Background Checks Called Inadequate

Employees Start Work Before Reviews Done, Auditor Says

The District's office of the chief financial officer, which was shaken by a massive scandal in its tax and revenue branch, has failed to adequately check the backgrounds of employees in another branch, the city's auditor concludes in a new report.

D.C. Auditor Deborah K. Nichols says in the report that the Office of Finance and Treasury allowed employees to start before background checks were completed and that it failed to perform periodic follow-up checks.

The report, dated Oct. 24, was sent to D.C. Council Chairman Vincent C. Gray (D).

A spokesman for Natwar Gandhi, the chief financial officer, said in an interview last night that investigations of all employees have been carried out or are planned and that Gandhi has agreed that random checks on employees should be performed later.

The auditor's report says that allowing employees to start work before background checks are completed could give people with questionable criminal or financial histories access to cash or checks. Moreover, the report says, employees with financial problems could find themselves in positions in which they might "be tempted to steal or engage in other criminal or unethical behavior."

Failure to perform pre-employment checks, the report concludes, means "exposing the District to an unreasonable risk of financial harm from misappropriation, theft and fraudulent activities."

Nichols's report also says Gandhi's office did not conduct periodic checks after completion of initial background investigations. Such periodic checks would enable the office to protect the city's financial resources if an employee's circumstances changed substantially after the initial check, the report says.

In a letter to Nichols, Gandhi's office said it conducts an extensive background investigation of every new employee and has begun investigating those hired before the policy went into effect. As to pre-employment investigations, the letter said, the hiring process is already long, making it necessary to weigh the benefits of such investigations against the costs.

The letter, dated Oct. 3, also said that the office of the chief financial officer "recognizes the benefits of pre-employment and periodic background checks for employees in certain positions."

Of all background investigations conducted in recent years, 2 percent resulted in termination, the letter said.

The letter said the office would ask a consulting firm to review its background policy in the light of Nichols's recommendations.

In an interview last night, Nichols said her office "did not see any evidence they have done background checks on individuals who handle cash or cash equivalents or that they are conducting periodic checks."