CFO Gandhi declines to answer questions; Graham defends conduct on D.C. lottery contract

Chief Financial Officer Natwar M. Gandhi declined Thursday to answer questions of a D.C. Council committee investigating discrepancies in two versions of a report about how a District lottery contract was awarded four years ago.

David Tseng, general counsel for Gandhi’s office, said Gandhi could not answer because of pending litigation. He repeatedly answered for him, employing versions of “I’ve instructed my client not to comment.”

Tseng’s position so frustrated council member Jack Evans (D-Ward 2) that at one point, Evans held up the two reports, one on either side of his head, and declared: “This is the crux of the matter. Someone is going to explain to this committee what happened.”

Evans, one of Gandhi’s staunchest supporters, threatened to obtain a court order to compel his testimony about the reports and issues surrounding the lottery contract. The deal is an issue in a wrongful-termination lawsuit and is also being investigated by federal authorities.

Evans wants to know about changes in a draft report’s language concerning an offer by council member Jim Graham (D-Ward 1) to support a businessman’s bid for the lottery contract. A Metro board member at the time, Graham told Warren Williams Jr. that he would support him on the lottery contract if he withdrew a bid on a development project on Metro-owned land.

In 2012, the tax office more often struck deals directly with owners who had appealed to an independent board or to Superior Court. The overall results lowered the District's tax base by $4.1 billion. A look at the past four years and how the cuts in assessments compared.

Graham undertook “inappropriate actions” driven by a “separate political agenda” against Williams, Robert G. Andary, then-chief of an internal affairs unit in Gandhi’s office, wrote in the draft report. That language was not included in Andary’s final report.

The toned-down report compounded concerns that Gandhi has shrouded his agency in secrecy, including misgivings about internal audits critical of the agency that were not previously made public. “These reports have had as much protection as the Watergate tapes,” council member David A. Catania (I-At Large) said.

Catania said Gandhi should present the council with a comprehensive plan for correcting problems in his agency, including poor internal controls and management, by the beginning of the year or consider resigning.

Evans, chairman of the Committee on Finance and Revenue, said he initially called the hearing, the second since October, to address issues concerning the tax office and an increase in the number of reduced commercial tax assessments, as outlined in stories in The Washington Post.

But the focus Thursday was on the lottery contract and whether any council member improperly influenced the deal.

Eric W. Payne, Gandhi’s former procurement director, filed a wrongful-termination suit against the city in which he alleges that he was fired after refusing to change the terms of the lottery contract to favor bidders preferred by Graham and others.

Gandhi would not answer questions on Payne’s termination, but he said, “No member of the council told me or intervened in the selection of this contract.”

When Graham arrived in the council chambers, almost three hours after the hearing began, he said he had to appear to defend himself against “so much innuendo, so much implication.”

“I have been an honest public servant of this council,” he said.

For the first time, Graham gave an extensive account of what happened four years ago, denying that he had a hand in changes made to the final report. Graham said he questioned Payne about Williams’s lottery qualifications at a hearing in 2008 and that Payne approached him afterward and asked whether he had more information about Williams.

Graham said he suggested that Payne speak to Dottie Love Wade, a Ward 1 resident who formerly worked for the D.C. Lottery. “She will tell you about his qualifications or lack thereof,” he recalled saying.

Graham said that about a week later, Wade told him that his support of Williams and his partners could lead to a job for her. Graham added, “I looked at her and said, ‘Are you out of your mind?’ ”

Wade previously told The Post that she had “absolutely not” sought favors from lottery contract bidders in return for Graham’s support.

Graham said that he mentioned the matter to Gandhi and that an investigation was launched, but he denied asking for the inquiry.

“I did not request an investigation of Eric Payne or Dottie Love Wade or anyone else,” he said Thursday. “To this day, I have not seen the draft version. Whatever happened, it happened beyond my knowledge.”

Andary could not be reached to comment. But in a deposition taken in Payne’s lawsuit, Andary called Graham’s offer to Williams a “sordid quid pro quo.”

Andary has said he had not confronted Graham with his findings. According to the deposition, on his way into a briefing of Graham after the report was completed, Andary told Tseng that he planned “to tell [Graham] I thought [the offer] was inappropriate.”

Tseng, Andary said in the deposition, “got very upset and concerned and didn’t want me to discuss it. And I said, ‘Well, you know, I think I have to.” Gandhi’s chief of staff, Angell Jacobs, became involved, telling him not to bring up Graham’s conduct in the briefing.

Andary said he did not recall removing parts of the draft report most critical of Graham and did not know why it was done.

Andary said his departure stemmed from Gandhi’s interference with audits in general, a concern shared by his successor, William J. DiVello. DiVello resigned in protest in October over a report on another matter that the agency did not want to make public.

Williams said Thursday that Evans and Catania had done a good job of “trying to get to the bottom of this fiasco.” He said his company and its employees “look forward to continued investigation into this matter.”

The matter was referred to the D.C. inspector general’s office, Andary said.

In January, the office released a 19-page report saying that it “did not find sufficient evidence to support or conclude that [Graham] had acted improperly.”

A Metro report in October said that Graham improperly mixed his roles as a council member and Metro board member when he attempted to influence the development deal.

Jennifer Jenkins contributed to this report.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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