DETROIT (AP) — Before being elected mayor, then-state Rep. Kwame Kilpatrick steered state grants to two nonprofit agencies that in turn agreed to pay $175,000 to a company owned by his wife, a newspaper reported Sunday.

One grant was to a nonprofit formed by Kilpatrick’s friend Bobby Ferguson and the other was to a group run by the Rev. Edgar Vann, who then was Kilpatrick’s pastor, the Detroit Free Press reported.

The mayor’s office praised the work done with the money. Steering grants to friends or family is not illegal unless there’s a kickback, the newspaper said.

Records obtained by the Free Press show the state eventually terminated half of Ferguson’s $500,000 grant, citing inappropriate spending, including buying a house, and failure to document how the money was being spent.

Ferguson’s nonprofit had paid $100,000 to a company called U.N.I.T.E. Co. Inc. that Carlita Kilpatrick, the mayor’s wife, incorporated in July 2000. She is listed as the president of U.N.I.T.E. on the incorporation papers.

The newspaper said Vann’s program had agreed to pay U.N.I.T.E. $75,000 from its grant, but paid only $37,500 after state officials raised objections about the propriety of compensating Carlita Kilpatrick’s company.

The two grants were among 82 totaling $18 million that the state Legislature and then-Gov. John Engler approved in June 2000 for a program to enhance the arts, culture and quality of life across Michigan.

Kilpatrick’s office issued a statement praising work with the grants.

“The First Lady’s U.N.I.T.E., which did excellent work in the schools by providing nonviolent education, mentoring young girls, and coaching basketball, provided all of its services with a high amount of dignity and respect,” the statement said. “The teachers, principals and students who participated in the program can all attest to U.N.I.T.E.’s great work.”

Ferguson’s lawyer Avery Williams said in an e-mail: “We hope that good press would not be in the business of soliciting stories from regulatory officials on ancient matters and thereby creating controversy where there should be none!”

Vann praised the work his nonprofit has done in Detroit. Vann said his Vanguard Community Development Corp. has provided cultural education, tutoring and housing in a desolate area of the city.

“We have great programs at Vanguard,” he said. “We’re very proud of it.”

The report comes as the mayor faces perjury and other charges related to a text-messaging sex scandal. Last week, the City Council voted to begin a process aimed at removing him from office.

Kilpatrick took office as mayor in 2002. He served in the state House from 1996 to 2001.