The District’s government ethics board said it has found “a substantial body of evidence” that D.C. Council member Jim Graham (D-Ward 1) violated the city’s code of employee conduct while intervening in a 2008 contract dispute. But the board dismissed its proceedings against Graham, saying it had no authority to penalize him.

In a 27-page opinion delivered Thursday, the Board of Ethics and Government Accountability concurred with an earlier investigation that found Graham had offered a D.C. businessman support for his lottery contract bid in return for the businessman’s withdrawal from an unrelated real estate project.

That offer, the three-member board said, broke three provisions of the employee code of conduct — loss of independence or impartiality; giving preferential treatment; and adversely affecting public confidence in government — because Graham was motivated to transfer the real estate project to a development firm that had given him campaign donations.

Had Graham’s actions taken place today, the board could proceed to a formal investigation that could result in fines or a statement of censure. But because the dealings in question took place five years ago — before the D.C. Council voted to strengthen city ethics laws — sanctioning Graham now would violate constitutional prohibitions on retroactive lawmaking, ethics board chairman Robert J. Spagnoletti said Thursday.

“To proceed with an evidentiary hearing would require the Board, its staff, and Councilmember Graham to invest significant time and resources to prosecute and defend an action where no sanction could be imposed,” the board wrote. “We find this to be an unwise use of resources.”

Jim Graham (Mark Gail/The Washington Post)

William W. Taylor III, Graham’s attorney, criticized the board’s decision for drawing conclusions without giving Graham an opportunity to respond.

“We’re glad, of course, that the matter is concluded, but I think this an unfair and unjustified criticism and blot on his reputation,” he said.

The board relied on investigative work done by the law firm Cadwalader, Wickersham and Taft on behalf of Metro — on whose board of directors Graham served at the time of the alleged deal and on whose land the real estate project was located.

In its opinion, the board said Graham has been given several opportunities to explain his actions — in a deposition for the Metro investigation, in a letter to the ethics board and in Taylor’s arguments to the board last month.

Taylor had argued that Graham acted to keep the businessman, Warren W. Williams Jr., off the Metro project because he felt Williams was “unworthy” of the project given his prior record as a landlord and the owner of a controversial nightclub. Any suggestion that he drop out, Taylor said, amounted to “sharp-elbowed political activity” from which Graham would not personally benefit.

But the board found “Graham’s ‘sharp-elbowed’ tactics were designed not in support of the public interest, but rather to exact punishment on Mr. Williams and steer a benefit to . . . his campaign contributor.”

The contributor in question is development firm LaKritz Adler, for which the board found Graham showed a “clear inappropriate preference” to replace Williams’s firm. Principals Joshua A. Adler and Robb M. LaKritz, who each donated $500 to Graham in 2006, did not reply to e-mails seeking comment Thursday.

Graham, in an interview, said he “categorically” denied acting to benefit LaKritz Adler. He also criticized the board for drawing conclusions without undertaking its own investigation.

“There’s no evidence to support it,” Graham said of the suggestion he acted to benefit a campaign contributor. “The board went way beyond the bounds of fairness.”

The board said it was “in the public interest” to issue its analysis, given the issue’s high profile and in light of the Metro report.

On the key matter in question — whether Graham proposed a quid pro quo to Williams of supporting his lottery bid in return for exiting the land deal — the ethics board concurred with the Metro probe that such a deal had been offered.

In a deposition, Graham said he did not have “any specific recollection of any discussion” regarding the Metro land. “If there was one, it was said in passing,” he said.