Handouts at the Office

Saturday, February 23, 2008

EVERY DAY was Christmas in the D.C. Office of Tax and Revenue. One employee got $35,000 to remodel her house, two others got $15,000 to help pay off credit card bills. Breakfast and lunch were often on the boss, as were high-end shopping sprees. District officials trying to figure out how a multimillion-dollar embezzlement scheme went undetected for years need look no further than a government culture in which goodies were taken for granted.

New revelations show that the scheme was costlier, older and more deeply entrenched than first thought. As reported by The Post's Carol D. Leonnig, federal authorities now think the amount of money stolen may approach $50 million and that the theft started as early as 1989. Even more mind-boggling are reports of the largess handed out by Harriette Walters, former tax office manager and the alleged mastermind of the scam. Investigators are interested in at least 40 people, most of them city workers, who received cash or gifts from Ms. Walters or who signed off on paperwork to issue the bogus checks. Did they knowingly receive ill-gained goods and cash? Should they have known? Why did no one speak up? It's outrageous that some of these employees still work for the D.C. government -- and urgent that questions about their behavior be cleared up and that disciplinary action be taken where appropriate. Needless to say, the District must also aggressively seek to recoup its stolen millions.

It's reassuring that the District is conducting top-to-bottom reviews of the city's tax operations separate from the ongoing criminal probe by the U.S. attorney's office. Just as anyone who broke the law needs to be prosecuted, it's important to find out why the system failed and even more critical to fix it. The D.C. Council has retained William R. McLucas, a lawyer well known for his probe into Enron, to lead an investigation with PricewaterhouseCoopers. Additionally, Chief Financial Officer Natwar M. Gandhi has established an audit committee with distinguished outside experts to review the office's management and recommend improvements. Some 600 people work at the tax office, and it's tragic that their accomplishments have been overshadowed by their selfish co-workers' deceptions.

The scam appears to have been underway well before Mr. Gandhi became director of the tax office in 1997. Why, though, weren't the notable changes instituted by Mr. Gandhi -- such as ethics training, an employee hotline for wrongdoing and improved technology -- more effective? No doubt part of the answer lies in the difficulty of bringing about lasting reform in a government that for too long served as easy employer for those with political friends and family connections.

© 2008 The Washington Post Company