Mayor Marion Barry, responding to reports that the chairman of the city's ethics board has misappropriated thousands of dollars from the D.C. Chamber of Commerce, yesterday ordered an investigation into the chamber's handling of $472,000 in District and federal funds.
The investigation, to be conducted by the city's inspector general, Joyce Blalock, will determine whether the Chamber properly used $291,000 in job training funds, a $129,000 housing revitalization grant and $52,000 in tourism promotion moneys.
Barry would not say what he would do if the investigation found evidence of wrongdoing. But one of the options available is removing Chamber President James L. Denson as chairman of the D.C. Board of Elections and Ethics, Barry said.
Meanwhile, Carolyn L. Smith director of the D.C. Department of Finance and Revenue, said she will begin immediately to determine how much the chamber owes the city in overdue employe withholding taxes, and to collect those funds.
If the chamber is not able to pay the taxes, Smith said, a lien will be placed against any funds due to be granted to the organization. Chamber records made available to The Washington Post indicate that $15,761 in local withholding taxes has not been paid.
The records also show that the chamber owes the federal government $75,174 in income tax and social security withholding payments.
Denson, who since last week has been in Paris on a free promotional trip, was unavailable for comment. Edward J. van Kloberg, executive vice president of the chamber, declined comment last night.
The two investigations followed reports in The Washington Post that Denson had misappropriated thousands of dollars in chamber funds over the past year. An accounting by the chamber's finance committee indicated that Denson had withdrawn $26,184 without authorization in 1979 and 1980. Of that amount, $13,730 has not been accounted for.
The Post has reported that Denson took a series of actions -- including signing contracts, disbursing funds and writing letters -- sometimes using the name, financial resources and influence of the chamber to further his own financial interests, according to chamber records.
Denson has said that he may have violated some laws in handling chamber funds. But he said, "always my primary goal was to make the chamber a viable organization." He said he never did anything "intentionally illegal -- there was no willful intent or anything of that nature."
The chamber, a nonprofit organization that traditionally has represented small and minority businesses, is facing debts of at least $150,000.
Denson has been a member of the ethics board since 1978, and its chairman since last year, when Barry appointed him to that post.
At a hastily called press conference yesterday, Barry said Blalock would give him an interim report on the findings of the investigation by Friday.
Blalock's office, established in 1979 as a successor with broader powers to the old Office of Municipal Audit and Inspection, does not have the power to impose criminal or civil penalties. It only recommends action to the mayor, Barry said.
Blalock said the office does have the power to subpoena financial records of the chamber if necessary. However, she added, "I don't anticipate any problems."
During the course of the investigation, "key witnesses" would probably be interviewed under oath and others would be interviewed informally, Blalock said. She said she is not sure if Denson will be interviewed, and if so, under oath.
She said her final report could include a "broad range" of recommendations, including asking the Corporation Counsel to attempt to recover funds used improperly. If the investigation turns up any evidence of criminal wrongdoing, Blalock would have to refer prosecution to the U.S. Attorney's office here.
On Friday, the U.S. Attorney's office, contacted privately by several chamber board members, subpoenaed records of the chamber, as it launched its own investigation.
Barry said yesterday that he would have a "long talk" with Denson about the allegations when Denson returns.
The mayor also used yesterday's press conference to scold the elections board chief for not being present today, when the city's holds a primary election in which some voters will receive five different ballots and some confusion in ballot counting is possible.
As chairman of the elections and ethics board, Denson receives compensation of up to $26,500 a year and responsible for overseeing operations of all city voting.
"I think all the members of the elections board should be here during the election," Barry said.
Barry had planned to go on the trip as well, but changed his mind following criticism of his planned trip by some community spokesmen. Barry said he stayed in Washington to lobby for passage of his budget-balancing tax package.