- The Washington Times - Tuesday, September 4, 2012

As a federal grand jury weighs evidence that key figures in D.C. business and politics manipulated the city’s lottery contract because of political considerations, the international gambling firm that won the $38 million-a-year deal in 2008 and again after a rebid a year later has remained largely silent.

But a previously unexamined internal memo drafted by Greek company Intralot SA during that period offers its inside view of a toxic climate in the District of Columbia that prompted the vendor to spend more time worrying about local political machinations than about the lottery itself.

The memo, labeled “confidential,” was never intended for distribution and has since been described as “false” by its author. Yet it was distributed in 2009, with at least one source saying they were told it represented the firm’s thinking at the time. It details a process that became necessary when the existing contract controlled since 1984 by competing firm GTech Corp. and local businessman Leonard Manning was due to expire.

After partnering with local firm W2Tech LLC, headed by Warren Williams Jr., an ally of former Mayor Adrian M. Fenty, Intralot was awarded the contract on the basis of technical merit and pricing, the memo states.

“The fact that Intralot won was a shock not only to [Mr. Manning and GTech] but to the entire D.C. infrastructure,” the memo states. “It was what Intralot did not see that gave us problems.”

Consistent accounts

The document suggests that after the initial contract award, which Mr. Fenty urged the D.C. Council to approve, D.C. power broker and lobbyist-lawyer David W. Wilmot reached out to Vincent C. Gray, who was council chairman, and council member Marion Barry.

“Dave realized the mayor’s people won and therefore no one but the mayor would gain” from control of the lottery contract, the memo states. “They decided to delay the process so a new plan could be put in place.”

That plan, according to the memo, involved provoking D.C. Council member Jim Graham — who had clashed publicly with Mr. Williams and fellow Fenty ally Sinclair Skinner — to oppose the award “by telling [Mr. Graham] that Skinner ran the deal.”

Mr. Skinner denied that he “ran the deal,” saying that his vocal support for the Intralot-Williams team was “purposely mischaracterized to undermine” a legitimate contract award.

Mr. Gray and Mr. Barry, who in the past have denied wrongdoing on the lottery contract, did not respond to requests for comment for this report.

Byron Boothe, vice president for government relations for Intralot, acknowledged writing the memo, but he recently disavowed its assertions and assumptions.

“The memo is false,” Mr. Boothe said. “We have no further comment.”

But the memo alludes to several key points that have been consistent with information that subsequently has been made public, raising questions about some of the other players and parties that the company identified.

For example, what later emerged but was unmentioned in the Intralot memo was a June 2008 meeting between Mr. Graham and representatives of Mr. Williams, who say the council member offered his support on the lottery contract if Mr. Williams would withdraw from a development joint venture at a Metro station won by a firm that also had ties to Mr. Fenty. The Washington Times first reported on the allegations, which were based on an exchange of emails between Mr. Williams and his associates and attorney. Metro authorities have called for a separate investigation of those allegations by an independent lawyer, while Mr. Graham, Ward 1 Democrat, strongly denies any wrongdoing. He declined to comment for this report.

Questions of influence

With Mr. Gray delaying a vote on the lottery award and Mr. Graham objecting to W2Tech, Intralot officials were convinced that Mr. Wilmot was working behind the scenes to put together a lottery team loyal to Mr. Gray, the memo states. That team, according to the memo, was to include a company that a 2008 report in the Washington Examiner said was represented by Mr. Wilmot and run by billionaire Black Entertainment Television founder Robert L. Johnson and D.C. businessman and former bank President Robert B. Washington.

Mr. Johnson and Mr. Washington were directors of Caribbean Cage LLC, which says on its website that it promotes gambling interests in Caribbean countries. In a 2008 report published in the Washington City Paper linking them to the D.C. lottery, the men denied any active involvement. They did not return multiple calls for comment for this report.

In an earlier email to The Times, Mr. Wilmot said he had “absolutely no role or interest” in the lottery.

Reached last week for comment, Mr. Wilmot reasserted that he has had nothing to do with the lottery contract.
“Happy trails to anyone who wants to investigate me,” he said.

When pressed about the influence he wields in the halls of power, where he is sometimes referred to as “King David,” Mr. Wilmot, a former dean at the Georgetown University Law Center, displayed a flair for profanity and racial innuendo, at one point deflecting a question with the comment, “I didn’t call your white ass, you called me.”

The Intralot memo says the group “worked closely with Gray” in trying to persuade Eric Payne, a contract lawyer in the Office of the D.C. Chief Financial Office, which oversees the lottery, to “come out with a new bid or accept an unsolicited bid.”

The claim in the memo appeared to be bolstered by a 2009 report in the Washington City Paper in which Mr. Payne said Mr. Washington asked him to accept a bid after the contracting process was over. In a recent email to The Times, Mr. Payne recalled receiving a call from Mr. Washington, who said Mr. Johnson and others were “interested in providing me with an unsolicited proposal.”

Mr. Payne’s email continued, “The clear inference I received was that there were politically connected persons supportive of their bid and that I should give due consideration to their request.”

Mr. Payne was later fired from his job for what he says was retaliation for exposing attempts by elected officials and D.C. Chief Financial Officer Natwar M. Gandhi to manipulate the contract approval process.

In a civil lawsuit, Mr. Payne states that in May 2008, he met with Mr. Gray, Mr. Gandhi and others to discuss modifying or canceling the contract award, which Mr. Payne felt “was inappropriate and constituted efforts to unduly influence the contract selection process.”

Immediately after the meeting, the court documents state, Mr. Gray and Mr. Gandhi met privately, after which Mr. Gandhi, in the presence of his chief of staff and others, “repeatedly cajoled” Mr. Payne to cancel the proposed lottery contract and reopen the process.

In his court filings, Mr. Payne also has accused Mr. Graham of attempting to intimidate him and has stated that he received a complaint from Intralot’s local partner that an advisory neighborhood commissioner offered to deliver Mr. Graham’s approval vote in exchange for a job, car and other perks for herself.

A transcript, also contained in court filings, of a taped conversation between Mr. Payne and Angell Jacobs, Mr. Gandhi’s chief of staff, quotes her as saying that “Jim Graham is on a personal vendetta here. For Gray and Graham, this is all personal. This is about their friends, or who is not their friends for Graham.”

Mr. Gandhi has disputed Mr. Payne’s account of his firing.

“Dr. Gandhi has stated innumerable times, neither the Mayor nor his staff nor any member of City Council nor their staffs ever tried to influence the Office of the Chief Financial Office’s decision on the awarding of the Lottery contract,” his spokesman said.

Changing partners

Intralot also suspected that Mr. Wilmot asked Mr. Gray to approach Intralot’s local lobbyist, former council member Kevin P. Chavous, “to see if Intralot would change partners,” according to the memo.

A review of Mr. Chavous’ lobbying reports for 2008 shows 12 contacts with Mr. Gray in the months leading up to a private meeting in the council chairman’s office in October 2008 that, according to Mr. Gray’s desk calendar, included Maryland businessman Emmanuel S. Bailey, a friend, golf partner and frequent political fundraising companion of Mr. Wilmot’s who could be described as a protege.

In a series of emails first reported by The Times, Mr. Bailey thereafter began suggesting to Mr. Williams that “forces” did not approve of him being the local face of the D.C. Lottery and that Mr. Bailey could help overcome the resistance if appended to the Intralot team.

Mr. Bailey and Mr. Chavous, now a nationally recognized advocate for school reform, appear to have had other business dealings together, according to emails between the two, obtained by The Times, that describe the development of various presentations in pursuit of government custodial contracts Mr. Bailey was seeking.

In one of the emails, Mr. Chavous is among the recipients addressed by Mr. Bailey as “Team.” Mr. Bailey refused to comment for this report. Mr. Chavous in January told a reporter from The Times asking whether he was interviewed by the D.C. Inspector General in connection with the lottery contract to “get the f*** out of my face,” and threatened, “I’m gonna f****** kick your ass.” He did not respond to requests for comment for this report.

Second procurement

In December 2008, D.C. Attorney General Peter J. Nickles sent Mr. Gray a letter warning of “significant loss of savings to the city and a continued deterioration of the operation of the lottery” if the contract was rebid. But Mr. Gray, who — according to the memo and numerous sources close to Mr. Fenty, had made a futile attempt to persuade the former mayor to either replace Mr. Williams or append a different local partner to the contract — scheduled a council vote and took the lead in voting down the contract award, thus necessitating the rebid.

After a second lottery procurement process, Intralot — bidding alone — won the contract award, and Mr. Bailey later emerged as the local face of Intralot’s lottery venture.

Mr. Williams, essentially replaced by Mr. Bailey, had no complaints about Intralot or Mr. Wilmot.

“I’m sure anything that [Mr. Boothe] wrote in that memo was during the fog of war,” he said.