D.C. Chief Financial Officer Jeffrey S. DeWitt has drawn attention to himself this week, but not necessarily in a good way.
First, in a highly publicized dispute with the D.C. Council, DeWitt rode into battle on a mighty steed that turned out to be a hobbyhorse. Next, DeWitt asked the council to approve a $215 million sports gambling contract that reeks of cronyism.
What he might do next week is anybody’s guess.
On Monday, DeWitt boldly declared he would not certify the council’s $15.5 billion budget, supposedly because it diverted $49 million from the reserves of the Washington Convention and Sports Authority. DeWitt asserted that the transfer would violate the city’s obligations to bondholders whose investments funded construction of the convention center and its hotel.
It appeared that DeWitt had scored one for being faithful to his fiduciary duty.
However, it turns out that on May 24, council Chairman Phil Mendelson (D) and D.C. Attorney General Karl A. Racine (D) had presented DeWitt with documents showing that because of poor oversight by the CFO and the sports authority, authority reserves were improperly being kept at a higher level than required: Nearly $47 million in misplaced funds should have been transferred to the D.C. general fund since fiscal 2017. The D.C. Fiscal Policy Institute, a nonprofit watchdog group, correctly noted that DeWitt’s ruling means that the money in question “is not needed as a guarantee” to the authority’s bondholders.
DeWitt’s reach exceeded his grasp. The council’s decision should stand.
Similar due diligence also appears to be missing in the chief financial officer’s proposed multiyear, $215 million, sole-source contract to manage the online sports gambling system and the D.C. Lottery.
There is no forgetting how this point was reached.
Earlier this year, legislation authorizing the award of a sole-source contract to operate the city’s new sports betting system to the city’s current lottery system operator, Intralot, was steamrolled through the council. Time-tested competitive bidding rules were thrown aside because DeWitt and the lottery (which is under DeWitt’s supervision) argued that Maryland and Virginia were planning to enter the sports betting game, and if the District didn’t get its system up and running first, those neighbors would capture the business. A council majority and Mayor Muriel E. Bowser (D) fell for the arguments, and the sole-source deal went through.
Now, DeWitt is seeking council approval of the five-year online sports gambling contract that his office and the lottery have negotiated with Intralot.
What a deal. As Post reporter Fenit Nirappil wrote, DeWitt’s proposed contract, which involves seven local subcontractors who will share more than a third of the $215 million deal, will benefit “several politically connected individuals.” What these subcontractors will do is unknown.
Some of them are drawn from the ranks of D.C. insiders with political ties that apparently bind.
Let’s take a look:
There is Emmanuel Bailey, head of a company called DC09, which is Greece-based Intralot’s local subcontractor for the lottery system. Bailey is founder of another company, Veteran Services Corp. — which is one of the seven subcontractors in the proposed sports betting contract.
Bailey has a long-standing penchant for giving, having bestowed, personally and through his companies, campaign contributions to Bowser and an array of council members.
Another listed subcontractor, the law firm Goldblatt Martin Pozen, not only lobbied the council for sports gambling legislation on Bailey’s behalf but also peddled an unsolicited legal opinion contending the D.C. Lottery did not even have to put the online sports betting contract up for bids. David Umansky, spokesman for the Office of the Chief Financial Officer, advised me via a March 4 email that the Lottery/OCFO neither requested the opinion nor considered it in the decision-making process. Now one of Bailey’s lobbyists is in line to have a direct stake in the sports gambling business.
Also landing a subcontractor role in DeWitt’s proposal is Everett Hamilton, through his PR firm Octane; Hamilton is Bowser’s former campaign communications chief and was public-relations consultant in 2016 for council member Brandon T. Todd (D-Ward 4). He also contributed to the Bowser and Todd campaigns.
Then there is the proposed subcontractor District Services Management. Allieu Kamara, principal of that company, is also president of Life Deeds, which operated a homeless shelter for the D.C. Department of Human Services until DHS discovered falsified documentation on the backgrounds of his shelter staff. The shelter closed in four months, and Kamara’s contract was terminated — which apparently has not prevented him from entering the District’s gambling arena.
I sought information about what these subcontractors would actually be doing but was told by Umansky in an email this week that “the ‘summary of the subcontracting plan’ contains proprietary information such as pricing and costs and that along with other similar sections of the contract cannot be released at this time, but it will be made public if and when the contract is approved and signed.”
Umansky added, “You could file a [Freedom of Information Act] request for a redacted version, but the reply will take at least several days.”
Ah, but who in the District cares?
Read more from Colbert King’s archive.