January 24, 2012

HERE ARE SOME of the conclusions of D.C. Inspector General Charles J. Willoughby, who examined the city’s tortured history of lottery procurement and its furtive approval of online gambling: The District’s chief financial officer didn’t follow proper procedures, and that may have deprived the city of the best deal. One group was wrongfully disqualified as a local small business, a decision that might have changed the outcome of the bidding. Two members of the D.C. Council conducted themselves in, at best, a less-than-ideal manner.

“The OIG found insufficient evidence,” states the inspector general’s 19-page report, dated Jan. 20, “to conclude that councilmembers acted improperly and violated standards of conduct.” Nonetheless, the document cites a litany of issues that call into question the fairness of the process.

It chides Chief Financial Officer Natwar M. Gandhi for amending the lottery contract, awarded in 2009, to include online gaming after bidding had closed; Mr. Gandhi’s office said its actions were in keeping with all laws and regulations. It questions the credentials of a politically connected firm that the winning bidder, Greek gaming giant Intralot, belatedly took on as a local partner to win council approval. Without identifying him by name, it notes that council member Michael A. Brown (I-At Large) sponsored legislation legalizing online gaming without disclosing that the law firm that employed him had a gaming practice. “The better course of action” might have been to alert the council to this fact or to seek an interpretive opinion about his activities, the inspector general noted, while stressing that his office found no evidence that the council member lobbied for or received anything from any gaming entity. Mr. Brown has said there was no conflict because no client had business with the city that would have been affected. The council approved Mr. Brown’s measure with no public hearing or debate.

The report focuses also on allegations, previously reported by the Washington Times, regarding council member Jim Graham (D-Ward 1) without identifying him by name. Mr. Graham, who at the time was also a D.C. representative on the Metro board, had been a vocal opponent of a D.C. businessman, Warren Williams Jr., who was then Intralot’s local partner. According to Mr. Willoughby’s report, his office received information that Mr. Graham offered to drop his opposition to the lottery bid if a separate development company that Mr. Williams was involved in would withdraw from a contract awarded by Metro to develop property on Florida Avenue NW, because he could not give the local partner everything.

Mr. Graham told us he was not allowed to talk to inspector general investigators because of pending litigation by a former Gandhi subordinate, who claims he was fired for resisting political pressure in the lottery contract award. (Mr. Gandhi’s office denies those allegations.) To us, Mr. Graham flatly denied that he intervened as is alleged in the report. “It’s a lie,” he said.

How then to explain a series of 2008 e-mails in which Mr. Williams and others say they met with Mr. Graham and discussed this offer? Of particular note is a June 2, 2008, e-mail from Scott Bolden, Mr. Williams’s attorney, quashing any suggestion that the alleged proposal even be considered. “I have made my thoughts on this nonsense very clear to warren,” wrote Mr. Bolden, who was not in the meeting with Mr. Graham. “[T]his is complete bs and we are getting very close to corruption, bid rigging and other inappropriate conduct. . . . To even consider it is placing each of us at risk. Period.” Mr. Graham told us he could not account for Mr. Bolden’s correspondence other than to speculate that some kind of “misunderstanding” had occurred. In a later conversation, he told us that the Williams team was very angry at Mr. Graham’s opposition, which he said was based solely on its past problems in operating a hip-hop club on U Street NW. Mr. Williams did not return our phone call.

Here is what the inspector general wrote: “While the councilmember’s actions . . . may give the appearance that he lost complete independence or impartiality, and may have affected adversely the confidence of the public in the integrity of the government, the OIG did not find sufficient evidence to support or conclude that the councilmember had acted improperly.” Hardly a ringing endorsement.

The council’s finance committee is set to hold a hearing Thursday on the report, but the issues raised are beyond its authority. They go to the heart of the public’s confidence in how city business is conducted. We would urge D.C. Attorney General Irvin B. Nathan and the already busy U.S. attorney to carefully review these events.