WASHINGTON - Calling himself the "supreme bean counter of the nation's capital," NatwarM. Gandhi is an unusually self-effacing soul in a town overrun by monster egos.
Sources credit the District of Columbia's powerful chief financial officer, along withMayor Anthony A. Williams, who was one of Gandhi's predecessors as CFO, with helping tobring the city back from the brink of financial chaos in the late 1990s.
But Gandhi tries not to get a swelled head about it. He loves to use self-deprecatinghumor, especially about his shiny cranium, to break the ice or make a point. "I think itgoes with being bald," he says, laughing. Before entering the world of governmentfinance many years ago, Gandhi earned a doctorate in accounting from Louisiana StateUniversity at Baton Rouge. After that he taught accounting at the University ofPittsburgh. "So you can call me bean counter par excellence," he says.
He rejects suggestions that accounting is a dull and tedious occupation favored byhumorless number crunchers. "I just think they don't know anything about being anactuary, which is really boring," he says with a smile.
On a serious note, he says that accounting is an especially important professionnowadays in light of a series of recent corporate scandals relating to cooked books thathave given investors the jitters and helped to send the stock market on a roller-coasterride. "Making sure that you have accounting which is transparent, which is relevant, isextremely important," Gandhi says.
HUMBLE BEGINNINGS
Born in 1940 at Savarkundla, in the Indian state of Gujarat, to a small-town grocerfather - he notes that his surname means grocer in Gujarati - and a homemaker mother,Gandhi is the third child in a family of three brothers and three sisters. His fatherdid not complete high school, and his mother received no formal education. Gandhi movedto the United States in 1965 and likes to view his ascension in his adopted country asjust one in a sea of millions of American immigrant success stories.
"Life is so unpredictable," Gandhi says. "I would have never imagined when I was inIndia, or when I came here or worked in several jobs here, never would have imaginedeven five, six, seven years ago, that I was going to become the chief financialofficer," he says.
And he says he's learned a few things since coming to the nation's capital. "The mostimportant thing in Washington is that you should never take yourself seriously. Youshould take your work seriously," he says.
Gandhi, unlike many people in the capital city, does not suffer from so-called Potomacfever. That malady can be defined as an obsession with power and what it can achieve,often coupled with delusions of grandeur.
"Unless you have a sense of humor around here, the work becomes unbearable," Gandhi says"The job that I have is among the most stressful jobs in Washington, and you have tomaintain your sense of humor, your sense of perspective."
'UNHEARD OF' POWERS
One of the reasons the job is so stressful is because the district's CFO possessespowers that are "basically unheard of," he says. Compared to the typical state financesecretary or treasurer, Gandhi does have immense powers. In fact, the district's CFO'spost is one of the most powerful such positions in the nation, according to KathleenHolt, a senior credit officer at Moody's Investors Service.
As Gandhi explains it, he has absolute authority to estimate and certify districtrevenues. In the typical state, those functions are normally performed by a committee ora board of economists. The district CFO is also authorized "to recommend and insist uponwhatever measures are necessary to assure the city's viability," Gandhi says. All chieffinancial officers of agencies and departments throughout the district government reportto him.
"Further on, to assure the independence of the CFO, the Congress has given the chieffinancial officer independent personnel authority and independent procurementauthority," he says. "So all the CFO employees are basically `at will' employees, and mysimple rule here is that any CFO, any agency CFO, that reports deficits, he or she makesthat call from the home. You don't belong here if you generate deficits, or if you donot know how to contain the deficits.
"That is not to say that Monday morning I wake up, I have a headache, and I go and fire10 people, but one has to be very careful. The city's financial viability is supreme asan objective, and that is why the mayor and the [District] Council and the Congress havegiven the CFO this independence."
Finding critics of Gandhi is not an easy thing to do, but the CFO, along with otherdistrict officials, did come under fire last year after it was discovered that hisgeneral counsel, Saamir "Sam" Kaiser, had embezzled $248,000 in funds from the Districtof Columbia Tobacco Settlement Corp., which was created for the district's $525 milliontobacco securitization in 2001.
Gandhi hired Kaiser as a staff attorney in January 2001 after Kaiser had worked for fiveyears on the legal staff of the district's financial control board - despite the factthat he was not actually licensed to practice law. The board did not uncover Kaiser'slack of credentials while he worked there. Kaiser was promoted to general counsel inAugust 2001 and resigned from the post in December of that year after an investigationinto his background was launched.
Gandhi quickly distanced himself from Kaiser and referred the case to the city'sinspector general, Charles C. Maddox. Gandhi has repeatedly pointed out that the tobaccobondholders were never at risk, an assertion that rating agency analysts have accepted.Gandhi's defenders have argued that he wasn't the only official whom Kaiser - considereda brilliant, charming impostor - tricked into believing that he was a bona fideattorney.
In October, Kaiser received a four-and-a-half year prison term for fraud and was orderedto pay $514,000 in restitution. Rating agency analysts have said the embarrassingincident has had no impact whatsoever on the creditworthiness or financial status of thedistrict.
STEADY AS SHE GOES
For all its problems, the district - a federally created enclave where Congress has thepower to veto all decisions made by the District Council - is doing well, creditanalysts say. But there are problems, including a possible budget gap that popped uplast month, a limited tax base, and a slowly recovering tourism-dependent economy thattook a hit nearly 18 months ago with the terrorist attack on the Pentagon in nearbyArlington, Va.
But the district has progressed light-years since the dark days of 1995, when its bondrating was junk and huge deficits mounted. Both Standard & Poor's and Fitch Ratings ratethe city's general obligation debt BBB-plus, while Moody's rates it Baa1. The outlookfor the rating is stable.
The district is expected to issue about $300 million of GOs in late summer or earlyfall.
The release of the city's comprehensive annual financial report in late January markedthe sixth straight year the city has posted a balanced budget, and is the second CAFRissued since a federally appointed financial control board relinquished its oversightpowers on Oct. 1, 2001. Congress created the board in 1995, giving it veto power overdistrict affairs because of the city's deep financial problems. Balancing the budgetfour years in a row helped the district end oversight by the board. By the same token,running a deficit could reactivate the control board.
The report released under Gandhi's watch five weeks ago was "clean," or irregularity-free, and was released on schedule. In 2000, the fiscal 1999 report came out threemonths late, and that tardiness led to the ouster of Gandhi's predecessor, Valerie Holt.Gandhi, who presided over the dissolution of the control board, likes to say that if youcan't get the CAFR out on time, you have no business being CFO.
Like other jurisdictions around the nation, the district has been facing revenuepressures related to the downturn in the national economy and the rising costs ofeducation and of providing medical care to the poor. The city is currently grapplingwith a prospective budget shortfall of $128 million in the present fiscal year, whichends Sept. 30.
Last year was particularly rough one. Large unanticipated revenue shortfalls forced $75million in emergency cuts from the fiscal 2002 budget last summer, and then $323 millionmore had to be cut in the fall from the current fiscal 2003 budget.
But sources say whatever the task, the ever-genial Gandhi is up to it. Moody's Holtworked at the U.S. General Accounting Office here from 1989 to 1992, when Gandhi was theGAO's associate director of tax policy and administration. She says she was pleasantlysurprised to be working with him again, in effect, when she started at the rating agencyin 1997.
"Nat is very gracious," says Holt. "As a rating agency person, I find him very willingto talk and especially accessible, which are great qualities."
The former head of the control board, Alice M. Rivlin, now a senior fellow at theBrookings Institution, also sings Gandhi's praises, crediting him with helping to putthe district on a strong financial footing.
"I think he's terrific," says the economist and former vice chairman of the FederalReserve Board. "He is a tight-fisted CFO, which is a good thing, and I think his majorachievement has been getting ahead of what he calls spending pressures, so that they cankeep the budget balanced." The district may currently be "in a difficult situation, butI don't think there's any danger of a control period right now," Rivlin says.
As the district's deputy CFO and head of the Office of Tax and Revenue from 1997 to 2000- the year he became CFO - Gandhi fixed the city's malfunctioning income-taxadministration system, Rivlin observes. "It was a mess and taxes weren't being collectedon time, and there was a lot of inaccuracy and he got that straightened out in a majorway, and that contributed to the better and fairer financing of the district," she says.
Gandhi notes proudly that when he first took over the OTR, taxpayer files were keptloose in buckets - he has the photographic evidence to prove it. "There was no way wecould have gone after you. If you paid our taxes we'd say `thank you,' " he says. Todaythe files are properly organized and, come tax time each year, the district's tax refundchecks are processed more quickly than federal refund checks.
He even brags that while he's been CFO, the Federation of Tax Administrators gave thedistrict government an award for "the best tax system in the world."
Indeed, the federation did give the city the 2002 Award for Outstanding TechnologyApplications for State Administrations for its online tax-filing system introduced in2001, the Electronic Taxpayer Service Center, or eTSC. Businesses and individuals canuse the system to file their taxes via the Internet for free. The man from Savarkundlalikes to point out that the district is the first U.S. city to offer individualtaxpayers and businesses access to tax services 24 hours a day, seven days a weekonline.