December 14, 2011

BEFORE THE District of Columbia signs a contract, it’s supposed to determine whether the company being hired is in good standing. Does it, for example, owe the city taxes? Is it properly licensed? Yet when the District inked the multimillion-dollar deal for its lottery business, no one seemed to know — or apparently care — that the corporate registration for the international conglomerate had been revoked. The seeming lack of due diligence adds yet another concern about the handling of this business.

“Innocent oversights can occur” is how a spokesman for Intralot Inc. responded to our inquiry about the Greek gaming giant’s credentials on March 29, 2010, when it signed a $38 million contract to run the District’s lottery. The city’s Department of Consumer and Regulatory Affairs (DCRA) revoked the firm’s corporate registration on Sept. 14, 2009, for a failure to file appropriate reports and pay for annual registration; reinstatement occurred more than two years later — on Nov. 21, 2011. Civic activist Marie Drissel, a foe of Intralot’s plans to offer online gaming through the D.C. Lottery, discovered the lapsed registration.

It’s true, as a DCRA spokesman told us, that it’s not unusual for companies to overlook paperwork to keep their corporate registrations current. That’s why reinstatement is generally eased with simply an application accompanied by payment of back fees and submission of back reports. Nonetheless, it’s more than a little unsettling that the city’s Office of the Chief Financial Officer, which administers Intralot’s contract with the lottery board, apparently had no clue that it was entering into an arrangement with a firm lacking the required paperwork. “The corporate status was not ‘revoked.’ The company inadvertently let it lapse,” was the explanation provided to us in a statement from a spokesman for Natwar M. Gandhi. It makes one wonder what else city officials might have missed. Keep in mind that this same office has sought to dismiss mounting concerns about the lottery by pointing to its supposed meticulous handling of the business.

The first solicitation in 2008 for a lottery contract became a tug of war between the mayor and the D.C. Council. It is now the subject of a federal lawsuit by a former procurement officer for Mr. Gandhi who claims to have been fired for resisting improper political pressure. The subsequent selection of Intra­lot to manage the lottery has been called into some question because of the last-minute decision to bring in a little-known local partner. Adding to the concerns is the sneaky process the council undertook to legalize online gaming, which was an unheralded part of the deal with Intralot. The city’s inspector general is reported to be looking into the circumstances surrounding the lottery contract, and council member Jack Evans (D-Ward 2), head of the finance committee, has promised to hold hearings before online gaming proceeds. We suggest they touch base with Ms. Drissel; she, at least, knows what questions to ask.