Tax Director, Audit Chief Are Key Figures in Effort to Restore Public Trust
By David Nakamura
Washington Post Staff Writer
Tuesday, March 4, 2008
Stephen Cordi served 31 years in Maryland tax administration before stepping down as deputy comptroller in 2005. Around the same time, Robert Andary wrapped up his final case in 32 years as a criminal investigator for federal and D.C. government agencies. Both assumed their days of public service were over.
They were wrong.
In January, D.C. Chief Financial Officer Natwar M. Gandhi moved to fill two critical posts after the largest embezzlement scandal in city history erupted at the Office of Tax and Revenue. He hired Cordi, 64, as the tax director and Andary, 60, as the chief of internal audits and investigations. The two have been given the job of restoring public trust in an agency reeling from allegations that two employees and several accomplices stole as much as $50 million over 20 years through bogus property tax refunds.
Gandhi said Cordi's and Andary's extensive r¿sum¿s show that they are the right choices for the difficult task. Yet each lacks experience in a critical area.
Cordi ran the day-to-day operations in the Maryland comptroller's office, but he has never overseen a property tax division because Maryland has an independent department for that function. Andary prosecuted homicide cases for the U.S. attorney's office, worked as inspector general of the U.S. Government Printing Office and spent three years investigating government agencies for the D.C. inspector general. But Andary said he has never investigated financial crime.
Fletcher Baldwin, a University of Florida law professor who specializes in financial crime, said it is important for financial investigators to have expertise in the field because they must deal with complicated paper transactions and banking regulations. "The illicit money is laundered in banks, so you have to have some expertise," Baldwin said.
Andary said he has been "learning a lot" during his first few weeks on the job. "It's sort of a new area to me," he said.
Gandhi dismissed questions about Cordi's and Andary's credentials, saying that when the totality of their experience is weighed, they are more than qualified. He added that their willingness to sign on in a time of crisis should boost the spirits of embattled employees.
"Employees are demoralized," Gandhi said. "Before this, we had a model tax office and a great reputation. Then, it was gone in one day."
Their cleanup job won't be easy. A half-dozen teams of auditors and investigators -- including members of the U.S. attorney's office, the D.C. inspector general's office and several high-powered private firms -- are swarming through the tax office, poring over documents, testing financial controls and examining policies for weaknesses. Tomorrow, Gandhi, Cordi and Andary will appear at an oversight hearing before the D.C. Council.
"Our job is to move forward to make sure it won't happen again," Andary said of the scandal.
For Gandhi, the stakes are enormous. In the wake of the scandal, his carefully constructed world -- and shining public image -- were turned upside down. He fired the tax director, Sherryl Hobbs Newman, and several of her deputies. Ben Lorigo, a close aide of Gandhi's, resigned. Lorigo had been responsible for the internal audit and investigation unit since its inception in 2003.
Some residents and city leaders have called for Gandhi's removal, but he appears determined to ride out the political storm by focusing on reform efforts.
Cordi and Andary are making the rounds. Cordi, whose salary is $152,000 and who oversees 600 employees, has toured various departments, meeting with senior managers and going desk to desk to introduce himself to employees. Andary, whose salary is $142,000 and who has a staff of two dozen, reported to work a week early to shadow Lorigo.
"We have a scandal on our hands, and that's diverting some attention," Cordi said in his office at 941 North Capitol St. "But it's essential, if we are going to restore public confidence, that we execute well on the routine things we do."
Routine things include processing income tax returns and sending out 185,000 property assessment notices. Cordi also has begun interviewing candidates for several key positions, including director of operations and chief assessor, jobs being filled temporarily by managers from other departments.
In Maryland, Cordi had a reputation as a soft-spoken, dedicated wonk, whose knowledge of tax administration enabled him to rise through the ranks and become deputy to longtime comptroller Louis L. Goldstein and Goldstein's successor, former governor William Donald Schaefer.
Colleagues said the garrulous Schaefer would demand a speech whenever someone arrived late to a meeting. Cordi once complied by reciting the Gettysburg Address by heart. Another time, he reeled off the list of vice presidents in chronological order.
Linda Tanton, who worked with Cordi for years and replaced him as deputy comptroller, credited him with implementing new technology, such as the Accenture integrated tax system, also used by the D.C. tax office.
"Steve lives and breathes this stuff more than anyone," said Michael Golden, a former spokesman for the comptroller's office. "He understands down to the most minute detail things that would make our eyes glaze over."
Andary's career began in 1974, when he joined the U.S. Justice Department's criminal division to investigate public corruption. He moved to the U.S. attorney's office for seven years, bounced between a couple of other federal agencies and then joined the D.C. inspector general's office in 2003.
Lorigo was criticized for failing to audit the real property tax division during his four years on the job. With a small staff, Andary said, it is impossible to review every function performed by the more than 1,000 employees Gandhi oversees.
Gandhi has established new controls in the real property tax division, ordering that all refund checks worth more than $10,000 be approved by Cordi. Two accounting firms, Deloitte Touche and Ernst & Young, have probed for control weaknesses in the treasurer's office. Andary said he envisions consultants doing similar probes in other departments to indicate where he should focus his auditors' attention and resources.
The auditors are to deliver their findings in April to a new advisory board headed by D.C. lawyer Sheldon Cohen. The board will make policy recommendations to Gandhi and Mayor Adrian M. Fenty (D).
Cordi has consulted with Gandhi's chief information officer, Mike Teller, about a possible overhaul of the Accenture tax system, which uses software that is a decade old. A new system could provide better data storage and tracking mechanisms that would help prevent identify fraud, Cordi said. However, such a project would cost tens of millions of dollars and take several years, with no guarantee of success.
"I'm here to implement recommendations that I'm getting," Cordi said. "We will receive many, a long list. I perceive my job as getting them done."
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