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Review Finds No Breach By Charter Board Leader

By David Fallis and James V. Grimaldi
Washington Post Staff Writers
Thursday, January 15, 2009

District Attorney General Peter Nickles has decided that the chairman of the public charter school board did not violate the city's conflict-of-interest law when he took official actions involving schools, landlords or developers financed by his bank. But Nickles called on the charter board to adopt more stringent ethics rules "to avoid potential problems in the future."

In a letter this week to board Chairman Thomas A. Nida, who is also a vice president of United Bank, Nickles said he had concluded a review begun last month after a Dec. 14 report by The Washington Post. "I find no need for further inquiry," he wrote.

Nickles said in an interview yesterday that he found no violations in the cases he reviewed. When appropriate, he said, officials recused themselves from taking action. "I was satisfied that there was no violation of those conflict-of-interest rules," he said.

A second inquiry by a city agency, the Office of Campaign Finance, is ongoing. That office is reviewing whether Nida or former board member Karl Jentoft violated conflict-of-interest rules when they or their companies pursued business with the schools that the board regulated.

In his letter this week, Nickles advised the seven-member volunteer board, which regulates 60 charter schools, to strengthen its policies on when board members should recuse themselves or decline gifts. He also said board members should undergo ethics training and file financial disclosure reports with his office.

The Post reported last month that key members of the charter board and another city panel that oversees the schools had taken part in official decisions that stood to benefit themselves, their colleagues, their employers or companies with which they have business ties. In all, those decisions involved almost $200 million in business deals at more than a third of the city's charter schools.

Nida repeatedly voted or took other official actions that involved charter schools, their developers or their landlords that were clients of his bank. United Bank has lent more than $55 million to charter schools, their landlords or their developers during Nida's time on the board and at the bank. Nida was personally involved in about $35 million of those loans.

Nida told The Post in a November interview that he recused himself from votes when appropriate. The Post documented that Nida recused himself a handful of times but participated in dozens of other board votes or official actions involving bank customers.

For example, Nida reviewed and recommended approval of a lease for a charter school in space being renovated with a loan from his bank. Nida also voted to increase enrollment ceilings -- and thus taxpayer funding -- of schools financed by United Bank. In addition, he took official actions involving charter schools whose landlords or developers had secured loans from United Bank with Nida's involvement.

To conduct his inquiry, Nickles sent Nida 18 questions about issues documented in The Post's articles. Nida and the board staff, Nickles said, provided detailed written responses, and he found no need to conduct interviews. "The individuals who had either a direct or indirect conflict of interest appeared to have recused themselves" when it was appropriate to do so, Nickles said.

Asked about some specific cases, Nickles characterized them as indirect or beyond the scope of the city's laws. "I don't think the conflict-of-interest rules extend to the situations that you talk about," he said.

He added that he "saw no evidence" that Nida benefited from his actions on the board.

The District's law states, "No public official shall use his or her official position or office to obtain financial gain for himself or herself, any member of his or her household, or any business with which he or she or a member of his or her household is associated."

Nida told The Post in the November interview, which was recorded, that United Bank pays him an annual bonus based partly on any loan business he generates, including from charter school projects. In his written responses to Nickles, Nida said his "bonus determination specifically excludes any business from DC public charter schools."

Nickles, who said he has never met or spoken with Nida, commended his service to the public and the charter school board. "Nida is doing a public service here, and the charter schools have benefited from his service," he said.

In response to Nickles's letter, the charter board yesterday issued a statement: "We agree with his recommendations regarding the adoption of more formal ethics standards" and "are currently developing policies reflecting those recommendations."

Nida, who could not be reached for comment, wrote Nickles yesterday and said that he agreed with recommendations to adopt "more formal ethics standards" for the board and that he would direct the staff to "develop policies reflecting those recommendations."

Among Nickles's recommendations was that board members file a financial disclosure form with his office in addition to the one filed with the Office of Campaign Finance. The additional form would be confidential and maintained by the city's ethics counselor.

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