Before there was the controversy surrounding the Department of Parks and Recreation projects, there was the scandal around the city’s lottery contract, including allegations of favoritism, interference and intimidation by Chief Financial Officer Natwar Gandhi, D.C. Council Chairman Vincent C. Gray and others.
The lottery storm kicked up in 2008. But the ugly affair seemed resolved with the award last year of a new contract. Then, last week, Eric W. Payne, a former director of contracting for the CFO, filed a multimillion-dollar lawsuit alleging violations of the Whistle Blower Act and the False Claims Act, along with constitutional defamation and wrongful termination.
In his complaint, Payne said the CFO and others “viewed internal controls, rules, and regulations as optional and secondary to political considerations.”
“Gandhi served as advocate for the politically connected and the powerful,” he told me.
The allegations, if proven true, could have devastating consequences for Gandhi and for Gray, who recently kicked off his mayoral campaign.
Payne’s troubles began when Gandhi decided to ditch Lottery Technology Enterprises — owned by P. Leonard Manning — and GTECH. That partnership had held the contract for 25 years. But in 2005 and 2006, there were security breaches and the company subsequently was fined $1.4 million.
Gandhi made it clear “LTE was not to be selected as the vendor for the new contract award,” Payne said. It wasn’t. W2I Venture was chosen. That group included a local company owned by Alaka Williams and Warren Williams Jr. — who were friends of Mayor Adrian M. Fenty — and Intralot, a lottery operator based in Greece.
Council members went ballistic. After all, Manning had provided financial support for many of their campaigns. It was chit collecting time. Legislators promised to scrutinize the new contract.
In May 2008, Payne said in his complaint he met with “Gandhi, a senior elected official, and other CFO personnel” and was told to “get rid of Warren Williams Jr. and replace him with Leonard Manning.”
When Payne rejected that appeal, Gray — who Payne told me was the “senior elected official” at the meeting — refused to place the new contract on the legislature’s agenda.
Payne complained to the CFO’s Office of Integrity and Oversight and the city’s inspector general about being pressured to circumvent the city’s procurement law. But nothing happened. In fact, he said the individual at the Inspector General’s Office he spoke with eventually went to work for Gandhi.
When the dust cleared, the council disapproved the W2I contract. Manning remained temporarily as the contractor. Payne was fired.
“[He] became a political doormat, disposed of after being trampled upon because of his character, integrity and insistence on public accountability,” said Donald Temple, Payne’s lawyer.
Attorney General Peter Nickles told me there were “serious issues related to the [W2I] lottery contract.”
Gray couldn’t be reached for comment. David Umansky, the CFO’s spokesman, said Payne was removed as manager but “retained his salary, grade and some responsibility over the lottery contract. What was important to us was that he wasn’t managing people.”
It is true that Payne was moved — to a position that had little to do with the contract. It is also true that he was then fired.
Umansky insisted to me that the charges in the lawsuit were “baseless” and “totally without merit.”
At this point, that is hard to believe.
Jonetta Rose Barras can be reached at [email protected].
