Gandhi has his own nickname, proudly referring to himself as “The Supreme Bean Counter.”
The boast is an oxymoron, fusing the humility of an immigrant who arrived in the United States as a young man with all of $7 and the cockiness of a city official often credited with reforming a finance agency that once piled thousands of unprocessed tax returns in a basement office.
But under Gandhi’s watch, the city agency also has been ground zero for controversy, including criticism for poor internal controls and a $48 million embezzlement case by tax office employee Harriette Walters. Most recently, The Washington Post published articles about agency database systems that may be at risk of manipulation.
Gandhi, who headed the tax office before ascending to fiscal chief, has outlasted the firestorms despite the outcry from detractors who say he is an autocrat bent on holding onto power by wooing city politicians and policymakers. His supporters, however, say he has prevailed because he is “The Survivor” — a dependable steward of city finances. But as he begins his third term as CFO, he is sliding into perhaps the most turbulent period of his tenure.
“People like me come and go,” Gandhi, 72, said in an interview in his office, where the walls hold scores of framed articles about him. “I have no illusion. Even though I have a five-year tenure, and I have spent 12 years here and four mayors, God, I take one day at a time. You cannot take these things for granted here.”
A question of focus
Friends and foes agree that Gandhi, an accountant, is an administrator who puts far less emphasis on the day-to-day oversight of his office than what he believes is his broader mission: to ensure that the city remains in the black while earning strong bond ratings from Wall Street.
A report commissioned by the D.C. Council after the embezzlement case in 2007 said that Gandhi’s “overriding concerns have been maintenance of the district’s favorable bond rating, receipt of clean independent audit opinions and improved customer service . . . [T]he unremitting focus on these concerns, however, caused managers within the OCFO to place a much lower priority on imposing controls or meaningful oversight.”
Gandhi, a published poet born in Gujarat, India, doesn’t disagree with the words used to describe his management style. “I can see that, but imagine this: If I were not concentrated on that . . . if that is the charge, how am I able to balance the budget?” asked Gandhi, the eldest of seven children. “Do you think balancing [the] budget happens because I sit here in this office? Or credit ratings are maintained because I just sit in the office and contemplate that or write poetry about that?”
To underscore his successes as CFO, Gandhi has produced laminated business cards that chart the favorable direction of city surpluses and bond ratings. He often bestows them on the breakfast and lunch guests he meets at his reserved booth at the Old Ebbitt Grill.
During the interview in his office, Gandhi pulled an 8-by-10-inch version of the card out of his desk drawer. “I don’t think you have seen this chart before, have you?” he asked a reporter, grinning.
His emphasis on the financials makes the agency vulnerable to waste, fraud and abuse, such as in the Walters case, said Morris Winn, director of human resources for the agency from 2005 to 2007. “They always looked at the wrong thing. I’m always watching the front door when it’s the back door, because the money’s going out the back door,” Winn said.
Other former employees said Gandhi should have focused on what they call systemic problems, especially the databases used to calculate property assessments and determine tax bills and refunds: the computer-assisted mass appraisal system and the Integrated Tax System.
The Office of the Inspector General, the D.C. auditor and the agency’s oversight unit have faulted the vulnerability of those databases, and Gandhi is leading an effort to replace or improve them. According to an internal audit, first disclosed by The Post, a small group of tax office managers could alter assessed values of property without being detected.
Some former employees, who spoke on the condition of anonymity to talk freely about the agency’s inner workings, said Gandhi should have adopted the improvements years ago. “I’m not surprised by any of this. I’m surprised it’s holding up as well as it is,” one former senior manager said of the tax system.
The former employee said the office’s priority was making sure it received good overall audits that are used by bond rating agencies. “There is a good outward perception of change and improvement,” the ex-worker said.
Gandhi heard calls for his resignation after The Post’s articles, just as he did after federal authorities arrested Walters, who is serving a 171
2-year sentence on wire fraud and other charges. As head of the tax office then, Gandhi supervised Walters.
Gandhi’s reputation, however, saved him, according to supporters.
“The guy has a track record of steering the District through difficult times,” said Neil O. Albert, a former city administrator.
Jim Dinegar, president and chief executive of the Greater Washington Board of Trade, said Gandhi did a good job of repairing any damage to his reputation after the embezzlement case.
“Yeah, you know, it was on his watch,” Dinegar said. “I would rather that he takes responsibility and tries to make things right and continues in the job to repair his reputation than brushes it off and takes no responsibility whatsoever.”
Still, some former employees said Gandhi survived the embezzlement controversy at the cost of other people’s reputations, including 30 employees who lost their jobs because he held them accountable for the scandal.
Gandhi pointed out that he offered to resign after the embezzlement was detected. Then-mayor Adrian M. Fenty rejected that idea, he said.
“If you have been here as long as I have been here, 12 years, you always find things that are not always up to the best of the standards,” he said. “This [is] not all cookie-cutting business here. You are trying to balance the overall mission with the daily demands, and it’s messy.”
Since the embezzlement was uncovered, other employees have stolen from the tax office, including a former control technician who faces 37 to 46 months in prison after pleading guilty in October to a conspiracy that netted $14.7 million in fraudulent refunds.
“When you’re talking survival, it’s easier to say the folks that are there didn’t do what they were supposed to do,” said the former senior manager.
“I think he thought that trying to pin it on a small group of people was the solution. It wasn’t.”
Clashing over audits
Some of the problems, such as the way managers could change assessments without detection or how months-old mail was found in a tax office storage room, were documented by the agency’s Office of Integrity and Oversight.
Gandhi did not make the internal audits public until The Post reported some of the findings. Oversight chief William J. DiVello and Robert Andary, his predecessor, resigned amid concerns that the agency meddled with the internal audits.
“Mr. Gandhi inserted himself into the process,” Andary said in a deposition in a wrongful-termination lawsuit filed by a former employee. “He wanted to tell me how the report should be issued and whether the report should be issued and whether anything should be written down as a result of the audit, and I would not concede to that.”
Gandhi declined to speak about the audit, citing the ongoing litigation. David Umansky, his spokesman, has said there was a “philosophical difference of opinion” over the audits.
Council member Jack Evans, long Gandhi’s most enthusiastic supporter, was uncharacteristically critical of Gandhi at a council hearing this month. Evans called for hearings to address reductions in commercial property assessments that were done through little-known settlements between the agency and property owners.
Gandhi and his staff have defended the settlements as appropriate and necessary to avoid litigation.
During the hearing, Evans (D-Ward 2) complimented Gandhi for the city’s exceptional bond rating and robust revenue.
“For these and other efforts, Dr. Gandhi and his staff deserve well-earned praise,” Evans said. “However, far too frequently, management issues within the Office of the Chief Financial Officer are either uncovered or materialized that appear to indicate that the OCFO is not being well-managed.”
He also said Gandhi’s decision not to disclose internal audits made it appear that the agency had something to hide. The Securities and Exchange Commission has opened an inquiry into the audits, and the D.C. Council has approved legislation requiring that completed audits by the agency be posted online.
Anthony A. Williams (D), Gandhi’s predecessor and the mayor who initially appointed him financial chief in 2000, said he does not understand why Gandhi did not initially disclose the audits. After all, Gandhi established the oversight unit that conducts the audits.
“If I were Nat, I would take credit for launching the audits myself,” he said. “This is Washington. People take pride in their careers. People care about their reputations . . . Nat is a proud bird.”
Williams credits Gandhi with being instrumental in stabilizing the tax office in 1997, a critical year for a city under a financial control board that had to show it could manage its own budget. “Without that, I wouldn’t be sitting here now,” said the former two-term mayor. “Nat wouldn’t be CFO.”
Debbie Cenziper contributed to this report.