December 12, 2012

The Office of the Chief Financial Officer (OCFO) and the D.C. Lottery and Charitable Games Control Board shouldn’t be alone in the spotlight at the D.C. Council’s Committee on Finance and Revenue’s oversight hearings on Thursday.


Jack Evans (Lucian Perkins)

D.C. Council member Jack Evans (D-Ward 2), who chairs the committee, should also come in for close public scrutiny.

Evans tried and failed to win the Democratic mayoral nomination in 1998, garnering only 10 percent of the vote. He still wants to be the city’s mayor in the worst way.

His performance as overseer of the OCFO and the lottery operation, however, suggests that when it comes to those agencies, he prefers to play coddler and enabler rather than wield a powerful gavel.

On Evans’s watch, the OCFO has stumbled badly when tending to matters other than the District’s prized bond rating. Even that rating may be under a cloud, given the informal investigation into the OCFO’s operations being conducted by the Securities and Exchange Commission.

From the Harriette Walters scandal to the arrests of cheating employees to the reported federal grand jury investigation of the D.C. Lottery contract, Chief Financial Officer Natwar Gandhi’s stewardship of this critical agency has been called into serious question.

Evans’s conduct in Thursday’s hearings will go a long way toward demonstrating whether he has the ability to manage and lead a multifaceted challenge such as the entire D.C. government.

As a first step, he should require that all witnesses testify under oath.

Based upon my observations of OCFO operations and my consultation with former OCFO personnel, Evans should pose the following questions to Gandhi and other key OCFO witnesses:

Regarding a code of conduct: 

  • Does the OCFO have an employee code of conduct?
  • If so, what does it require of OCFO employees?
  • If there is a code of conduct, does it also apply to the CFO?
  • If there has been a code, was it revised following the Walters scandal? If so, did this revision create an affirmative duty for OCFO employees to report waste, fraud and abuse?
  • Can you provide examples of employees who reported waste, fraud, and abuse? How were their cases handled?

 Regarding procurement authority:

  • Why does the OCFO have independent procurement authority?
  • What are the internal controls to prevent abuse of that authority?

 Regarding the Andary Report, the result of an investigation of the lottery-bidding process:

  • Did Mr. Gandhi, Gandhi associate Angell Jacobs or general counsel David Tseng know about the draft Andary report in 2008?
  • Robert Andary’s report was modified or sanitized, with the most critical observations about D.C. Council member Jim Graham (D-Ward 1) contained only in the version of the report stamped “Draft.” Who ordered the modification of this draft report?
  • Was Mr. Andary directed to debrief Mr. Graham on the investigation results?
  • Was Mr. Andary directed by Mr. Gandhi, Ms. Jacobs or Mr. Tseng to modify the remarks he intended to make to Mr. Graham?
  • Did Mr. Gandhi independently report the Andary findings to the U.S. attorney’s office, the council chairman, the finance committee chairman or the mayor?
  • Shouldn’t he have done so, given Mr. Andary’s findings?

The Securities and Exchange Commission reportedly is investigating the suppression/modification of OCFO reports and whether material disclosures weren’t made to potential investors. The SEC reportedly is also looking at whether gifts or gratuities played a role in municipal securities-related contracts. Regarding this investigation:

  • Has the OCFO competitively bid all securities-related contracts (i.e., legal services, financial advisory services, underwriters, etc)?
  • Can you provide the Finance Committee with a list of all such contracts, contractors and a description of services provided over the past five years?
  • Can you describe the circumstances surrounding the award of each?

The OFCO’s Office of Integrity and Oversight (OIO) conducted two investigations involving lottery director Buddy Roogow. Regarding these investigations:

  • Were they completed, with a final report written for each?
  • Were those investigative reports sent to the Office of the Inspector General?
  • Was the second report, which allegedly involved a conflict-of-interest charge against Mr. Roogow, quashed by any OCFO official? If so, who did it?
  • Explain the handling of the sexual harassment complaint against Mr. Roogow. How was the complaint settled? Were the plaintiff and her lawyer compensated by the Lottery Board/OCFO in any way?
  • Were the issues raised by Eric Payne in 2008 regarding the lottery contract, IT and legal contracts fully investigated by OIO? What were the results? If the issues were not fully investigated, why not?
  • What were the circumstances leading to the departure of the last three OIO directors (Ben Lorigo, Robert Andary and William Divello)?
  • Were they given severance packages? What was the size of each?
  • What role does Charles Butch Fultz play in OIO. Was he involved in the Andary investigation of the lottery? Did Mr. Fultz agree with Mr. Andary’s investigative results?
  • Mr. Fultz reportedly has announced his departure from the OCFO. What are the facts and circumstances surrounding his departure? Will he receive a severance package? Was his resignation requested? By whom? Why?

Regarding severance packages and non-disclosure agreements:

  • How many other OCFO employees have been given severance packages?
  • How many have been requested to sign non-disclosure agreements as a condition to receiving a severance package?
  • Isn’t this tantamount to using public funds as hush money?

These are among the questions that Mr. Evans should pose to the OCFO leadership during tomorrow’s public hearing.