Jailed Ex-HUD Official Recounts Severance Deal : Housing: DuBois Gilliam testifies that Pierce OKd the lucrative package despite inquiry. He also alleges fund diversion after pressure from Bush’s staff.

A former top official at the Department of Housing and Urban Development continued Wednesday to rebut former HUD Secretary Samuel R. Pierce Jr.’s claim that he was a “hands-off” manager who was unaware of fraud and abuse within the agency.

DuBois Gilliam, HUD deputy assistant secretary for program policy development and evaluation during the Ronald Reagan Administration, told a House subcommittee that Pierce--although aware Gilliam was under investigation by HUD’s inspector general--nevertheless approved an expensive severance package for him.

Gilliam, who has admitted taking bribes in connection with his work at the agency, also described how he diverted HUD funds to help a Kansas City Latino program after being pressured by staff members in then-Vice President George Bush’s office.

Gilliam is serving an 18-month prison term for manipulating HUD grants.

“I told the secretary the investigation was getting hot and I was going to leave, and that I might need some help,” he told members of the House Government Operations employment and housing subcommittee, which is investigating HUD. “He said he would help me in any way he could.”

Gilliam said he asked Deborah Gore Dean, Pierce’s executive assistant, if she could obtain approval from Pierce to give him control, after he left the agency, over 400 subsidized rental units designated for renovations under the Section 8 moderate rehabilitation program.

The designation he sought would have allowed Gilliam to award the units later to developers of his choice in return for consultant fees. The subcommittee has described the agreement as a kind of “gift certificate.”

“She talked to him and came back and said I could have 250 units,” Gilliam said. “She said the secretary thought that by asking for 400, I was being greedy.”

Gilliam estimated that the resulting consultant fees and tax benefits eventually would have provided him with $1 million to $2 million. “It would have given me a good start after leaving government,” Gilliam said.

Gilliam said that he thought he needed Pierce’s approval because of the large number of units involved.

“I felt if I’d gone in and asked Deborah for 10 or 15 units, she could have made that decision on her own,” he said. “But because of the large number, I knew that type of decision had to be made by the secretary.”

Gilliam said, however, that he never received the units “because the (HUD inspector general’s) investigation got hot.”

After Wednesday’s subcommittee hearing, Paul L. Perito, Pierce’s attorney, issued a statement denying “all allegations of wrongdoing and improper conduct” on the part of his client and attacking Gilliam’s credibility as a witness.

“It is inconceivable that this subcommittee has accepted at face value the unsubstantiated testimony of an admitted cheat and liar who repeatedly violated the public’s trust while at HUD,” Perito said.

Pierce is the subject of a criminal investigation by independent counsel Arlin Adams, a former federal judge, to determine if he illegally favored Republican consultants in awarding multimillion-dollar contracts during his eight years as HUD secretary.

Gilliam, testifying under a grant of immunity from further federal prosecution, was the first former HUD official to contradict Pierce’s sworn testimony that he generally did not involve himself in funding decisions and directed his subordinates to make awards based on merit.

Two other former high-ranking department officials, Dean and Lance H. Wilson, have refused to appear before the subcommittee. Pierce, after his initial appearance before the panel last May, has refused to testify further on advice of his counsel.

Gilliam, who served in the HUD post from June, 1985, to September, 1987, said he helped divert funds for the Kansas City Latino project after being told that unidentified staff members in then-Vice President Bush’s office wanted it financed.

Gilliam said the funds were sought by Hector Barreto, then president of the U.S. Hispanic Chamber of Commerce, to study the feasibility of building a Latino trade center. He said he initially told Barreto the project was ineligible for funding under rules governing grants from the secretary’s discretionary fund for special projects.

Then, Gilliam said, “he (Barreto) told me that he’d had a meeting in the vice president’s office.” A short while later, he said, Dean called him and “indicated to me that she’d received a call from the vice president’s staff and they wanted to get the project funded.”

Gilliam said Barreto again visited him, and “I assured him we’d work it out.”

As a result, he said, he asked a Kansas City assistant city manager to provide the money from the city’s Community Development Block Grant funds, another HUD program. Gilliam said he arranged to replace that money with funds from the discretionary fund.

White House spokesman Marlin Fitzwater, asked Wednesday whether Bush’s office interceded on Barreto’s behalf when Bush was vice president, replied: “I don’t know. I’ve never heard of Hector Barreto.”

Gilliam, whose credibility has been under attack, insisted that he has been telling the truth.

“I’m here under oath,” he said. “I’ve been granted immunity. I have no reason to lie.”

Rep. Tom Lantos (D-San Mateo), chairman of the subcommittee, noting that Gilliam is due for parole and that he will be released from prison shortly, said there was no incentive for Gilliam to perjure himself before the panel and “spend several more years in prison.”