D.C.’s Chief Financial Officer to Resign

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WASHINGTON — Natwar M. Gandhi, who has overseen the District of Columbia’s finances since the dark days of the 1990s when the city was under federal control, announced his resignation Friday as the district’s chief financial officer.

Long respected on Wall Street and on Capitol Hill, Gandhi will step down at a time when the city’s finances are robust — on Tuesday, officials announced a $417 million budget surplus. But his stewardship of the office has come under increasing scrutiny and is the subject of investigations by a federal grand jury and the Securities and Exchange Commission.

Gandhi, 72, announced his resignation in a letter to Mayor Vincent Gray, who appointed him to a new, five-year term last year. The letter does not detail his reasons for stepping down, but his spokesman, David Umansky, said Gandhi, a widower, wants to spend more time with his girlfriend. He will step down June 1.

“I feel comfortable retiring at this time because the city is in excellent financial condition, perhaps the best in its history,” Gandhi wrote. He thanked the mayor for his fiscal discipline, which he said “has placed the district in the forefront of the nation’s financially stable municipal governments.”

In a statement, Gray thanked Gandhi for his service.

“I am sorry to see him go,” the Democratic mayor said. “Without his leadership, the district would not have experienced the extraordinary fiscal turnaround that we have seen in the last dozen years. Our city owes him a great debt of gratitude.”

Born in Gujarat, India, Gandhi earned a doctorate in accounting from Louisiana State University. He became the city’s deputy chief financial officer in 1997 when the district was governed by a Congressional control board, serving under Anthony Williams, who was elected mayor in 1998. Williams appointed Gandhi as the permanent CFO in 2000.

The city had been placed under federal receivership in 1995 after years of financial mismanagement under Mayors Marion Barry and Sharon Pratt.

Over the years, Gandhi was criticized by elected officials and government watchdogs for a perceived lack of transparency and internal controls in his office. His first major scandal came in 2007, when tax office employee Harriette Walters was found to have embezzled $48 million from the city. She is serving a 17 ½-year federal prison term.

More recently, Gandhi has come under fire for his office’s handling of the district’s $38 million lottery contract. A federal grand jury is investigating the circumstances surrounding the contract, which was awarded in 2009 to Greek gaming giant Intralot, and Gandhi is one of the numerous officials under scrutiny, according to several people familiar with the probe. Those people spoke to The Associated Press on condition of anonymity because they were instructed not to impede the ongoing investigation.

Gandhi’s former chief contracting officer claims in a civil lawsuit that he was demoted and fired after he resisted pressure from Gandhi and elected officials to rebid the lottery contract.

Last year, the office’s internal-affairs chief resigned abruptly, accusing Gandhi of refusing to release audits critical of his office. The Securities and Exchange Commission has launched an inquiry into that issue.

During a D.C. Council hearing in December, Gandhi repeatedly refused to answer questions about the lottery contract and the procurement officer’s firing, citing pending legal matters.

Councilmember Jack Evans, who chaired that hearing, said Gandhi’s recent troubles were just a small aspect of an “extraordinary tenure.”

“He came under a lot of fire in the last six months,” Evans said. “I don’t know if those who put him under a fire realize, with his loss, what that’s going to mean for the city.”

Despite the controversies, the man who often described himself as a “bean counter” has consistently pointed to the district’s bottom line in defense of his job performance. Neighborhoods have been transformed since the control board era, thanks in part to an influx of young professionals who have expanded the city’s tax base. The commercial real estate market is booming.

“His stewardship of the district’s finances is the primary reason we have gone from junk bond status to double-A ratings on Wall Street,” Council Chairman Phil Mendelson said in a statement. “As with any person who excels in his or her profession, Nat Gandhi has made the work look easy. But anyone who looks closely will realize quickly that guiding the district’s fiscal health is work — hard work.”

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(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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