D.C. Department of Employment Services Director Matthew F. Shannon and Deputy Director James George have resigned and eight other department officials have been disciplined for their roles in the corruption case of former deputy mayor Ivanhoe Donaldson, Mayor Marion Barry announced yesterday.
According to two city officials who asked not to be identified, the city has taken steps to fire another top employment services official, associate director for contracts Lillian Manson-Neal, who they said is contesting the action. Grants management supervisor Cornelius Haynes, who was suspended for 30 days, received the most severe punishment of the eight who were disciplined.
Barry, who acted after his legal counsel, Herbert O. Reid Sr., headed a review of the evidence presented by federal prosecutors in the Donaldson case, said he has concluded that there are no grounds to discipline four other officials named in prosecution documents.
They are Curtis McClinton, deputy mayor for economic development; Dwight Cropp, director of the Office of Intergovernmental Relations; Sandra Hill, a Department of Public Works official, and Edward Meyers, a former top Barry aide who is an assistant employment services director.
A federal law enforcement official said yesterday that Shannon, George and Manson-Neal remain under investigation for their roles in the Donaldson case. The official said the grand jury is examining whether they knew of Donaldson's fraud scheme when they violated city administrative rules.
Yesterday's announcement by Barry follows the resignation Saturday of Deputy Mayor Alphonse G. Hill, who stepped down after he acknowledged receiving $3,000 from the head of an auditing firm that has received hundreds of thousands of dollars in city contracts. A federal grand jury is investigating whether Hill received any kickbacks or other financial considerations from the contractor, allegations strongly denied by Hill.
"It's not massive corruption," Barry said of the raft of corruption investigations. "It's not widespread."
"I have done all I can do," the mayor said. "When I have found out things, even though it is painful, I've moved quickly on it . . . . I don't know of anything else I can do except to be vigilant and to let myself be used as an example of one who has never taken a penny. Never misused my office. And never will."
The mayor, speaking at his monthly news conference, also disclosed that he has decided to add $3 million to the proposed 1987 operating budget for the D.C. schools.
Barry's commitment, which was first made in a phone conversation earlier yesterday with D.C. Board of Education President R. David Hall, follows the City Council's decision Tuesday to add more than $13 million to the schools' operating budget over the $380.7 million originally proposed by the mayor.
Of the $393.8 million in school operating funds approved by the council, $8 million is specified as a one-time expenditure for school repairs and that money is expected to be generated by a proposed tax amnesty program. Barry and his aides have disputed the council's projections on how much the amnesty plan will generate.
Hall said yesterday he was pleased by the mayor's last-minute reversal, especially in light of the dispute over the tax amnesty funds.
The personnel actions growing out of the Donaldson case have been in the works since Jan. 28, when Barry placed Shannon, George, Manson-Neal, and Haynes on administrative leave with pay. One day earlier, Donaldson, Barry's longtime top political aide, had been sentenced to a seven-year prison term for defrauding the city of $190,000 and orchestrating a cover-up.
Barry, who had been criticized by some council members and political rivals for not acting more swiftly to resolve the issue of the several employes, declined to discuss the timing of yesterday's disclosures.
"This is the time that Mr. Shannon and Mr. George decided to resign. That's their decision to do so," Barry said. "That's behind us now."
Aides said that Barry found it especially hard to resolve the fate of Shannon, a longtime aide who had entered the administration seven years ago after serving as Barry's Ward 5 campaign coordinator in the 1978 mayoral campaign.
Though he resists the label of being a Donaldson protege, Shannon was an aide to the former deputy mayor for most of his tenure in the District government. After a brief stint as acting employment services head in 1979, Shannon returned to the agency in October 1980 as a deputy director under Donaldson, who served as acting director until he left in May 1982 to manage Barry's 1982 reelection campaign. Shannon succeeded Donaldson in 1982 as director.
In a letter dated March 14 and released by Barry, Shannon said he resigned with a "deep feeling of gratitude" to the mayor and "the personal satisfaction of accomplishment" for his work. He could not be reached for comment yesterday, and George declined to comment.
Prosecutors, in court papers filed Dec. 10, outlined repeated violations of the agency's contracting regulations committed by Shannon, George and Manson-Neal while they obeyed Donaldson's orders to issue payments to associates who funneled money back to him.
Haynes was not named in those Dec. 10 documents, but was cited in a presentencing memo filed by prosecutors in January as one of several other employment services workers who were aware of irregularities but took no action to halt them or report them.
City officials said that the eight other employes disciplined will keep their jobs. The actions taken are expected to range from reprimands to suspensions of under 30 days, officials said. Haynes will be assigned unspecified new duties when his suspension is lifted, an official said.