As D.C. Mayor Anthony A. Williams (D) announced the return of Major League Baseball to Washington last week, he praised Fannie Mae chairman and chief executive Franklin D. Raines and financier Frederic V. Malek for their efforts as part of a high-powered ownership group seeking to buy the team.

Raines and Malek share another close tie, as members of the board of directors of Fannie Mae. As an independent board member, Malek's job is to scrutinize Raines's performance as chief executive at a time the mortgage finance giant's federal regulator is criticizing its accounting practices and the quality of its management supervision.

"I don't know how you can do a good job of evaluating the CEO and be in business with him in a side deal at the same time, particularly now when the CEO's tenure is very much in question," said Nell Minow, editor of the Corporate Library, which tracks corporate boards. "I think that shows poor judgment on both of their parts."

The close connections between Raines and Malek are part of a broader web of relationships that link Fannie Mae, the Fannie Mae Foundation, Raines and some outside directors.

Raines and other top Fannie officials will testify today before the House capital markets subcommittee on regulators' concerns about the quality of Fannie Mae's management and whether top executives manipulated financial results, in part to win bonuses. The Justice Department and the Securities and Exchange Commission are investigating the company.

Ann McLaughlin Korologos, who is scheduled to testify as the company's lead outside director, is one of two independent directors who hold senior posts at organizations that have received hundreds of thousands of dollars from the Fannie Mae Foundation -- the company's philanthropic arm, which Raines also chairs. Other directors are involved with companies that have received hefty fees for doing business with Fannie.

Since joining the Fannie Mae board a decade ago, Korologos has served as a top official of the District-based Aspen Institute. In that time, the Fannie Mae Foundation contributed $280,000 to the forum, including $135,000 in grants in 2002, according to the foundation's Web site. She is also head of a committee of outside Fannie directors overseeing an internal probe of the alleged wrongdoing.

Another independent director, Howard University President H. Patrick Swygert, presides over an educational institution that has received grants of more than $450,000 from the Fannie Mae Foundation since 1996. The foundation also contributed several thousand dollars to pay expenses for Swygert's inauguration as Howard's president in 1996 and hired Swygert's son, who is no longer with the company, as an employee.

"There is a pattern there," Minow said. By giving grants to entities headed by outside directors, the Fannie Mae Foundation "creates another layer of real and apparent conflicts and another reason to be less than independent in oversight."

Patrick S. McGurn, special counsel of Institutional Shareholder Services, said the links among Raines, the Fannie Mae Foundation and the company's outside directors are "red flags" for investors.

Board members declined to be interviewed for this story. But Fannie Mae spokesman Charles Greener strongly defended the board and the company, saying Fannie Mae has received high marks from corporate governance groups reviewing its policies and practices in recent years.

"Our criteria for the independence of board members are stricter than the New York Stock Exchange requires," Greener said. "We focus extensively on the issue of independence and do an extensive review. This is one of the reasons we receive the high ratings we do from objective organizations on corporate governance."

Last January, Fannie Mae adopted new standards for who would be classified as independent directors on its board. Fannie Mae directors are not considered independent if they receive any payment from Fannie Mae other than fees for board service or if the Fannie Mae Foundation contributes more than $100,000 a year to a charity affiliated with a director.

The New York Stock Exchange rule requires public companies to identify which of its outside board members are independent and which are not. It says, for example, that directors may accept charitable contributions of any size and requires disclosure only of donations in excess of $1 million.

Raines is co-chairman of the Business Roundtable, a group of chief executives at the nation's leading corporations, and chaired its corporate governance task force. In the aftermath of the Enron scandal, Raines helped develop a set of best practices for companies to adopt so boards would be more effective watchdogs in overseeing management.

Greener also defended the sports link between Raines and Malek, saying Major League Baseball has not decided which competing investor group will end up owning the new team in Washington. "It is likely no decision will be made for some time," Greener said. "When such a decision is reached, we will review any independence issues that might arise."

Korologos, in addition to being a Fannie director, serves on five other major corporate boards, chairs the California-based Rand Corp., and lives in Brussels with her husband, the Bush administration's ambassador to Belgium.

Greener said Korologos is handling her Fannie Mae duties well, despite living in Brussels. She also serves on the boards of Microsoft Corp., AMR Corp., Kellogg Co., Host Marriott Corp. and Harman International Industries Inc.

"She moved over to Belgium in late June. She has an office here in Washington with an assistant and she travels back several times each month," Greener said. "In September she traveled back twice in a two-week period. She is fully, very involved, and indeed it's not much different than directors on the West Coast who serve on East Coast companies."

Another issue complicating matters on the Fannie Mae board is that a number of outside directors work for profit-making enterprises that have had business relationships with the company.

Donald B. Marron, a Fannie Mae outside director, formerly headed Paine Webber Group Inc. and was chairman of UBS Paine Webber Inc. when he joined the board in 2001. The Wall Street firms garnered tens of millions of dollars in fees for selling billions of Fannie securities, according to Thomson Financial. Two other Fannie Mae outside directors, Joe K. Pickett and Stephen B. Ashley, come from the mortgage banking industry, which has had extensive business and political dealings with the company.

Another outside board member, Kenneth M. Duberstein, has worked for Fannie Mae as a contract lobbyist since 1991, being paid $375,000 annually in recent years. A former chief of staff to President Ronald Reagan, Duberstein is not listed as an independent director because of his direct business relationship. He has been a director since 1998.

The other non-management directors, Thomas P. Gerrity, a professor and former dean of the Wharton School, who is chairman of the audit committee, and Leslie Rahl, an expert in a type of complex financing the company uses, appear to have no financial ties to Fannie Mae, the Fannie Mae Foundation or Raines, other than the director fees they receive.

Fannie Mae directors are paid $35,000 annually for serving on the board, or $45,000 if they chair a committee. In addition, they receive thousands of dollars for attending board sessions or participating by phone in meetings. This year, according to company filings, the outside directors also received $191,568 in restricted stock and options to buy an additional 4,000 shares.

Greener said all of the independent directors' ties to the company comply with Fannie's strict corporate governance policies. He also pointed out that Fannie Mae had received high marks from the Corporate Library and other watchdog groups reviewing its corporate governance practices in recent years.

Minow said the Corporate Library mistakenly gave Fannie Mae a sterling grade -- in part because it failed to examine ties between the Fannie Mae Foundation and directors. In hindsight, Minow refers to Fannie Mae's initial "A" grade as a "false positive."

Minow also said the two most important jobs of corporate boards are determining chief executive compensation and ensuring accurate accounting. While Fannie Mae earned an "A" for meeting an array of good governance practices earlier this year, it received an "F" from the group for Raines's compensation package. He received more than $17 million in compensation last year.

After disclosure of the report slamming Fannie Mae by the Office of Federal Housing Enterprise Oversight last month, the Corporate Library revised Fannie Mae's overall board ranking downward, giving it a grade of "F" for its handling of accounting issues.

McGurn said Raines and the Fannie Mae board shouldn't have allowed the company's chief financial officer, J. Timothy Howard, to also serve as chief risk officer, head of the audit function and in other roles where he was measuring his own performance. Raines and the board failed to ensure that basic checks and balances were in place with regard to the CFO, McGurn said, adding that most financial companies do not permit CFOs to wear so many hats.

"They had him grading his own papers," McGurn said of Howard.

The pool of outside directors overseeing Raines has shrunk in recent months. Five slots on Fannie Mae's board are vacant because President Bush has not reappointed the company's presidentially appointed directors. Fannie and its smaller rival Freddie Mac have presidential directors because the companies were chartered by the government.

And Anne M. Mulcahy, chief executive of Xerox Corp., who headed Fannie Mae's compensation committee, resigned from the board last month just days before OFHEO issued its critical report.