D.C. Council leaders announced Wednesday they will launch their own investigation into the largest case of public corruption in city history, while more District employees were fired.
At the center of the controversy, embattled Chief Financial Officer Natwar Gandhi vowed to remain on the job.
Gandhi, backed by Mayor Adrian Fenty, acknowledged a “profound management failure” that opened the door to the theft of upward of $30 million from city coffers, allegedly by a pair of employees who exploited the property tax refund process.
The warning signs of problems were there more than a year ago: D.C. Auditor Deborah Nichols cautioned in an August 2006 audit that having the same person approving and manually entering tax refund vouchers, as was happening at the Office of Tax and Revenue, “violates the basic principle of segregation of duties, and is contrary to an effective system of internal control.”
Though she found no wrongdoing, Nichols urged tax office to implement “effective checks and balances” to “timely detect errors and irregularities.”
Ten tax office employees have either resigned or been fired since last week, Gandhi said. That raises the total from six firings previously announced. Officials on Wednesday would not name the other employees sacked.
There “will be more removal of people,” Gandhi said.But not him, he promised. “I’m not a quitter.”
Council Chairman Vincent Gray and eight of his colleagues, meanwhile, held a news conference of their own in advance of today’s oversight hearing on the alleged corruption in OTR. During the hearing, Gray said, the council will break down failures in internal controls and “determine if there were previous signs of fraudulent activity and why they were ignored or went unheeded.”
The council also is expected to hire an outside auditor to further its investigative work.
No one called for the CFO’s resignation, though Council Member David Catania said that day might come.
“If all of this is true, then I don’t see in my judgment how Dr. Gandhi can survive,” Catania said.
Harriett Walters and Diane Gustis, two Office of Tax and Revenue employees, and several others are accused of issuing and cashing false refund checks in the name of dummy corporations. A bank teller in Bowie tipped off federal authorities to the theft.
Gandhi has called for an independent investigation by the D.C. inspector general and has sought advice from the Internal Revenue Service. He has named a panel to approve every refund check of more than $10,000. And he asked U.S. Judge Stanley Sporkin, a former enforcement director with the Securities and Exchange Commission, to act as his “personal adviser.”
