Report says city official ignored warnings of improper fund transfer

Report says city official ignored warnings of improper fund transfer »Play Video
Jack Graham.

PORTLAND, Ore. – A top city administrator was clearly warned that his actions regarding fund transfers were improper but he chose to ignore the warnings anyway, a report released Tuesday says.

Early last year then-Mayor Sam Adams ordered Portland city bureaus to trim budgets. To fill gaps, the city's chief administrative officer, Jack Graham, wanted to transfer $200,000 from the Water Bureau and Emergency Services into the city's general fund.
Former chief financial officer, Rich Goward, and Andrew Scott, manager of the Financial Planning Division within the Office of Management and Finance, complained, saying the transfers were improper. But those complaints went to people who answered to Graham and the mayor.

"In this particular circumstance, the HR director worked for the chief administrative officer and the city attorney worked for the mayor," Goward told KATU News on Tuesday.

The city hired a Portland firm, Jackson Lewis – Attorneys at Law, to investigate the allegations made by Goward and Scott against Graham.

In the Dec. 20, 2012 report, Graham told Yael A. Livny, an investigator with the firm, he discounted those warnings saying "They weren't giving me information or any hard stuff. (Their warnings) were soft enough for me to move forward."

During a meeting in May 2012, Graham was asked about the funds transfer. According to the report, he started to say, "No, I think everything is fine ...," stopped, and then said, "Well, we need to go back and double check."

A few weeks later, Graham dropped attempts to transfer the money, and the amended budget no longer contained it.

The city eliminated whistle-blower Goward's position. The mayor's office said it was for budget reasons and not punishment.

Mayor Charlie Hales told Willamette Week, "I hope that we won't need whistle blowers very often," adding, there's been no retribution, and "The other principal whistle blower has been at my side, crafting a budget for the past six months."

Goward said he believes Hales should send whistle-blower complaints straight to the auditor's office.

"Doing nothing is not the right answer," he said. "I think he needs to – because doing nothing gives the impression that it doesn't matter and that people can come forward and nothing will happen. He's gotta be worried about that message."

According to the report, Graham planned to use the "oops" defense and would claim he didn’t know what was going on if anyone ever questioned the money transfer.

"What are they going to do to me? If it comes up, I'll say 'oops,'" he reportedly told Goward sometime before May 9, 2012.

Additionally, Graham sent a letter to the investigator, Livny, saying the allegations against him were motivated by those "who have openly questioned my qualifications and my choice to include racial diversity among our priorities in hiring."

Livny found, however, that "Mr. Graham could not provide any specific evidence to substantiate his belief" that the complaints against him were racially motivated.

Hales has indicated Graham cooperated with the investigation and in the end Graham did nothing he could be disciplined for because he gave up trying to transfer the money.

The mayor's office tried to keep the report from being made public, and it has left Hales having to answer for things that were going on under the former mayor, Sam Adams.

Steve Benham, Staff, contributed.