Norton Requests Update on Tax and Revenue and Supports Continuing Local Oversight (11/20/07)

Washington, DC-In the wake of allegations of fraud and theft by staff in the D.C. Office of Tax and Revenue; a troubling audit revealing the District's mishandling of millions of dollars in federal grants; and congressional inquiries, Congresswoman Eleanor Holmes Norton (D-DC) today sent a letter to D.C. Council Chairman Vincent Gray requesting information on investigations and actions on these two matters that are underway or pending. Norton wrote, "I continue to believe that whether the misuse is of local or federal funds intended to benefit residents, the responsibility for investigation and correction lies with the local jurisdiction, not the federal government, except under unusual circumstances." Norton's chief regret, she said, is that the Office of the Chief Financial Officer, may not have always received strict oversight.

Norton wrote that she expects that the Tax and Revenue scandal and problems with federal grant contracts will be raised when the House Financial Services Appropriations Subcommittee considers the D.C. budget during its hearings. In her letter to Gray she said that she has told her colleagues that she does not see the need for a congressional oversight hearing at this time in light of Council hearings in progress and the on-going criminal investigation.

The full text of Norton's letter follows.

November 20, 2007

Chairman Vincent Gray

Council of the District of Columbia

Dear Chairman Gray,

I write concerning the recently released financial audit by BDO Seidman LLP required by federal grant regulations, indicating violations and other issues in the District's implementation of some federally funded grants. This audit comes as the Council has embarked on an investigation and hearings into alleged acts of fraud and theft by staff at the Office of Tax and Revenue that may total more than $30 million.

These matters, of course, will be raised by the House Financial Services Appropriations Subcommittee during the District's budget hearings. However, a member of Congress has approached me indicating that he believed that a congressional oversight hearing was necessary following press reports concerning the property tax theft. I told him that there was every indication that the Council was engaged in pursuing its obligation to hold the indicated hearings. Particularly in light of oversight being done by the City Council and the ongoing criminal investigation, I said that I did not see what a congressional hearing at this time would add. As with any local government, I believe that such matters should be investigated and dealt with by local officials. My chief regret is that the Office of the Chief Financial Officer may not have always received the strict oversight required for every local office, regardless of its own oversight responsibilities.

However, it concerns me that the final federally required audit for 2006, which was not well publicized, was received by the CFO's office on August 3, 2007, but posted on his website only within the last couple of weeks. This audit concerns both federal and D.C. funds. The auditors found that officials in the District mishandled millions of dollars in contracts in a number of ways, including failing to get D.C. Council-required approvals and to adhere to normal contracting rules.

The federal audit is particularly troubling in light of the January 2007 GAO report concerning city procurement procedures, which faulted the CFO's office for failing to establish tight controls and oversight of the Office of Contracting and Procurement.

I continue to believe that whether the misuse is of local or federal funds intended to benefit residents, the responsibility for investigation and correction lies with the local jurisdiction, not the federal government, except under unusual circumstances. Your recent hearings make it clear that there is no hesitation to proceed to uncover wrongdoing and mismanagement. A special effort to clear up the issues concerning all the disputed funds, especially public schools and Medicaid funds that were particularly cited in the federally-required audit, is important to preserve local and federal funds.

I would appreciate hearing from you identifying the investigations and actions concerning all these matters that are underway or planned.

Sincerely,

Eleanor Holmes Norton

Cc: Mayor Adrian Fenty

Chief Financial Officer Natwar M. Gandhi