By Nikita Stewart and David Nakamura
Washington Post Staff Writers
Wednesday, November 21, 2007
The D.C. Council approved emergency legislation yesterday to create a special committee to investigate the scandal at the Office of Tax and Revenue, but the biggest question on council members' minds is whether Chief Financial Officer Natwar M. Gandhi should resign.
The fiscal chief said he forced the resignations of his top managers because they failed to catch a scam that authorities say resulted in the theft of at least $20 million, and possibly more than $30 million, through phony property tax refunds.
But Gandhi's critics note that some questionable refunds were issued during his watch as director of the tax office, before he became CFO. An analysis by The Washington Post identified $2.46 million in such refunds, which were issued without required court orders, sometimes to fake companies.
"Isn't what's good for the goose good for the gander?" asked council member Jim Graham (D-Ward 1).
Council member Kwame R. Brown (D-At Large) said simply, "Gandhi has got to go."
Neither Brown nor any other council member has officially called for Gandhi's resignation.
"That's the job of the mayor," Brown said.
Mayor Adrian M. Fenty (D), who can fire Gandhi for cause, is supporting the chief financial officer because of his overall accomplishments, said Carrie Brooks, the mayor's spokeswoman. Fenty would need two-thirds of the council to agree.
Council Chairman Vincent C. Gray (D) said the issue isn't so easily resolved. "No one has said, 'Mr. Chairman, we have to remove the chief financial officer,' " he said. "I think it's on everyone's minds, but how do you move on a groundswell and weigh . . . what he's done for the city and how this could affect the city?"
Gandhi, whose job was created by Congress, has enjoyed national acclaim. The scandal does not endanger the city's bond rating, Wall Street analysts have said, because the amount is a blip in the city's multibillion-dollar budget. Wrong moves by city leaders -- an abrupt decision to remove Gandhi and then a bad choice of a replacement -- could affect that status, Gray said. "That's not an excuse to keep somebody, but it has to be a factor."
Council member Mary M. Cheh (D-Ward 3) said that she understands Gray's point but that Gandhi might have made a rash decision to dismiss his top managers.
The emergency legislation gives the council the power to subpoena witnesses and to hire legal counsel and consultants. Gandhi's office was created by Congress in the mid-1990s, but Gray said the council will exercise its oversight authority.
Del. Eleanor Holmes Norton (D-D.C.) lent her support to the council's efforts yesterday. In a statement, she said, "I continue to believe that whether the misuse is of local or federal funds intended to benefit residents, the responsibility for investigation and correction lies with the local jurisdiction, not the federal government, except under unusual circumstances."
Gandhi's action against top managers has drawn the ire of several of them and been criticized by community leaders. Two of the ousted managers have said Gandhi is scapegoating them for long-standing problems that predate them.
Matthew Braman, an ousted manager, said yesterday that Gandhi and Ben Lorigo, who has headed the internal investigating unit, should be held accountable. Lorigo is now interim tax office director.
"Gandhi and Lorigo had a greater responsibility for the management failings at OTR than any of the employees they fired," said Braman, who had been the tax office's director of operations since 2004. "Their attempts to deflect blame by throwing others under the bus is becoming obvious to government leaders and citizens."
Thomas Branham, the city's longtime chief assessor, had been serving as interim director of the real property tax administration unit when he was ousted two weeks ago. Branham has said he did not want the interim position and accepted it in July after being pressured by superiors.
In a Nov. 8 letter to Gandhi, Branham's attorney, John M. Clifford, demanded that Branham be reinstated and that Gandhi "publicly acknowledge that he was not responsible for the wrongs that occurred."
Some council members are also questioning the appointment of Lorigo after he testified last week that he had not audited the real property tax division in five years.
"He failed to audit the one division which generates the largest portion of our revenues," said council member Yvette M. Alexander (D-Ward 7). "Gandhi? I'm saying I'm up in the air. A lot of constituents are asking why Gandhi should stay. I'm heavily weighing the reasons."
About his tenure as tax office director, Gandhi said that he was vigilant and that he signed off on all tax refunds exceeding $250,000.
The Post analysis showed that the largest of 15 questionable checks, for $363,382, was issued to a developer whose attorney can find no record of the check or of winning a tax appeal resulting in a refund.
"If [Gandhi's] philosophy is that the person in charge is responsible, it would seem he has effectively fixed blame on himself," Cheh said.
Council member Harry Thomas Jr. (D-Ward 5) said: "I think that he's opened Pandora's box. There seemed to be a subculture operating outside the management controls."
But council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue, which has oversight of Gandhi's office, did not waver in his support of Gandhi yesterday. "I don't have anything to say. There have been no new revelations that have come out," Evans said.
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