Funds to Historical Society in question

By Nikita Stewart
Washington Post Staff Writer
Friday, October 29, 2010

As Mayor Adrian M. Fenty and D.C. Council Chairman Vincent C. Gray were cracking down on earmarking city funds last year, council member Harry Thomas Jr. (D-Ward 5) worked to push through a large transfer to the struggling Historical Society of Washington, D.C., for exhibits at its downtown building.

Thomas won council approval of a $1 million grant to the financially strapped nonprofit group, using money that was transferred from the Department of Parks and Recreation to the D.C. Public Library and on to the historical society. And council member Marion Barry (D-Ward 8) acknowledged in an interview that he contacted the chief financial officer's office when the group's last payment of $250,000 was delayed.

The $1 million transfer came to light last week after the District sued the historical society for failing to repay an additional $250,000 the city officials said was accidentally deposited into the group's bank account in June. Since then, Barry has been trying to get the CFO's office to clear up the debt.

Thomas said the expenditure was not an earmark but a transfer of capital funds to the city-owned Carnegie Library. The society holds a 99-year lease to the library at 8th and K streets NW across from Walter E. Washington Convention Center. "That's a piece of history," Thomas said.

Thomas said he and Barry did not speak about the grant, which went into effect Oct. 1, 2009. But several government and historical society sources said Bellamy complained to city officials, including Barry, that the D.C. Public Library was slow in making the money available to the society.

In an interview, Barry acknowledged he called the chief financial officer's office in June about the final payment. "I sure did. What's wrong with that?" said Barry, who added that he has made similar calls on behalf of other groups.

However, he would not address allegations by government sources that he and the society's executive director, Sandy Bellamy, are romantically involved. He would only say that he and Bellamy, who accompanied him to a gala for the D.C. Chamber of Commerce on Saturday, are friends. Bellamy declined to comment on their relationship.

Thomas, who currently faces questions about the Team Thomas nonprofit group he operates, is now facing accusations of hypocrisy for the society's grant. Since October 2009, he has headed an ongoing council probe into how the Fenty administration funneled millions of dollars through the D.C. Housing Authority, which awarded contracts to firms with ties to the mayor to build parks and recreation centers.

The Fenty administration transferred the money without council approval - an action that officials later called illegal. Thomas's transfer does not appear to have broken laws but raised a red flag when the funding arrived at the D.C. Library board of trustees.

"The fact of the matter is, I have no idea why the money was coming to the library board," said John W. Hill, who heads the D.C. Public Library's trustee board.

Thomas said the library could manage the capital funds because it has procurement authority that other agencies, including parks and recreation, do not. Invoices show the society used some of the grant to pay employee salaries, including that of Bellamy, who makes about $112,800 according to the most recent available tax documents from 2008, and project management of the exhibits. Other funds were used to pay vendors for design and fabrication of the exhibits.

Hill said the library was slow to issue payouts because of questions over society invoices that appeared to be reimbursements for work that predated the grant. Library records show several invoices were rejected.

But Bellamy said in a statement that she suspected Hill retaliated because of a dispute between the society and the Federal City Council, which Hill also heads.: "It has been excruciating dealing with Hill and his obvious conflicts of interest over the past three years.''

In July, the society sued the Federal City Council and its National Music Center and Museum Foundation for backing out of a sublease at the Carnegie Library in 2008. The society claims move left it in dire financial straits because the center had booked and collected payments for future events. The two groups are scheduled to meet in mediation Nov. 16.

Bellamy also said Hill burdened the society with the debt in a plot to move the Martin Luther King Jr. Library to the Carnegie Library property. She said reports of such potential transactions made it difficult for the society to raise private dollars among donors worried that it would fold.

Hill countered that the library board had considered the Carnegie building but found refurbishing it would be too costly. Instead, the board decided to focus on renovating and building neighborhood libraries.

Bellamy called Attorney General Peter Nickles's decision to sue the Historical Society "a slap suit" on behalf of Hill.

"It's an interesting conspiracy theory, but it has nothing to do with the extra check for $250,000," Hill said, adding that he never spoke to the offices of the chief financial officer or Nickles about the payment. "It amazes me to think that she believes I would have the power to have the city sue the Historical Society."

Nickles said he sued the society after a recent breakfast with Chief Financial Officer Natwar M. Gandhi, who fretted about the accidental wire payment and the society's failure to give the city the $250,000 back. Nickles's office and the society are in negotiations, but he said, "If we don't get a resolution or clarity this week, we will turn this over to criminal authorities."

Government and society sources have explained the society had outstanding debt through Industrial Bank, which automatically used the bulk of the extra $250,000 payment to cover the debt. The city wired the funds, but an employee charged with canceling a check being processed for the society failed to do so, leading to the additional payment. That staffer is no longer employed by the city, according to a source in the chief financial officer's office who spoke on the condition of anonymity because personnel actions are confidential.

Meanwhile, Barry has continued to call the chief financial officer's office to clear up the inadvertent payment, according to two government sources.

"If I call five times, 10 times, so what, if I'm trying to get the job done?" asked Barry, who said he calls District agencies on behalf of organizations and individuals when the city is late on payments.

A contract that Barry awarded to an ex-girlfriend through his council office prompted an independent investigation. The probe concluded earlier this year that he violated conflict-of-interest rules and impeded the investigation. The council censured him and removed him as chairman of the Committee on Housing and Workforce Development and as a member of the Committee on Finance and Revenue.

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