The District government used hundreds of thousands of dollars from city workers' retirement funds to pay administrative costs for the plans without informing employees, prompting quick demands for transparency from key lawmakers.
Last year, the District received $212,000 from plan manager ING to help cover administrative costs for the plan, which serves about 13,000 city employees, but never told investors of the payout. The Associated Press first reported the arrangement.
A spokesman for Natwar Gandhi, the District's chief financial officer and the official in charge of the retirement plan, said Wednesday that the city had done nothing improper, especially since information about administrative costs was available upon request.
"Contracts are bid. Contracts are won," David Umansky said. "It wasn't any secret."
About 18 percent of the money -- $39,000 -- went to an accounting firm formerly controlled by Jeffrey Thompson, a key figure in the investigation of Mayor Vincent Gray's 2010 campaign, for auditing. Thompson, whose business interests have made him the city's single largest contractor, left the accounting practice earlier this year amid the intensifying federal probe.
Thompson, who has not been charged with any crime, is believed to have bankrolled a $653,800 shadow campaign that helped Gray defeat then-Mayor Adrian Fenty. The federal investigation of that illegal effort has already prompted one person to plead guilty, and court records in that case identified Thompson, though not by name, as "co-conspirator No. 1."
Ward 3 Councilwoman Mary Cheh said the quiet payments raised renewed red flags.
"I'm concerned about all of these ways that people have to manipulate money and to take money from the District of Columbia, either unlawfully or without proper notice, and this is just one more example," Cheh said. "It's like this steady drumbeat of disappointment."
Cheh said that even though it appeared the payouts were legal, she was still angered that employees weren't told.
"Even if it doesn't amount to a lot of money, we should be open and above-board," she said. "I can't even tell you how frustrating this is."
Ward 2 Councilman Jack Evans, who chairs the committee with oversight of Gandhi's office, also called for greater disclosure.
"There always should be transparency," Evans said. "If I have a retirement account, I want to know where my money's being used so I can get the most return for my money and not have administrative expenses eat it up."