D.C. City Council member John Wilson, angry that Assistant Treasurer Fred Williams had shown the council a backdated memo to justify having invested nearly $100 million with a now-bankrupt firm, produced evidence yesterday that Williams may have lied about checking the firm's references.
Williams, one of three high-ranking city officials summoned by the council yesterday to answer questions under oath about the memorandum, testified May 6 that he had personally contacted four references of Bevill, Bresler & Schulman Inc. last October, before investing with the firm.
However, Wilson (D-Ward 2), chairman of the Finance and Revenue Committee, yesterday introduced letters from two of the references -- Harry MacDougall of the Home Savings Association of Florida, and Charles C. Conklin of the Federal Home Loan Mortgage Corp. -- stating they had never discussed BB&S with Williams or any other city official.
A third reference, R.L. Bond of the CSX Corp. in Richmond, said in a letter that he could not recall talking to Williams last fall until he spoke with Williams by telephone a week ago and that Williams "assured me that we had spoken."
"Did you tell Mr. Bond that your job was on the line and it would be helpful if he said he had talked with you?" Wilson snapped at Williams during his nearly three hours of testimony.
Williams, a key figure in the District's decision to begin investing with BB&S despite the warnings of a D.C. senior cash managment analyst, denied that he persuaded Bond to write a letter on his behalf.
He conceded that he had "erred" in testifying May 6 that he had spoken with MacDougall, but he insisted that he had contacted Bond, Conklin and Steven Miller, the assistant treasurer of Iowa.
"These gentlemen, in my opinion, are trying to distance themselves from that activity [of providing advice on BB&S Inc.]," Williams said, in trying to explain why some of the references denied they had spoken with him.
Deputy Mayor for Finance Alphonse G. Hill, who also testified yesterday, told reporters later that he cannot be totally certain of the veracity of Williams' testimony until he contacts the references Williams claims to have spoken with.
"It's a serious consequence if somebody lies under oath," Hill said. "There are penalties for perjury. I think the irony in this and the tragedy of the situation is that these people we're talking about have not been called to testify."
Asked by a reporter whether he planned to take any action against Williams for the backdated memorandum, Hill replied: "We don't really know what we plan to do at this point. That's open to discussion as to how we plan to revamp and revise the office. All of our options are open."
Williams, the lead-off witness, apologized to the council members for having submitted a memorandum stamped with a Dec. 7, 1984 date that was actually drafted by Williams on April 11, 1985 -- four months after the city began investing with BB&S and four days after reports that the firm had gone bankrupt.
"I have been been verbally assaulted in the media as lacking integrity, competence and, above all, honesty," Williams said. "I ask for no special favors or sympathy in this matter before us, but I do ask for a sense of fair play and objectivity."
Williams testified that the backdated document was essentially a recapitulation of information taken from three pages of handwritten notes he prepared Dec. 7.
He said he referred to those notes in a meeting Dec. 11 with D.C. Controller Anthony Calhoun, where a decision was made -- subject to Hill's final approval -- to place BB&S Inc. on a list of preferred investment institutions.
However, Wilson, council Chairman David A. Clarke and council member Betty Ann Kane (D-At Large) repeatedly voiced doubts about Williams' explanation of how and why the memo was prepared.
"I still have difficulty, Mr. Williams," Clarke said. Later in the proceedings, Clarke warned Williams, "If you said anything wrong today [under oath], the consequences will be more serious" than adverse media coverage.
Wilson contended that Williams drafted the memo, after BB&S Inc. went bankrupt, to create the erroneous impression that considerable thought and analysis had gone into the decision to invest with the firm.
Under questioning, Williams acknowledged that neither he nor other members of the city's cash management team had reviewed Securities and Exchange Commission records to determine whether BB&S Inc. had engaged in any wrongdoing. Williams and Hill said they were unaware of a 1980 case in which the SEC censured the firm and barred it from trading in certain mortgage-backed securities for 60 days.
Wilson also questioned whether Williams had actually prepared handwritten notes about BB&S Inc. in December, and he raised the possibility that his committee would retain a handwriting and documents expert to determine exactly when the notes were prepared. Assistant Corporation Counsel Richard Aguglia, who aided Williams in his testimony, objected to Wilson's proposal.