Centro's Pat DiGiovanni Resigns Amid Ethical Investigation, Again

If you're up on city politics, you've probably heard by now that Centro San Antonio CEO Pat DiGiovanni has resigned as the city investigates an elaborate embezzlement scheme linked to the downtown development nonprofit (that contracts with the city).

Here's the quick and dirty rundown: According to Centro officials who spoke with San Antonio Express-News' Josh Baugh Tuesday, an internal investigation recently uncovered that a former Centro employee had embezzled $175,000 over a two-year period. That unnamed accountant, who was fired in early November, had allegedly fabricated two audits and numerous fake documents to swipe the thousands without being detected.

The employee was supposed to be working with an outside auditing firm Centro had selected to conduct annual audits. A few phone calls, however, revealed that the firm had no contract with Centro and never worked with the employee. It appeared those audits had been authored by the employee alone.

This employee had allegedly created a fake website, email address, letterhead, and identity to cover her tracks, lawyers said. The San Antonio Police Department has begun a criminal investigation into the well-orchestrated scheme. Which makes sense.

What doesn't entirely make sense is why this scandal prompted DiGiovanni to step down so quickly.

The story we're hearing from Centro officials makes it seem like the problem was solved when the accountant was fired. The ex-employee was a bad seed that got the boot — and SAPD will handle the rest. The Centro board of directors released a statement assuring that DiGiovanni had "absolutely nothing to do with the financial indiscretions," but "the board and he both felt his resignation was in the best interest of Centro San Antonio.”

If DiGiovanni had absolutely no connection to the embezzlement scheme, why leave? Now is arguably a moment when Centro needs him the most. Wouldn't the nonprofit want to maintain an unfaltering appearance — led by a resilient leader — to help iron out this kind of PR disaster? But, that's not in the "best interest" of Centro.

As these allegations bubble to the surface, it's hard to ignore DiGiovanni's ethically rocky past.

DiGiovanni came to San Antonio in 2006, recruited by City Manager Sheryl Sculley to join her office as a deputy city manager. A year earlier, DiGiovanni had resigned from his role as city manager for Kalamazoo, Michigan, shortly after firing an African-American staffer who had made allegations of racism in the city department. Community outcry led to DiGiovanni stepping down a week after firing the staffer (who later sued the city of Kalamazoo for claims of institutional racism).

DiGiovanni's next career move was equally bumpy. As deputy city manager, DiGiovanni led San Antonio's 2012 search committee to find the right developers to land San Antonio's largest-ever construction project: tearing down half of the Henry B. Gonzalez Convention Center just to rebuild it a block away. While this was going on, DiGiovanni was meeting privately with David Zachry, a local developer and vice chairman of Centro, to negotiate DiGiovanni's future position as Centro CEO. The week after DiGiovanni sealed the deal with Centro for his new job, his city committee awarded the $325 million convention center project to Zachry Corp — yup, that's David Zachry's firm.

Unsurprisingly, this was a violation of the city's ethics rules. But while the city's Ethics Review Board decided that yes, DiGiovanni had clearly broken these rules, they did nothing to reprimand him — it was the judicial equivalent of a shrug. DiGiovanni said he was "embarrassed," and clambered to the top of Centro's administration. 

From his position as Centro CEO, he's led city "stakeholders" (mostly downtown developers and business owners) in informing major city budgetary decisions. The city's 2017 bond recommendations on which large-scale city projects get public funding were nearly identical to the suggestions the Centro stakeholders made to the city in 2016.

That's why, with a track record like DiGiovanni's, it's hard to take his latest career decision at face value.

In an interview with the Rivard Report (a Centro-sponsored nonprofit that's unapologetically defended DiGiovanni's ethical missteps in the past), DiGiovanni said, "I don't want to be a distraction."

That time may have come and gone. We still don't know where DiGiovanni's headed yet, but with his history in city government and the city's Tricentennial Celebration on the horizon (which has its own ethical wrinkles), maybe it's time San Antonio took a break from DiGiovanni.