Subpoenas eyed on contracts

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By David C. Lipscomb

D.C. Council members are poised to issue subpoenas and involve the U.S. Attorney's Office in the probe of an unusual transfer of millions of dollars between two city agencies.

"It's like Watergate," said council member Harry Thomas Jr., who has taken the lead in the council's investigation. "You don't know where you're going to end up. The little things shed light on the big things."

Council members last week said they think Mayor Adrian M. Fenty's administration broke the law by executing contracts for parks and recreation projects after transferring city money to pay for the projects to the D.C. Housing Authority. City law requires contracts in excess of $1 million be approved by the council, but it had been unclear whether the law applied to the housing authority because it is a quasi-governmental agency.

Mr. Thomas, Ward 5 Democrat, said that on Monday, he will subpoena witnesses involved in the funds transfer and a related contract for parks and recreation projects if those witnesses do not appear during a joint council hearing scheduled for Thursday.

Mr. Thomas said he will refer any evidence of wrongdoing to the U.S. Attorney's criminal division. He also proposed an emergency bill to be voted on tomorrow that would prohibit Chief Financial Officer Natwar M. Gandhi from transferring any funds to the housing authority for 90 days. The Department of Parks and Recreation also would have to notify the council of transactions of $75,000 or more.

Council Chairman Vincent C. Gray on Friday requested from Mr. Gandhi copies of contracts of more than $1 million that had not been brought before the council for approval in the last year.

The letter also asked for contracts from independent agencies since January 2007 and for a list of all agencies that have grant-making authority and all grants issued since October 2008.

The controversy has centered on a $40 million contract for project management services awarded to District-based Banneker Ventures and Herndon-based Regan Associates by D.C. Housing Enterprise (DCHE), a nonprofit subsidiary of the D.C. Housing Authority.

The contract was to be paid for with funds transferred from the parks department to DCHE via the Office of the Deputy Mayor for Planning and Economic Development.

According to documents from the chief financial officer, officials agreed to transfer as much as $170 million to DCHE for parks projects.

Fenty administration officials have defended the transfer saying it was proper and has helped projects move forward.

Council member Mary M. Cheh, Ward 3 Democrat, said the execution of the contract suggests that similar arrangements may have been made elsewhere and that the council may need to seek an independent investigator.

"The path is not yet clear," Mrs. Cheh said. "I don't know that we have the wherewithal to follow all the permutations [and] all the pathways."