Portland's top administrator, Jack D. Graham, tried to divert nearly $200,000 of water and sewer ratepayer money to the city's general fund last year over the objections of staff, prompting an outside investigation that substantiated allegations of "impropriety" but resulted in no recorded discipline, according to information obtained by The Oregonian.





Jack D. Graham, Portland's chief administrative officer.

Graham's actions, intended to shield his office from cuts during city budgeting in 2012, emerged just months after a group of utility ratepayers

.

Although city leaders knew about the allegations -- brought to them by multiple whistleblowers -- since at least July, Portland did not hire an outside investigator until November. And both mayors

and

kept Graham in his role as chief administrative officer, even after the investigation confirmed the claims against him.

The city has been fighting since May to keep the investigation secret and denied the newspaper's public records request for related documents.

This week,

considered the newspaper's appeal but ruled that the investigation is protected by attorney-client privilege until city officials discuss the findings publicly.

Hales declined three times through a spokesman to comment this week and Adams referred questions to

, who declined to comment.

Graham, who is on vacation since Wednesday, declined Friday through a city spokeswoman to comment on details of this story, which had been sent to him. An attorney representing Graham did not respond to a request for comment.

The Oregonian learned that Graham last year directed a transfer of nearly $200,000 in water and sewer funds from a reserve account to the city's general fund, a move meant to offset cuts demanded by Adams that affected Graham's

.

But the transfer didn't go through because other city officials were told about the plan and corrected the budget. They worried that the transfer of ratepayer money for non-utility uses would violate Portland's charter and add fuel to the utility lawsuit. As a result, the nearly $200,000 went back to the

and

when the City Council formally adopted its 2012-13 budget last June.

That July, Portland provided "whistleblower" status to staff who reported Graham's actions and offered the promise of protection from retaliation, the newspaper has confirmed.

But for reasons that remain unclear, four months passed before the city hired

in November to investigate the complaint

. By hiring an outside attorney, city officials shielded the investigative report from public disclosure, claiming attorney-client privilege.

On Dec. 10, Livny met with Graham for 30 minutes,

. Before year's end, Adams' chief of staff, Amy Ruiz, received confirmation that the allegations against Graham had been substantiated, the newspaper has learned.

Hales' office has been aware of the findings since at least January, when he replaced Adams. On Jan. 22,

, Hales' chief of staff, authored a memo about the investigation, which the city refused to release, again citing attorney-client privilege.

"The information gathered during the course of Ms. Livny's investigation substantiated that Mr. Graham was clearly warned about the impropriety of the Water/BES funds transfer before he directed the transfer," Shibley wrote, according to a copy of the letter reviewed by The Oregonian.

Graham oversees more than 600 employees and earns $186,056 annually, the highest salary a bureau director can receive. According to the city attorney's office, Portland has no record of discipline against Graham related to the investigation.

, the city's human resources director who reports to Graham, said this week that Graham wasn't disciplined because the investigation found no "wrongdoing." But Kanwit said she has not read the investigation, only heard about the findings from the mayor's office and had not seen Shibley's memo.

"I know there was no finding of wrongdoing because, if there was, there would have been action taken," she said.

This marks the

only for the city to

and influence. In recent years, the city investigated parking manager Ellis McCoy, who last year

after the FBI launched its own inquiry.

In 2011, Adams asked Graham to leave an administrative position in the Fire Bureau to

. As chief administrative officer, Graham is the closest thing Portland has to a city manager in its commission form of government. But his tenure hasn't been smooth.

In 2012, Graham recruited an old colleague, Bryant Enge, and hired him as director of the Bureau of Internal Business Services

. Employees later anonymously criticized Enge's management style and Graham responded by hiring the city's former human resources director, Yvonne Deckard, to coach Enge under a

.

Most recently, Graham lost a power struggle when the City Council voted to create an

and remove budget responsibilities from his department.

Concern about the water and sewer money first surfaced as the City Council prepared to formally adopt its budget last June.

Behind the scenes, city staff recognized problems with Graham's plan to tap into reserve funds -- more than $900,000 in all -- without returning nearly $200,000 of that money to the water and sewer bureaus, which originally contributed the funds.

More

The fix: a last minute money shift within the already approved budget. Adams introduced a substitute budget June 21 that included

, although none specifically highlighted concern over water and sewer money.

"We may need to make a series of technical adjustments ... to assure reserves coming out of the reserve funds are going to the appropriate places," Andrew Scott, the city's financial planning manager at the time, said

.

The City Council adopted the altered budget with no questions asked.

In the year since the allegations surfaced, Graham's power has dipped, only to rise again.

, the City Council voted unanimously in December to strip budget responsibilities from the Office of Management and Finance. It's not clear whether the City Council knew about the allegations against Graham, who opposed the move.

, the council said that creating a budget office headed by Scott was in the "public interest" because it would "eliminate the possibility or appearance" that budget officials "might not give the same thorough, impartial and critical examination" to the Office of Management and Finance as other bureaus.

But more recently, Graham has taken on a bigger role over other city finances.

Hales in April eliminated the chief financial officer position, which reported directly to Graham. The

in exchange for his retirement and assurance he would not to sue the city.

Graham has

, including direct oversight of accounting, investments and debt management.

In response,

warned that Hales' goal of long-term cost savings could be

from losing the oversight and expertise provided by the chief financial officer.

But Hales has given Graham a vote of confidence.

When asked in April if he was satisfied with Graham's performance, Hales told The Oregonian: "I am."

-- Brad Schmidt