WASHINGTON — Despite growing criticism and some calls for the removal of District of Columbia chief financial officer Natwar Gandhi in the wake of a huge tax scandal, it appears that his healthy reputation with the financial community has not been severely tarnished. “He’s been very important to the district’s turnaround, and if he left it would be a loss,” said Richard Raphael, executive managing director at Fitch Ratings.Gandhi has earned national acclaim for his role in turning around the district’s once-disastrous financial situation. Under his leadership, the district has earned its highest ever bond ratings — A-plus by Fitch and Standard & Poor’s and A1 by Moody’s Investor Services.The city in April rewarded Gandhi with a nearly $100,000 raise, increasing his salary to $279,000 from $186,000, in order prevent him from leaving. He reportedly had been considering taking a job at Amtrak.But the revelation that the largest embezzlement in district history occurred under his watch has brought Gandhi’s reputation — as well as his continued employment — into question.Last month, federal investigators revealed that employees within Gandhi’s Office of Tax and Revenue had stolen $30 million through phony property tax refund checks over a number of years. The scandal was uncovered by a bank employee rather than anyone in Gandhi’s office. More than a dozen district employees have either left or been fired as a result, and some officials are wondering if Gandhi too should be held responsible. “Isn’t what’s good for the goose good for the gander?” District Councilman Jim Graham asked at a meeting authorizing an investigation into the scandal.Kwame Brown, another council member, went further: “Gandhi has got to go ... but that’s the job of the mayor.” Gandhi’s removal from office can only be initiated by Mayor Adrian Fenty, who thus far has remained supportive of his CFO.Gandhi also continues to find support from within the financial community. He received no questions or criticism about the scandal when he appeared before the Municipal Forum of New York two weeks ago to discuss the district’s finances.Raphael noted that even though the scandal siphoned funds from the district under Gandhi’s watch, the city has reaped millions of dollars more from actions he has taken during his tenure.“I’ve been covering the district for years and years, including when Nat Gandhi came in and basically turned it around,” he said. “They basically found a tax office that was in disarray and turned it around and found hundreds of millions of dollars — $30 million pales in comparison to that.”Raphael also said that while headline-grabbing, the scandal does not rest entirely on Gandhi’s shoulders:“It seems to me that it wasn’t like an endemic situation, but more of a pretty sophisticated operation carried out by two people,” he said.Karl Jacob, a municipal analyst with Standard & Poor’s, agreed. “Obviously it’s a little crack in the armor, but it’s not enough to say it’s a structural problem to damage the rating,” he said.Though they remain supportive of Gandhi, the rating analysts stopped short of suggesting that his removal would hurt the city’s bond rating. “He’s been important to the improvement of the bond rating, but it’s never about one person,” Jacob said.Raphael said that while Gandhi’s departure would be significant, his replacement would play a large role in future ratings consideration.“The removal of Dr. Gandhi would be a loss, but the question would be: Would the next person be as strong an advocate of maintaining and improving the financial strength of the district?” he said.Meanwhile, the city is preparing for an upcoming general obligation offering. On Dec. 4, the district hopes to competitively sell $300 million of GO tax anticipation notes to finance various capital projects.
Independent and authoritative analysis and perspective for the bond buying industry.
No credit card required. Complete access to articles, breaking news and industry data.
Have an account? Sign In