D.C. City Council member John A. Wilson (D-Ward 2) questioned yesterday the authenticity of a document, stamped with a Dec. 7 date, that Mayor Marion Barry's administration submitted to Wilson's committee last week to justify a decision to invest with a New Jersey-based securities firm that later went bankrupt.
Wilson said he has obtained evidence that the document, which concluded that Bevill, Bresler & Schulman Inc. was financially capable of doing business with the city, was drafted by Assistant D.C. Treasurer Fred 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.
"The only thing I can say is they [administration officials] didn't tell us the truth, they never did an analysis before putting them [BB&S] on the list [of preferred investment firms], they never provided us with all the information we requested, and they altered documents," Wilson said.
Deputy Mayor Alphonse G. Hill confirmed yesterday that the document was prepared last month, but he said it faithfully represented notes made by Williams last year after he and D.C. Controller Anthony Calhoun went over the firm's finances.
Following reports of the firm's bankruptcy proceedings, Hill said, Williams and Calhoun found it prudent to transcribe Williams' notes on a word processor.
Asked why the memo prepared in April had been stamped Dec. 7, Hill said, "As far as I was concerned, the analysis was made some time before Dec. 7."
Wilson is chairman of the Finance and Revenue Committee, which held a hearing Monday to determine why the city invested with BB&S over a four-month period despite warnings from a senior cash management analyst that the firm was on shaky financial ground.
Among the documents provided to Wilson's committee by Hill's office was a two-page evaluation, stamped Dec. 7, 1984, indicating that BB&S offered competitive interest rates and was financially stable and capable of handling $300 million to $500 million a month in short-term investments.
A copy of a D.C. government computer printout obtained by The Washington Post shows that a draft of that evaluation was created by Williams April 11, 1985, the same day a story detailing the cash management analyst's warnings about BB&S appeared on the front page of The Post. The evaluation was then heavily revised as late as April 30 before a copy was sent to Wilson's committee, the printout shows.
Williams, contacted late yesterday, said he was under instructions not to discuss the BB&S matter with reporters.
"I'm not at liberty to talk to you," Williams said when asked to clarify when he prepared the analysis.
"I understand what you're saying, but I'm not at liberty to talk. I'm certain everything will come out, but I can't elaborate at this particular time on this particular point."
During his testimony before Wilson's committee on Monday, Hill said that he had not read the document stamped Dec. 7 and instead relied primarily on his own analysis of the firm's financial statements, a review of its customer list, and an on-site inspection of BB&S's offices in Livingston, N.J., on Oct. 15.
Hill said yesterday that before he made a final decision Dec. 11 to place BB&S on the city's list of preferred investment firms, he conferred with Calhoun.
Prior to that, Calhoun and Williams had met to review Williams' written notes about BB&S, according to Hill.
Wilson said his committee may call Williams and other officials back to explain the document. Wilson and his staff previously complained that the administration had tampered with another BB&S-related document.
A letter sent to Hill Nov. 8 by Dale Ledbetter, executive vice president of the investment company, following Hill's visit to New Jersey, indicated that the firm was confident that it would receive business from the city, before a final decision had been reached.
Hill passed along the letter to Williams with a notation at the top that read: "Let me know when you have executed a transaction."
But the copy of that letter transmitted to the committee by Hill's office was missing Hill's notation. The committee obtained another copy of the letter, which included the notation.
The city had invested a total of $100 million with BB&S over a four-month period before the firm and four related entities went bankrupt last month and became a target of a federal fraud investigation.
The District had $10 million invested with the company at the time of its collapse. The city avoided losing its money by seizing and selling collateral that the firm had posted.