The truth about the D.C. Lottery contract

February 24, 2012

Jim Graham, a Democrat, represents Ward 1 on the D.C. Council.

Aweb of sullying intrigue and aspersion can be spun by selectively choosing some facts while ignoring others. Such is the case with six editorials published by The Washington Post in a recent three-week period, all concerning my role in 2008 on a Metro development project and the D.C. Lottery contract.

More questions for Mr. Graham,” the most recent editorial headline called out. Actually, this was not quite true — it was the same question, somewhat repackaged, that has been asked over some 5,600 words in the six editorials. It was also mind-boggling: The Post, which has spent the past year calling for ethics reform in District government, is now criticizing me for having requested an ethics inquiry when I had a compelling reason to do so.

Why all this attention? The Post itself seemed puzzled in its Feb. 12 editorial, spending hundreds of words trying to explain why it was so cross with me after it had endorsed me in every one of my election campaigns.

Much of what was written would have been red-lined out of a news story. But editorial is opinion, and pretty much anything goes.

The Post builds much of its case on speculation regarding a four-year-old conversation I had with a group bidding to become the local and majority partner in the D.C. Lottery contract. While I cannot recall every detail of the meeting, I remember repeatedly challenging the qualifications of the bidders and the irresponsible actions of one of the group’s principals, who had held a D.C. government lease and alcohol license at the Reeves Municipal Center, later revoked, for the notorious Club U. I expressed similar strong reservations at a D.C. Council hearing on April 7, 2008.

Members of this group were also involved with Banneker Ventures, an engineering and contracting firm that, in 2009, would be at the center of allegations of political cronyism, lack of qualifications and overbilling. Indeed, Banneker executives were compelled to testify before the council about what they did and didn’t do with millions in city contracts. The council’s special counsel, Robert Trout, concluded his examination of the matter by recommending that the U.S. attorney conduct “further investigation” into Banneker officials regarding these contracts.

For some reason, The Post sees an injustice perpetrated against those bidding for the lottery, as well as against Banneker and its principals. I do not agree. Let’s get some clarity on the facts.

First and foremost, there is zero allegation of any crime — because none was committed. There is also no suggestion of any financial gain by me.

The Post brushes aside, with little or no mention, these facts:

● No evidence of wrongdoing by Graham, the D.C. inspector general concluded last month in a lengthy review of my involvement with the lottery contract process.

● No evidence of wrongdoing by Graham, the Metro general counsel concluded in a five-page letter dated May 28, 2010, after a careful review of the major points raised by attorney A. Scott Bolden concerning the lottery and Metro projects. The review found that the problem with Banneker’s Metro bid was Banneker. The contractor missed deadlines, slashed its initial offer for the land and failed to demonstrate the capacity to do the work.

● A few days ago, the current Metro board chair said that the board’s unanimous decision in March 2010 to drop Banneker from the project was “based upon a dramatic change in the developer’s proposed price and other factors adverse to WMATA’s business interest.” She added that the decision was not based on “the views of Mr. Graham or any individual board member.”

Similarly, the group bidding for the lottery contract lost out not because of me but because — as one person close to the deal put it — “Forces don’t want you guys in the lead decision making role.”

None of this can be found in The Post’s editorials.

In May 2010, out of an abundance of caution, I did the ethical thing and asked the D.C. attorney general, Peter J. Nickles, to review these matters. I don’t know what action he took.

Banneker Ventures and its principals were surely not happy to lose the Metro project. It probably cost them and their lawyer, Bolden, millions. Although city staff advised him as early as 2008 to take his complaints to the D.C. inspector general, Bolden curiously took no action until the Metro project had been lost. Then in April 2010, he wrote the letter that is the cold soup The Post has been warming up over the past month.

But what about other major issues? For example, why did the city’s chief financial officer in early 2011 approve — by “making no objection” — the addition of Emmanuel Bailey as the replacement for the majority-ownership role for the lottery contract? Why was Bailey — a Maryland resident with a start-up company and no experience or qualifications in gaming — given 51 percent of the lottery? Why wasn’t this selection resubmitted to the D.C. Council, since Bailey was not in the lottery contract as approved? How did his company become a Certified Business Enterprise, thus earning it preferential treatment, after city inspectors had rejected his application on the merits?

The Post asked similar questions in editorials in August 2010 and last November; why is it not pursuing the answers?

Bolden’s clients also have questions to answer. The Washington Times reported in August on e-mails to one of his clients from Bailey, who proposed a “business strategy” involving the sale of an equity stake in the lottery contract, many months before Bailey was selected for the majority-ownership role. Bailey wrote that such a sale would not be illegal, suggesting to the client that Mayor Adrian Fenty’s lawyers “research this point.” Did this outreach lead to a business deal or understanding between the parties?

These issues are closer to the heart of the matter, yet The Post would rather carpet-bomb the underbrush.

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