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Possible De Blasio Replacement Faced Own Ethics Issues

Consultant illicitly paid more than $600,000 during Shaun Donovan’s tenure at HUD

Shaun Donovan
Shaun Donovan / AP
• August 11, 2016 4:59 am

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Liberals concerned by investigations into New York City’s Democratic mayor have suggested replacing him on the ballot with a White House-appointed bureaucrat who has his own ethical baggage.

Some of the left’s top political hands told Politico this week they want New York City mayor Bill de Blasio out next year—and they may have the candidate to do it in senior White House official Shaun Donovan.

But Donovan faces his own challenges, including possible corruption and poor leadership while leading the federal Department of Housing and Urban Development (HUD) before being appointed to direct the Office of Management and Budget (OMB).

The quiet campaign to draft the little-known Donovan against de Blasio has been underway for some time, according to Politico, in part because of ethics investigations into the mayor.

The U.S. Attorney, the Manhattan District Attorney, and other offices have launched probes into de Blasio’s dealings, according to The New York Daily News. He has been accused of violating campaign laws and giving donors special treatment while in office, as well as being involved in a shady real estate deal.

The watchdog group Common Cause said in May that concerns about de Blasio’s practices included the "use of private consultants with business before the city who may be lobbying on their behalf" and "insider information" consultants may have access to, including four who were given special appointments.

Another watchdog, The Foundation for Accountability and Civic Trust, told the Washington Free Beacon earlier this year it suspected de Blasio broke another campaign law by using his official position to pressure Senator Bernie Sanders (I., Vt.) into accepting a debate on the terms offered by eventual Democratic presidential nominee Hillary Clinton.

A third watchdog urged New York to improve its good government and ethics rules in light of the scandals surrounding the mayor.

De Blasio has also run afoul of bigwigs in the Democratic Party. He accused President Barack Obama of being late to decry income inequality, and Politico reports he has a difficult relationship with the Clinton campaign. Between the corruption charges and party infighting, de Blasio’s approval rating is at 42 percent.

Donovan is not without his own baggage, however.

One of former New York City Mayor Michael Bloomberg’s top aides is leading the charge to draft Donovan. Donovan, a New York native, served as commissioner of the New York City Department of Housing Preservation and Development in 2004 under then-Mayor Bloomberg.

His time at HUD was marred by a major corruption investigation and financial mismanagement.

Senator Jeff Sessions (R., Ala.) pointed to a fraud investigation being conducted by the Inspector General of HUD during Donovan’s 2014 Senate hearings to transfer from HUD to OMB. According to the IG report, published on May 30, 2014, a non-staff consultant for HUD was paid $622,369 from Feb. 14, 2011 through Feb. 27, 2014.

The account used to pay for the consultant was used illegally, according to the Inspector General’s report.

Sessions’ opposition to Donovan was also founded upon the then-HUD director’s failure to pass an annual audit for two years in a row. HUD was one of only two federal agencies to fail the annual audits in 2013, the other being the Department of Defense.

In Fiscal Year 2014, Congress approved HUD for $41.52 billion. The agency spent $42.68 billion.

Sessions and Wisconsin Sen. Ron Johnson were two of just 22 Republicans to oppose Donovan. Johnson said shortly after the Senate overwhelmingly approved Donovan for HUD that, when questioned by Johnson about the Social Security Trust Fund, "Shaun Donovan was not … truthful with the American public."

Donovan had dodged key questions from Johnson about Social Security, and made basic factual errors about the retirement program when responding to questions from Sessions.

The financial accounting issues under Donovan persisted even after he left office, according to an Inspector General report released in late 2015. Like his predecessors, Donovan had not implemented many recommendations that would have allowed HUD to modernize its processes and be auditable.

None of Donovan’s challenges at HUD were highlighted by Politico, which noted that the OMB Director could get support from New York Governor Andrew Cuomo. However, the governor is facing his own, much more publicized, scandals. One former aide to Cuomo and a former lobbyist in his office were raided by the FBI earlier this year, and the state’s two top legislators—one Republican, one Democrat—were sent to prison in the last year.

The offices of Donovan and de Blasio did not respond to the Free Beacon’s request for comment about the potential head-to-head race or questions raised about the quality of their leadership.

Published under: Bill de Blasio