Former D.C. audit chief says he felt pressured to keep critical reports ‘in draft’

D.C. Council members sharply criticized Chief Financial Officer Natwar M. Gandhi at an oversight hearing on Wednesday for failing to disclose internal audits that chronicled problems in his agency, with one council member saying she has “lost confidence in the operations of that office.”

Gandhi told council members that he would begin posting executive summaries of completed audits on the agency’s Web site — a reversal of the agency’s policy to not publicly circulate the reviews conducted by his internal-affairs unit. In recent years, the audits have uncovered weak controls and inadequate oversight in the city’s troubled Office of Tax and Revenue, where in 2007 a mid-level manager was caught after embezzling $48 million through fraudulent refunds.

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Gandhi on Wednesday defended the tax office, where he said widespread reforms have strengthened controls. The audits, he said, are proof that “we are doing our work and living up to our commitment and responsibility to be constantly vigilant in safeguarding the District’s financial resources.”

The council’s finance and revenue committee called Wednesday’s hearing after a series of Washington Post reports about the tax office, including one that described a spate of settlements that knocked $2.6 billion off the proposed taxable value of more than 500 commercial properties. Gandhi on Wednesday again defended the settlements, saying they were necessary to correct assessment errors and avoid the risk of litigation.

The hearing took on added urgency when Gandhi’s former internal affairs chief, William J. DiVello, testified that he faced ongoing pressure by Gandhi’s aides to “quarantine” critical audits by leaving them in draft. DiVello abruptly resigned last week after he said Gandhi’s senior management told him that it would not make public an updated version of a draft audit his staff had produced. The audit showed that a handful of tax office managers could change property assessments without detection.

Gandhi’s office delivered the report to City Council members late Friday.

Plain-spoken and emotional, DiVello recommended that Gandhi’s office begin formally approving a number of draft audits and sharing them with the council.

“Get the reports to y’all,” said DiVello, a former assistant inspector general for the city.

“That helps keep everybody — not that everybody’s a crook — true.”

DiVello later told The Post that five reports were still in draft, which Gandhi’s agency has said are exempt from public disclosure. DiVello said three reports focus on the tax office and two on Gandhi’s Office of Finance and Treasury.

Gandhi disputed that reports are lingering in draft, telling the council that of 40 reports completed under DiVello over two years, only one is still incomplete.

Wednesday’s hearing began at 9 a.m. and, after nearly two hours of testimony from DiVello, adjourned at noon so council members could attend the Nationals-Cardinals National League playoff game, the first postseason baseball in the District in 79 years. The hearing resumed Wednesday night, with an appearance by Gandhi and several other officials from his office.