each year to create a self-sustaining, interest-bearing foundation; use the other part to hand out grants for programs intended to help the rural economy hurt by tobacco's decline.

At the time, some Republican legislators predicted the Golden LEAF Foundation would turn into a slush fund for Democratic politicians to hand out political favors.

On its face, it's not clear that has happened. A quick look at grants handed out by the foundation's 15-member board over the last year doesn't suggest waste or double-dealing.

A $50,000 grant to support prawn farming in Greene County and a $50,000 award to help restore a Civil War battlefield site near New Bern are likely projects with some community backing. And they likely offer some chance at generating an economic return.

A larger concern with the Golden LEAF Foundation has always been whether spreading money around in $50,000 and $100,000 increments is the best way to generate real economic growth.

A recent state audit of the foundation asks another question: Should rules be in place to ensure that money invested is done so in the best interest of the endowment's long-term growth and without political influence?

The review by the office of State Auditor Beth Wood paints a picture of an organization that, in some respects, acts secretively.

Auditors said the group initially failed to provide minutes from 29 of the panel's 429 meetings. There were also closed meetings. "As a result, operational transparency and the public's right to monitor the administration of state funds were compromised," the audit said.

Dan Gerlach, president of the foundation, disagrees with that assessment. He points out that foundation board and staff follow the same ethical guidelines of other foundations and that investments occur after an extensive review.

The audit, though, found that the foundation agreed to invest up to $30 million in Hatteras Venture Partners. Its co-founder is John Crumpler, a political fundraiser who has given thousands to Democratic candidates and causes.

The foundation also put $6 million in Charlotte-based Carousel Capital, founded by University of North Carolina system President Erskine Bowles.

Over the years, a lot of attention has been paid to the grants handed out by the Golden LEAF Foundation. On its Web site, the organization lists the grants and provides details about each project.

As Gerlach noted in questions about the audit, the organization follows up with visits and reviews intended to ensure that grant money is being spent properly.

It's the investment side of the foundation that has gotten far less attention, and the questions raised by Wood's audit in that regard shouldn't be casually shoved aside.

The settlement money belongs to the people of North Carolina. Making sure it is properly invested, as well as spent, is of public importance.