DC: the house of cards starts to crumble

| November 26, 2007

I lived in Washington DC — yes, right in the District itself — for just under six years (1989-2005). To say that DC is bipolar and disfunctional doesn’t begin to capture the true weirdness of how the city runs (or fails to). This is a city with one of the highest per-student spending rates in the country, yet has one of the worst school systems (I know; I sent my son to it). This is a city where three DC workers netted large sums in bribes by erasing unpaid traffic violations from the DMV computer systems. And, of course: Marion Barry.

Now the scandal in the DC Tax Office is the gift that keeps on giving. It started off very large — tens of millions of dollars embezzled — but is threatening to become truly massive, as the full extent of DC’s fiscal disfunctionality and corruption gets exposed to light. The Washington Examiner — which is becoming the lead muck-raking newspaper in a city that desperately needs it — has been all over this story. Here’s the latest update from Bill Myers (emphasis mine):

Prosecutors have accused property tax office bureaucrats Harriette Walters and Diane Gustus of embezzling tens of millions of dollars through phony tax refunds since at least 2001. The Examiner has uncovered suspect payments dating to mid-1999, but a law enforcement source with intimate knowledge of the widening investigation said authorities still haven’t found the first check the pair allegedly wrote and are trying to search records going back decades.

Walters started in the tax office in 1981.

Authorities are scrambling to figure out the depth of the scandal because they fear the millions the pair allegedly hid in offshore accounts will quickly disappear. Authorities have acknowledged that, to date, they have recovered only one-third of the allegedly stolen funds.

But investigators have been hampered by D.C.’s chaotic record-keeping. The source, who asked to remain unnamed because of the sensitivity of the investigation, said what records still exist are scattered and few are computerized.

Even computerization hasn’t helped clear up the mysteries. According to tax office records obtained by The Examiner, D.C. authorized about $27.1 million in disbursements, but the payees and addresses were left blank. The transactions weren’t recorded on D.C.’s general ledger, the records show.

The findings don’t surprise me. Several years ago, while I was working at PricewaterhouseCoopers in DC, I met with the then-CIO of the DC Public Schools District to see about offering pro bono consulting on their IT systems. This person describe an IT infrastructure (if you could even use that word) that was profoundly wasteful and disfunctional even by public school standards. Virtually all my other direct interactions with the District government were similar, and six years of daily readings of the Washington Post — which tends to treat each successive scandal as unique rather than systemic — made the patterns quite clear.

Stay tuned. While DC has had more than its share of corruption and scandals, they always seem to get overlooked or played down. This one may be the one that turns out to be too big to sweep under the rug. ..bruce w..

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Category: Commentary, Economics, Main, Project Management, US Politics

About the Author ()

Webster is Principal and Founder at Bruce F. Webster & Associates, as well as an Adjunct Professor of Computer Science at Brigham Young University. He works with organizations to help them with troubled or failed information technology (IT) projects. He has also worked in several dozen legal cases as a consultant and as a testifying expert, both in the United States and Japan. He can be reached at bwebster@bfwa.com, or you can follow him on Twitter as @bfwebster.

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