A PUBLICATION OF THE INSPECTORS GENERAL OF THE UNITED …

FALL 1996

A PUBLICATION OF THE INSPECTORS GENERAL OF THE UNITED STATES

Editorial BoardAletha L. Brown, Equal Employment Opportunity Commission OIGRaymond J. DeCarli, Department of Transportation OIGStuart C. Gilman, Office of Government EthicsMaryann Grodin, Council of Counsels to the Inspectors GeneralDonald Mancuso, Department of Defense OIGThomas D. Roslewicz, Department of Health and Human Services OIGRobert S. Terjesen, Department of State OIGDavid C. Williams, Social Security Administration OIG, EditorWendy Zenker, Office of Management and Budget

Staff

Editorial ServicesKaren M. Shaffer, Social Security Administration OIGAgapi Doulaveris, Social Security Administration OIG

PrintingFrederick Watson, Department of Defense OIG

Public AffairsRobert S. Terjesen, Department of State OIG

Design & LayoutAutomated Graphic Services, Nuclear Regulatory Commission OIG

Invitation to Contribute ArticlesThe Journal of Public Inquiry is a publication of the Inspectors General of the United States.We are soliciting articles from participating professionals and scholars on topics importantto the the President’s Council on Integrity and Efficiency and the Executive Councilon Integrity and Efficiency. Articles should be approximately 6 to 12 pages, doublespacedand should be submitted to Ms. Agapi Doulaveris, Assistant to the Editor, Office of theInspector General, Social Security Administration, 6401 Security Blvd., Suite 300Baltimore, MD 21235.

Please note that the journal reserves the right to edit submissions. The journal is a publication ofthe United States Government. As such, The Journal of Public Inquiry is not copyrightedand may be reprinted without permission.

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The Journal of Public Inquiry

Tribute to Derek Vander SchaafPreamble Author: David C. WilliamsArticle Author: Bill Price ..........................................................................................................................................................................1

Profile of Executive Council on Integrity and Efficiency (ECIE) Inspectors GeneralAuthor: Aletha L. Brown ...........................................................................................................................................................................3

Dual Reporting: Straddling the Barbed Wire FenceAuthor: Sherman M. Funk .......................................................................................................................................................................13

Not Just Another Day at the Office: The Unique Business of the CIA Inspector GeneralAuthor: Frederick P. Hitz ........................................................................................................................................................................15

Operation Mongoose Matches ‘Em and Catches ‘Em: How Computer Matches Improve DOD’s Internal ControlsAuthor: Alvin Tucker ..............................................................................................................................................................................19

Two Aspirins Are No Cure for Medical Fraud HeadachesAuthor: William T. Merriman ..................................................................................................................................................................25

Lockheed-Egypt: An Investigation of Foreign Corrupt Practices Act ViolationsAuthor: Chris Amato ..............................................................................................................................................................................29

Tailhook: Investigative Challenges and LessonsAuthor: Thomas J. Bonnar ......................................................................................................................................................................31

Nuclear Safety and WhistleblowersAuthor: Leo Norton ................................................................................................................................................................................35

Book Review: The Age of Inspectors GeneralReprinted from sourceCommentary Author: James F. Hoobler, Ph.D. ......................................................................................................................................37

An American Yankee Visits the Pharaoh’s Court: An International Experience in Fighting CorruptionAuthor: Stuart C. Gilman ........................................................................................................................................................................41

Table of Contents

A PUBLICATION OF THE INSPECTORS GENERAL OF THE UNITED STATES

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1


Tribute to Derek Vander Schaafby Bill Price, Executive Assistant to the Inspector General, Department of Defense

(continued on page 2)

Tribute from the Department of Defense (DOD) Inspector General (IG) Eleanor Hill was recently paid to Derek Vander Schaafon the occasion of his retirement. I wanted to include that tribute as part of this Journal edition. The Journal is a fittinglocation inasmuch as Derek was one of the Journal’s most important supporters during the time it moved from an idea toa reality.

I once introduced Derek by saying that I believed he was one of the most important IGs although he had never officially servedin that position. He was the long term Deputy of the DOD Office of Inspector General (OIG) and served as Acting IG for longand highly distinguished periods.

Beyond the massive contribution that he made to the DOD OIG, he was an essential member of the IG community. He was abeacon of integrity and a symbol of aggressive vigilance. In a sea of impressible forces of compromise, he was the classicimmovable object.

At key moments in my time as an IG I called upon him to help me find the path when I could no longer see it. He was a persis-tent moral compass for me and many others.

Although he has retired from Federal service and from the IG community, his presence remains as vivid as when we last spoke,and when I last received his help and advice. Maybe the greatest tribute I can pay him is, that although I will miss his regularcompany, his contribution to the development of myself and many others is complete. His unshakable message has become partof my daily activities and character. On behalf of our entire community, I thank him for that most important legacy.

David C. Williams

Editor

“ … e are honoring a man tonight who, in my view,proves beyond any doubt that public service is

still an honorable, rewarding, and meaningful professionthat can, should and does attract Americans of exceptionalcharacter and ability… Derek Vander Schaaf, in nearlyevery context, has been the heart and soul of this (DoDInspector General) organization for many, many years.”

With those words of tribute from Ms. Eleanor Hill, theInspector General, DoD, Derek J. Vander Schaaf, theDeputy Inspector General since December 1981, retiredMarch 3, 1996. The “bark” of one of the Nation’s top“junkyard dogs” was immediately missed. Beginning withhis service as a commissioned officer in Germany from1963 to 1965, Vander Schaff’s Government career spannedover 30 years. During 1965-1972, he served as a program/budget analyst with the Office of the Secretary of Defense.He went on to serve as a Senior Staff Member for the HouseAppropriations Defense Subcommittee (1972-1981) andthen in the post of Deputy Inspector General.

Being present from the first formative days of the DoDIG, and continuing through its growth and development, heplayed a key role in shaping the structure, policies andculture of an agency with truly awesome responsibilities.

Derek Vander Schaaf, Deputy Inspector General, Departmentof Defense, retired March 3, 1996.

W

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Tribute to Derek Vander Schaaf (continued)

Oversight responsibilities alone encompassed activities ofmore than 15,000 auditors, criminal investigators andinspectors. Vander Schaaf and the IG organization achievedan extraordinary record of accomplishment in protecting theresources of the DoD from fraudulent and wasteful prac-tices. He and the agency he led helped ensure that militarypersonnel received safe, dependable equipment at fair andequitable prices. In achieving these results, Vander Schaafwas widely respected for having the integrity and courage tomake the tough calls.

Since Vander Schaaf’s appointment as Deputy Inspec-tor General in December 1981 until his retirement this year,he helped build an organization with widely renowned auditand investigative capabilities. The results achieved byVander Schaaf and the IG organization are impressive.Prior to 1982, not a single defense contractor has beenconvicted of fraud since World War II. Over the next 14years, IG investigations resulted in criminal convictions ofdozens of major defense contractors, as well as thousands ofindividuals and smaller firms. For the 14 years, criminalfines totaled a whopping $3.4 billion! That’s real dollarsthat have been deposited in the U.S. Treasury.

Equally impressive are the results achieved by VanderSchaaf and the IG organization from hundreds of audits. Asa result of these audits, over $20.8 billion of savings wereachieved either through questioned costs disallowed orfunds put to better use. The savings were agreed to bymanagement and were documented through continuous,detailed follow-up effort.

Mr. Vander Schaaf’s leadership helped achieve signifi-cant results in other areas as well. For example, he was astrong leader and supporter of the Voluntary DisclosureProgram, which has recovered over $302 million throughvoluntary disclosures by contractors. He was also one ofthe original proponents for the Defense Hotline Program

which has led to the recovery of more than $270 million.The DoD Hotline is widely recognized as one of the bestoperations of its type in the Government.

Vander Schaaf often said carrying out IG responsibili-ties was a tough job and certainly not a job where onemakes a lot of friends. For example, in addition to theinvestigations and audits, he was responsible for lookinginto misconduct by senior officials, both civilian andmilitary. These investigations, such as the Tailhook affairwhich looked into allegations of misconduct by Navyofficers, were often political bombshells.

Mr. Vander Schaaf was a frequent witness at keycongressional hearings and a sought-after speaker at theAssociation of Government Accountants, the NationalContract Management Association, the Defense IntegrityInitiatives Best Practices Forum and other forums, wherehis candor and knowledge of Defense issues were prized.

Mr. Vander Schaaf holds a B.A. degree in PoliticalScience and Business Administration, University of SouthDakota; M.A. degree in Public Administration, Universityof Massachusetts; and Honorary Doctor of Law, Universityof South Dakota. Among his many awards, Mr. VanderSchaaf has been twice recognized by the President byreceiving awards for Meritorious Executive and Distin-guished Executive. He is also a four-time recipient of theDefense Department’s highest civilian award, the Distin-guished Civilian Service Award.

Although Derek Vander Schaaf will not be missed bythose who were investigated, put in jail, or otherwise hadtheir careers shortened or affected in some way, those whoworked for him, worked with him or knew his work,realized that Vander Schaaf was tough, objective, fair, andan exceptional leader. He was one of the most widelyknown and respected individuals in the defense, congres-sional and PCIE communities. He will be sorely missed.❏

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Profiles of ECIE Inspectors Generalby Aletha L. Brown, Inspector General, Equal Employment Opportunity Commission


Robert G. Andary - Federal Labor Relations Authority (May 1995)

Prior to his appointment, Mr. Andary served as counsel to the IG and Directorof Investigations for the Office of Inspector General at the Federal Communica-tions Commission from 1992 to 1995. He also served as an attorney advisor inthe Ethics Unit of the Administrative Law Division, Office of General Counsel,U.S. Department of Commerce from 1991 to 1992. Mr. Andary served as anAssistant U.S. Attorney for the District of Columbia, prosecuting Federalcriminal cases in the Superior Court and the U.S. District Court in WashingtonD.C. He began his Federal career as a trial attorney in the Criminal Division ofthe U.S. Department of Justice, where he served in the Public Integrity and theGeneral Crimes Sections for 1974 to 1983. Mr. Andary received his law degreefrom the University of Virginia School of Law in 1974, and a B.A. in AmericanGovernment from Georgetown University in 1969. He is a member of the Barsof Virginia and the District of Columbia, and of the U.S. District Court for theDistrict of Columbia. Mr. Andary resides in Washington, D.C. with his wifeand daughter.

The Executive Council on Integrity and Efficiency (ECIE), established on May 11, 1992, by Executive Order 12805, is com-posed of statutory Inspectors General (IG) appointed by the heads of the entities they serve. The ECIE, like the President’sCouncil on Integrity and Efficiency (PCIE), is charged with promoting integrity and efficiency and detecting and preventingfraud, waste and abuse in Federal programs and operations. These ECIE IGs provide leadership and service to a variety oflarge and small Federal entities.

Robert G. Andary

Jane E. Altenhofen Jane E. Altenhofen - U.S. International Trade Commission (April 1989)

Ms. Altenhofen was Chief of the Program Operations Branch, in the OIG at theFederal Emergency Management Agency, prior to her appointment as IG in1989. She also served for 11 years in various audit positions at the U.S.General Accounting Office, including international assignments with the FarEast Branch, and the Office of Internal Audit in Washington, D.C. She is activein activities of the ECIE, including Co-coordinator of a PCIE/ECIE SeniorForum on Budget Issues in 1992, Management Forum on Strategic Planning in1994, and assisted in planning the joint ECIE/PCIE conference in 1995. Amongother activities, she has served previously on the Professional DevelopmentCommittee and the Standards Subcommittee of the Audit Committee of thePCIE. Ms. Altenhofen has been a member of the Washington Chapter of theInstitute of Internal Auditors since 1986 and is on the Board of Governors. Atthe international level, she is a member of the Government Relations Commit-tee and has also served on the Internal Auditing Standards Board. Ms.Altenhofen received a BBA, cum laude, from Wichita State University in 1973and a MPA from American University in 1982. She is a Certified InternalAuditor, a Certified Fraud Examiner, and a Certified Government FinancialManager.

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Thomas D. Blair - Smithsonian Institution (June 1990)

As IG, Mr. Blair is responsible for all audits and investigations of theInstitution’s programs and operations. Additionally, he is responsible forpreventing and detecting fraud, waste, and abuse in the Institution’s programsand operations. He formerly worked in several auditing positions with theDepartment of Veterans Affairs, the National Aeronautics and Space Adminis-tration, the General Accounting Office, the Department of Defense, the Depart-ment of the Army, and the Federal Deposit Insurance Corporation. Mr. Blairserved as a United States Army officer, which included a tour of duty inVietnam. Mr. Blair was born on April 8, 1946, in Plum Brunch, South Carolina.He earned a Bachelor of Science in Business Administration (Accounting) fromSouth Carolina State College in 1967 and a Master of Business Administration(Finance) from the University of Maryland in 1978. Mr. Blair became aCertified Internal Auditor in 1975 and a Certified Public Accountant in 1977(Maryland). He is a member of the Association of Government Accountantsand the American Institute of Certified Public Accountants. Mr. Blair has beenmarried to Frances V. Veney since 1973. The couple and their two sons (Jasonand Todd) reside in Centreville, Virginia. Mr. Blair currently serves as the ViceChair of the ECIE.

Profiles of ECIE Inspectors General (continued)

Brent L. Bowen

Thomas D. Blair

Brent L. Bowen - Board of Governors of the Federal Reserve System (July 1987)

Mr. Bowen has worked at the Federal Reserve Board since September 1973 andpreviously held the positions of Assistant Controller, Chief of Program Analysisand Budgets, and senior program/budget analyst. His special assignmentsinclude coordinating the downsizing of Federal Reserve Board staff by 9percent. He has received special awards from the Federal Reserve and theFederal Financial Institutions Examination Council. During 1971 and 1972, Mr.Bowen was a project manager and technical staff member at the GeneralResearch Corporation and the Research Analysis Corporation. His assignmentsincluded co-authorship of Handbook For Economic Analysis of ProposedInvestments, and “Student Instructor Load Model”. A graduate of the UnitedStates Air Force Academy (B.S. Engineering Management, 1965) and theUniversity of Alaska (MBA, 1970), he spent the early years of his career inassignments with the U.S. Air Force in scientific and business computermanagement, quality control of satellite mission control complexes, and costand economic analysis. He also served in the Air Force Intelligence Service asa reserve officer, retiring in 1988 as a lieutenant colonel. He was awardedseveral Air Force commendations and meritorious service medals and is also agraduate of the Industrial College of the Armed Forces’ National SecurityManagement program. A native of Utah, Mr. Bowen has lived in Virginia since1970. He is married, has four children, and is active in his community andchurch as a coach, scout leader, “block captain”, and religious advisor.

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Aletha L. Brown - Equal Employment Opportunity Commission (July 1996)

Ms. Brown served as Acting IG from February 6, 1995, until her recent appoint-ment. She joined EEOC in March 1990, as Special Assistant to the IG, becameAssistant Inspector General for Audits and Inspections in June 1991, and wasdesignated as Deputy IG in October 1994. A career Federal Governmentemployee, Ms. Brown worked as an Evaluator with the General AccountingOffice from 1979 through 1990. Her experience with GAO includes reviews ofU.S. defense capability, security and international relations, informationmanagement and technology; and a staff assignment with the House ArmedServices Committee. Ms. Brown has received several outstanding achievementand special commendation awards, including EEOC’s Special Act Award andthe Comptroller General’s Equal Employment Opportunity Award. Ms. Browngraduated from the University of Maryland with a B.S. degree in BusinessManagement, and from Central Michigan University with a M.A. degree inAdministration. She is graduate of OPM’s Women’s Executive LeadershipProgram. She serves on the PCIE Professional Development Committee andEditorial Board of the Journal of Public Inquiry. Ms. Brown volunteers withlocal organizations including Hospice Care, enjoys theater, art, travel andgardening. A native Washingtonian, she resides with her daughter, LaTrecia, insouthwest Washington, D.C.

Aletha L. Brown

Walker H. Feaster III

John E. Higgins, Jr.

Walker H. Feaster III - Federal Communications Commission (March 1996)

Mr. Feaster brings more than 20 years of experience in program analysis andevaluation to his position. His Federal career spans almost 30 years, includingexperience as a Naval Officer and civilian employee of the U.S. Navy, andvarious management positions at the Federal Communications Commission.A native of Philadelphia, he received his undergraduate degree in BusinessAdministration from Drexel University. He has also earned a Master of Sciencein Government from Southern Illinois University and an MBA from AmericanUniversity. As a resident of Arlington, Virginia, Mr. Feaster served as aCommissioner on the Transportation Commission and the Sports Commission.He and his wife, Susan, have a daughter, Nicole.

John E. Higgins, Jr. - National Labor Relations Board (July 1994)

John Higgins is the Acting IG at the National Labor Relations Board. He hasbeen with the NLRB since 1964 serving in numerous capacities includingDeputy General Counsel, Board Member, and Solicitor. A graduate of BostonCollege (AB), Boston University (JD) and Cornell University (MS collectivebargaining), Mr. Higgins is Public Co-Chair on the ABA Committee on Devel-oping Labor Law and Vice President - Professional Development of theAssociation of Labor Relations Agencies. He is the author of two texts onNLRB practice and teaches two courses at Catholic University School of Law.Mr. Higgins is married, the father of three, and is active in Boy Scouts. He andhis family reside in Chevy Chase, Maryland.


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Kenneth J. Hunter - U.S. Postal Service (August 1992)

Mr. Hunter is a career postal employee with extensive and varied postal experi-ence. He began as a letter carrier in Fort Collins, Colorado in 1964. He became apostal inspector in 1969 and served in a number of assignments in Chicago until1974 when he was transferred to a management position in the Inspection Serviceat headquarters in Washington, D.C. In 1979 he was named director of theMinneapolis Postal Data Center. While in Minneapolis, Mr. Hunter was veryactive in charitable organizations, and served as chairman of the Twin CitiesFederal Executive Board. In 1988, he was appointed Associate PostmasterGeneral. Mr. Hunter attended the University of Colorado and Colorado StateUniversity where he received a B.S. degree in mathematics. He completed theSenior Executive Program at Stanford University in 1981. He and his wife live inVienna, Virginia, and are the parents of five sons and one daughter.

Kenneth J. Hunter

Edward Johns

Edward Kelley

Tony Kominoth

Edward Johns - National Endowment for the Arts (March 1996)

Mr. Johns began his government career as a computer programmer and systemsanalyst with the Treasury Department from 1966 to 1982. Changing job hats tomatch new credentials, Mr. Johns served the Department’s OIG as an auditor(CPA) and computer audit specialist (CISA) until 1988, when he joined theNational Endowment for the Arts Audit Division. He was appointed as IG inMarch 1996. A native of Hot Springs, Arkansas, Mr. Johns has a B.S. degreefrom the University of Arkansas and is married with three sons.

Edward Kelley - Federal Housing Finance Board (April 1995)

Mr. Kelley brings over 23 years of experience in managing and conductingaudits and investigations in the Federal Government. Prior to being selected forthe IG position, he served as the Deputy IG at the Federal Housing FinanceBoard; Assistant Inspector General for Special Audits and Investigations at theFederal Home Loan Bank Board; Audit Manager at the Federal Home LoanBank Board; and an auditor at the General Accounting Office, where he beganhis Federal career. Throughout his career, Mr. Kelley has been the recipient ofnumerous awards, including the General Accounting Office’s MeritoriousService Award. Mr. Kelley is a graduate of Alabama State University. He isactive in church and community programs. His wife is an auditor and they havetwo daughters and a son.

Tony Kominoth - Federal Maritime Commission (1989)

Mr. Kominoth first came to the Commission as a Transportation Analyst in1968. After graduating from law school, he worked as an Attorney/Advisor inthe Office of the General Counsel. From 1978 through 1986 he was the DeputyDirector of the Commission’s Bureau of Investigations where his responsibili-ties included managing the Commission’s investigative program and exercisingsupervisory control over the Agency’s various field offices. From 1986 to 1989he held the position of Assistant Secretary. During part of this period he alsoperformed the duties of a non-statutory IG. Mr. Kominoth was born inWellington, New Zealand and moved to the United States in the early sixties.He attended the University of Maryland and graduated in 1968 with a B.S.degree from the College of Business and Public Administration, with a heavyemphasis on transportation issues. He subsequently attended the University ofBaltimore School of Law and received his J.D. degree in 1974.


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Lester J. Latney - Corporation for Public Broadcasting (April 1989)

Mr. Latney joined the Corporation for Public Broadcasting’s Office of InternalAudit in 1976, as a senior auditor. He progressed through the ranks and wasappointed CPB’s first IG in 1989. Prior to joining CPB, Mr. Latney wasemployed with the accounting firm of Touche Ross & Company. He receivedhis bachelor’s degree in accounting from Virginia State University and is alicensed CPA in Maryland. He is an avid golfer who also enjoys readingmystery novels. Mr. Latney resides in Hyattsville, Maryland with his wife.

Lester J. Latney

A. Roy Lavik

Charles C. Maddox

Lynne A. McFarland

A. Roy Lavik - Commodity Futures Trading Commission (1989)

Mr. Lavik has over 25 years of Federal experience, primarily in the area of anti-trust and regulatory law. He principally has held evaluation review positions atthe Federal Trade Commission and the Federal Reserve Board with some experi-ence at litigation. He prefers the former. Additionally, he has spent time inprivate practice doing corporate counseling. A Knoxville, Tennessee native, Mr.Lavik received undergraduate, law school, and graduate business school degreesfrom the University of Chicago. He is married and his daughter, eschewing herfather’s suspect subjects, is studying Materials Science in graduate school.

Charles C. Maddox - U.S. Peace Corps (January 1996)

Mr. Maddox began his law enforcement career as a military policeman with theUnited States Air Force in 1966, which included a 12-month tour of duty inVietnam. Four years later, he was appointed as a Special Agent with the UnitedStates Secret Service, Washington Field Office. He later was assigned to theWhite House Presidential Protection Detail under Presidents Nixon, Ford andCarter, and was also assigned under President Reagan and Vice-President Bushduring the 1980 presidential campaign. After leaving the Secret Service in1981, he joined the OIG of the Department of Health and Human Services(DHHS). Prior to becoming the Peace Corps IG, Mr. Maddox held severalpositions within DHHS Office of Inspector General which included Director ofSecurity and Protective Division; Chief of Inspectors, Criminal InvestigativeDivision; and Regional Inspector General for the Washington Field Office. Mr.Maddox received a Bachelor of Arts degree in sociology from Virginia UnionUniversity, a Master of Arts degree in criminal justice from George WashingtonUniversity, and a law degree from Northern Virginia Law School.

Lynne A. McFarland - Federal Election Commission (February 1990)

Ms. McFarland has been a FEC employee since 1976, serving in various partsof the agency. She began her career in the Reports Analysis Division, reviewingstatutory required reports of candidates for President, House, and Senate, alongwith political action committee filings. Prior to her selection as IG, she was aProgram Analyst in the Office of Planning and Management. In that capacity,she aided in the preparation and monitoring of Commission budgets andmanagement plans. She was also responsible for the evolution of the agency’sManagement Information System from a manual to a fully automated system.Ms. McFarland, a Maryland native, holds a B.S. degree in Sociology. Shecurrently resides in Alexandria, Virginia with her husband and two sons, Ryanand Kyle.


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Wayne Robert Poll - Pension Benefit Guaranty Corporation (April 1989)

Mr. Poll brings to the Pension Benefit Guaranty Corporation (PBGC) over 22years of audit and managerial experience in accounting and general finance.PBGC, a self-financing government corporation, provides insurance for definedbenefit pension plans and administers two insurance programs covering morethan 42 million workers. From 1979 until his appointment as IG by the Secre-tary of Labor, Mr. Poll was senior auditor and Director of Internal Audit ofPBGC. Previously, Mr. Poll worked for the United States General AccountingOffice for 5 years. Mr. Poll received a B.B.A. and M.B.A. from GeorgeWashington University and is a Certified Information Systems Auditor. Mr.Poll served 2 years in the United States Army as a member of the Old Guard,and was assigned to the Tomb of the Unknown Soldier.

Wayne Robert Poll

George T. Prosser

Edouard Quatrevaux


George T. Prosser - Tennessee Valley Authority Board (1994)

Mr. Prosser joined TVA in 1986 as an Investigative Department Manager inOIG. He was subsequently promoted to Assistant Inspector General forInvestigations with responsibility for planning, staffing, and directing adminis-trative and criminal investigations. In 1991, Mr. Prosser received the Paul R.Boucher Public Service Award as the outstanding OIG employee in the nation.Before joining TVA, Prosser was a 15-year veteran of the FBI where he servedin St. Louis, Newark, Chattanooga, and Washington, D.C. While at the FBI, hewas on loan for 4 years to Congress as an investigator for the U.S. House ofRepresentatives, Committee on Appropriations. His last FBI assignment was inthe Terrorism Section at FBI Headquarters. He was responsible for the FBIcounter-terrorism planning and nuclear counter-terrorism program and was aliaison with the Armed Forces, Department of Energy, Nuclear RegulatoryCommission, and Intelligence Community. Mr. Prosser was raised in Gallatin,Tennessee, and graduated from the University of Tennessee with a B.S. inaccounting. He was a U.S. Army Artillery Officer and served in the U.S.,Panama, and Vietnam. He received the Purple Heart and the Bronze Star forheroism. He and his wife, Nancy, have two sons, John and Tom, and live inKnoxville, Tennessee. He is a member of the Laurel Church of Christ.

Edouard Quatrevaux - Legal Services Corporation (September 1991)

Mr. Quatrevaux served 20 years in the U.S. Army, including two assignments asa company commander in Vietnam. While serving on the Army General Staff,he conceived and directed unit productivity studies that resulted in order-of-magnitude increases in the capability of Army logistical units. His finalassignment was as IG of the Defense Department’s Traffic ManagementCommand. In 1983, he received the annual Army Operations Research/SystemsAnalysis Award, and has authored several articles for professional journals. Mr.Quatrevaux received a bachelor’s degree from the University of New Orleans,and a M.B.A. from Tulane University.

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Kelly A. Sisario - National Archives and Records Administration (March 1996)

Ms. Sisario brings more than 12 years of experience in auditing at the State andlocal government level to her position. After graduating from Florida StateUniversity with a bachelor’s degree in accounting, she worked for a publicaccounting firm in Tallahassee, Fla. Ms. Sisario began her government careerwith the State of Florida, first as an Internal Auditor with the Department ofGeneral Services, then with the Auditor General and finally with Department ofEnvironmental Protection where she served as IG for 7 years. She began herFederal career 2 years ago by joining the Environmental Protection Agency, firstin their Office of Administration and Resource Management and then in theOffice of General Counsel. As an active member of the Institute of InternalAuditors (IIA), she served on the project management team for the IIA researchreport entitled “The Role of the Internal Auditor in Environmental Issues.”Ms. Sisario is an avid equestrian and enjoys biking, hiking and scuba diving.

Kelly A. Sisario

Lewis L. Small

Hubert N.Sparks


Lewis L. Small - United States Government Printing Office (June 1990)

After receiving his LLB from the University of Baltimore, Mr. Small, a nativeof Washington, D.C., entered into a career with the Federal Bureau of Investiga-tion (FBI) which spanned 21 years. Mr. Small served in Knoxville, Tennesseeand Newark, New Jersey, before returning to Washington, D.C. where he servedat Headquarters and the Washington Field Office. Mr. Small investigated andthen directed domestic terrorism matters until 1984 when he was assigned asLiaison to the White House, where he was responsible for handling specialinquiries relating to Presidential appointees. Mr. Small was also a CertifiedPolice Instructor for the FBI and a guest lecturer at the FBI Academy, Quantico,Virginia on terrorism matters.

Hubert N. Sparks - Appalachian Regional Commission (October 1989)

Mr. Sparks has 36 years of Government service, including 33 years with civilianOffice of Inspectors General. Prior to his appointment as ARC’s first IG, hespent 7 years at the OIG, Department of Veterans Affairs, where positionsincluded Regional Manager; Division Director; and Director, Policy andProcedures. During his 20 years with the Department of Agriculture OIG, heheld a wide variety of positions including Director, Foreign Operations Staff,responsible for worldwide audits and investigations of USDA programs. FromMay 1992 to October 1995, Mr. Sparks was the Vice Chair of the ExecutiveCouncil on Integrity and Efficiency. He is a member of the PCIE AuditCommittee. A native of Brooklyn, NewYork, Mr. Sparks received a B.B.A.from the City College of NewYork in 1959. He is a Certified Internal Auditor,a Certified Fraud Examiner, and a Certified Government Financial Manager.He is a member of the Association of Government Accountants, Institute ofInternal Auditors, Association of Certified Fraud Examiners, and Intergovern-mental Audit Forums. Prior to starting his OIG career in 1963, he served 2years in the U.S. Army and spent parts of 3 years on fire control activities withthe U.S. Forest Service in California.

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Thomas F. Stein - Consumer Product Safety Commission (1990)

Mr. Stein served as acting IG of CPSC prior to his appointment in 1990. Otherpositions at the Commission include both Director and Deputy Director ofInternal Audit from 1979 through 1988; and Deputy Director, Office of Man-agement Information from 1977 to 1979. Mr. Stein’s experience also includestours at the Department of Commerce as Deputy Director, Division of Planningand Evaluation (1973 - 1977); Economist (1970 - 1973); and ManagementIntern, (1967 -1970). He has a B.A. degree in business administration fromRutgers University and a MBA in management and finance from PennsylvaniaState University. Mr. Stein served in the United States Navy and the UnitedStates Naval Reserve.

H. Frank Thomas

Thomas F. Stein

Eldon W. Stoehr Eldon W. Stoehr - Farm Credit Administration (January 1989)

Mr. Stoehr served in FCA’s Office of Examination from September 1981 untilhis appointment as the agency’s first IG. He was originally a regional directorand also served as the agency’s chief examiner. Before joining FCA, Mr. Stoehrserved as the first Legislative Auditor for the State of Minnesota from 1977through 1981 and prior to that was the Auditor General of South Dakota for8 years. Mr. Stoehr was the charter president of the National State AuditorsAssociation, a former Chairman of the State Auditor Coordinating Committeeand served on South Dakota’s Board of Accountancy for 8 years. He served asVice-chairman of the Mountain and Plains Regional Intergovernmental AuditForum and the Midwest Regional Intergovernmental Audit Forum as well as onthe executive committee of the National Intergovernmental Auditor Forum. Healso held many leadership positions on committees of the National Associationof State Auditors, Comptrollers and Treasurers and the National Council ofState Legislatures.

H. Frank Thomas - National Credit Union Administration (September 1992)

Mr. Thomas brings more than 20 years Federal auditing experience with NCUAto his position. He began his career with NCUA in 1972 as a credit unionexaminer in Atlanta, Georgia, with later transfers to Columbia, South Carolinaand Greensboro, North Carolina. Upon returning to the Atlanta regional office,he held various supervisory positions before being named Deputy RegionalDirector in 1987. In 1990, he transferred to the Austin, Texas regional officeas Deputy Regional Director. Mr. Thomas received his bachelor’s degree inbanking and finance from the University of Georgia. He and his wife havea daughter.


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Fred E. Weiderhold, Jr. - National Railroad Passenger Corporation /Amtrak(April 1989)

Mr. Weiderhold brings more than 20 years in management experience to the IGcommunity. Upon graduation from the United States Military Academy, he wasan artillery officer in the United States Army assigned to the 18th AirborneCorps. Upon leaving the military, he began work at Amtrak in manpowerplanning and served as one of the company’s first EEO representatives. Insubsequent assignments, he served in the law department as a claims adminis-trator, and he represented the company in adjudicating policy and regulatoryoversight issues with the Interstate Commerce Commission. He then served ingovernment affairs as director of communications for 5 years, where he assistedin State and Federal liaison. Following a series of Congressional oversighthearings on labor-management relations, he became Amtrak’s first SpecialAssistant to the Chairman for Employee Relations, conducting special investi-gations as employee ombudsman. Mr. Weiderhold left Amtrak and wasemployed with Pragma Consulting, a French management consulting concern,as Executive Vice President for United States operations. In 1989, he was askedby Amtrak’s Chairman to return to Amtrak to establish its first OIG. He hasbeen a guest lecturer on management and quality issues for the United StatesCourts and Federal Judicial Center.

Fred E.Weiderhold, Jr.

Frederick J. Zirkel Frederick J. Zirkel - Federal Trade Commission (June 1989)

Prior to his appointment, Mr. Zirkel served for 7 years as the FTC’s Director ofBudget and Finance. He came to FTC from the Civil Aeronautics Board, wherehe served as Deputy Comptroller from l976 to l982. Before joining the Federalservice, he worked as Vice President of MACRO Systems, Inc., a systemsconsulting firm. Mr. Zirkel also worked for 5 years at a national accounting firmas a member of their auditing/tax staff. He received a B.S. in Accounting andFinance from the University of Kentucky, is a Certified Public Accountant, andhas done graduate studies at George Washington University.


12


Photographs were not provided for the following:

Sheldon L. Bernstein - National Endowment for the Humanities (April 1989)

Mr. Bernstein joined the Endowment as an auditor and served as Director ofAudit from 1981 to 1989. Prior to his work at the Endowment, he was auditmanager of a New York CPA firm. Mr. Bernstein is a CPA in the States of NewYork and Maryland, and is a member of the Association of GovernmentAccountants and the American Institute of CPAs. He holds a BBA from PaceUniversity and has completed graduate work at New York University and LongIsland University. He and his wife have two daughters and a son.

Linda G. Sundro - National Science Foundation (May 1989)

Prior to her selection as the National Science Foundation’s first IG, Ms. Sundrowas Deputy IG at the Department of Commerce. Before joining the OIGcommunity, she worked as an attorney in the Office of General Counsel at theCommerce Department during the Carter Administration, and for the securitiesindustry.

Walter J. Stachnik - Securities and Exchange Commission (March 1989)

Mr. Stachnik joined the Commission in 1979. He previously held positions asSenior Management Analyst and Director of Internal Audit, working onprogram, administrative, and EDP matters. He also served on an extendeddetail to the Central Intelligence Agency. Prior to joining the Commission, heworked for the U.S. General Accounting Office, the accounting firm of Coopers& Lybrand, and the Mayor’s Office of the City of Chicago. He also worked asan operating engineer in the construction industry. Mr. Stachnik received aBachelor of Arts degree in interdisciplinary studies from the University ofWisconsin in 1971 and a Master’s in Public Policy and Administration from theRobert M. LaFollette Institute of Public Affairs in Madison, Wisconsin in 1972.He is certified as a Public Accountant (State of Illinois) and Internal Auditor(Institute of Internal Auditors).

Peter A. Liehr - Panama Canal Commission (1989)

Mr. Liehr was born in Gruenberg, Germany in 1941 and emigrated to the UnitedStates in 1956. He graduated from California State University at Los Angeleswith a B.S. degree in accounting. After working a short time with TravelersInsurance Company, he accepted an audit position with the U.S. Army AuditAgency in 1966. He held a variety of audit and supervisory positions with theArmy Audit Agency in Texas, Germany and Colorado. After service with theArmy Audit Agency, Mr. Liehr accepted a position with the U.S. Army StrategicCommunications Command in the Canal Zone. He became Chief of InternalReview and established an internal audit function for the Command. In 1974,Mr. Liehr transferred to a position with the Office of General Auditor of thePanama Canal Company, which subsequently became the Panama CanalCommission. He became the Assistant General Auditor in 1977 and assisted inthe transfer of commercial and government functions to the Government ofPanama and the U.S. Army in 1979. Mr. Liehr also attended the MilitaryComptrollership Course and is a Certified Fraud Examiner. During his careerwith the Army agencies and the Panama Canal Commission, he has been therecipient of various awards for distinguished service. He is married to EvaLiehr from the Republic of Panama. They have a son and daughter.❏


13


Sherman M. Funk, FormerInspector General, Departmentof State and Arms Control andDisarmament Agency

It was in the spring of 1982, Ibelieve, when the Education

Committee of the President’sCouncil on Integrity and Efficiency

launched a series of workshops where Inspectors Generaland staff could meet to kick around subjects of mutualinterest. A number of IGs remained from the CarterAdministration, but most of us were relatively unbloodiedReagan appointees, still negotiating a perilous learningcurve. We welcomed all the help we could get, even--perhaps especially--from colleagues in the same boat,climbing the same curve.

I volunteered to host the first workshop, and was askedto come up with a meaty topic. The host part was easy; Ihad a superb staff which could handle the requisite logisticswithout raising a sweat. The topic part was even easier.After all, there was but one subject which drew all of theIGs together in shared uncertainty, frustration, puzzlement,satisfaction, and terror: dual reporting. And so, I invitedthe IG community to attend and participate in the initialPCIE workshop, which was to focus on dual reporting.There is an unwritten rule in Washington that workshopsmust have a catchy title. I labeled mine, “Straddling theBarbed Wire Fence.”

It was already clear to us by then that very little of P.L.95-452, the Inspector General Act of 1978, generated asmuch concern, and triggered as many raw emotions amongthe IGs and in their agencies than the provisions of the Actwhich collectively mandate the dual reporting responsibili-ties of the IGs. The relevant language in the Act is simple.Briefly, it says only that an IG (1) reports directly to theagency head and deputy; (2) must keep the Congress “fullyinformed and currently informed;” (3) must report twiceeach year to the Congress on major problems, abuses, anddeficiencies identified during the previous six months,together with the recommendations for corrective action;and finally, (4) may send special reports to the Congressabout particularly serious or flagrant problems, and theagency head must pass them on to the Congress within

Dual Reporting: “Straddling theBarbed Wire Fence”by Sherman M. Funk, Former Inspector General,Department of State and Arms Control and Disarmament Agency

seven days. (This last is known as the “Seven Day Letter.”)Agency heads may comment on the semiannual and specialletters but may not change them. It all sounds simple. Thetrouble is that, in practice, compliance with these mandatesis not at all simple.

Some of the problem is definitional. What, for ex-ample, does the law mean when it instructs the IGs to keepthe Congress “fully and currently informed?” Can this besatisfied by the semiannual reports alone? Not if “cur-rently” is given a literal interpretation; the semiannualsseldom reach the Hill less than 3 months after the mostrecent events they relate. Perhaps the Seven Day Letters arethe answer; by their very nature, they describe a currentdeficiency worthy of congressional attention. However, fewIGs have used this mechanism and, when they did, theresults (to put it kindly) were mixed. Seven Day Letters, inany case, are a form of last resort, to be sent only whenjawboning an agency head has proved futile. The abidingfear of any IG who considers such a letter is that, after theagency head forwards it to the Hill, it will vanish into avoid, a declaration of war to which nobody responds. Suchan outcome would, forever after, undercut the perceivedstrength of that IG. A Seven Day Letter, therefore, is bestused not as a document but as a deterrent, as an implicitthreat, as a hole card which, if called, may elicit a promptreaction from the Hill.

The most effective IG effort on the congressional sideof dual reporting is testimony in hearings. Properly done,this indeed provides full and current information to the Hill.It also provides a painful test of candor, knowledge ofprogram operations, and courage. Which IG has not sat at atable next to an Assistant Secretary or Assistant Administra-tor and, after that official gives a glowing picture of aparticular program or operation, has had to follow with ablunt assessment of the actuality, as determined by an audit,inspection, and/or investigation? And the IG is alwaysexcruciatingly aware, as this harsh and contradictoryportrait is presented, that while the Members and Commit-tee staffers will return to their offices after the hearing andaddress new subjects, he or she will have to go back to theagency with that same official and continue working closelyon the same program.

It is not all surprising that some agency heads take adim view of their IGs maintaining direct relations with the


14


Dual Reporting (continued)

Hill. Inevitably, they suspect that the IGs, anxious to shoreup these relations, will “fink” to the Congress aboutsensitive matters which the agency heads would muchprefer be confined within their own shops, or even withintheir front offices. This explains why many agency headsare reluctant to have their IGs participate in regular staffmeetings, or otherwise be routinely privy to current sensi-tive issues. The excuse generally given is that the IG shouldnot be involved in “policy deliberations;” the real reason isa fear that the IG may talk too much on the Hill.

(I relearned this the hard way when I moved to State in1987, as the department’s first independent IG. Perhapsbecause foreign affairs are not meat and drink to mostvoters and Members of Congress, State traditionally has ahard time on the Hill, so the department is therefore veryantsy about its congressional relations. Shortly after myarrival, George Shultz asked me to explain my role andproposed modus operandi at one of our regular meetings ofthe senior staff. The latter, aware that the secretary hadvehemently opposed the legislation which created my newjob, and acutely aware of rumors that some IGs were loosecannons on the Hill, heard me out in stony-faced quiet.When I finished, someone asked me to discuss in moredetail how I planned to work with the Congress. I did so,and returned to my seat amid a silence which had becometangibly hostile. Then Mr. Shultz, who is not a demonstra-tive person, stood up, walked over to me, placed a hand onmy shoulder and told the group that he regarded me as a fullworking member of his management team, that I had hiscomplete support and trust, and that he firmly expectedeveryone in the room to be no less supportive and trustful.Instantly, the atmosphere changed and I knew that my jobwould be “do-able.”)

Ironically, some in Congress tend to assume that theIGs are co-opted by their agency heads, and thus are not areliable source of objective information.1 This attitude isexacerbated by IGs who, for whatever reason (and it usuallyis inertia rather than a conscious desire to remain aloof fromthe Hill), choose not to seek occasional meetings with theCommittee/Subcommittee chairs, Ranking MinorityMembers, and senior Hill staffers. If they are not a per-ceived presence on the Hill, the assumption will be,however unfairly, that they are neither independentnor aggressive.

Some IGs may try to attract congressional attention byoverly elaborate and/or self-aggrandizing Semiannualreports. This is a lose/lose game. If their reports areactually read on the Hill, itself improbable, the attentionthey attract almost certainly will be negative, compoundedby equally or greater negative reactions in their ownagencies.

An unspoken but important player in the relationsbetween the IGs and Congress, and to a lesser degreebetween the IGs and their agencies is the Office of Manage-ment and Budget (OMB). Here too, the IGs must walk anarrow line, careful to avoid trespassing on OMB’s budget-ary responsibilities but just as careful to avoid any implica-tion that they take their marching orders from OMBregarding their statutory mission. As Presidential appoin-tees, the IGs must support the President’s budget. Period.The time to fight what they may regard as an unjustifiablyrestrictive budget is first within their own agencies, up tothe agency head if necessary, and then at their OMBhearing. If they fail in both places, some IGs believe thatdual reporting sanctions taking their fight to the Hill….initially via furtive pleas to Appropriations staffers or later,making it clear during Appropriations hearings (if by nomore than figurative winks and nods) that they don’t reallymean what they are presenting. This demeans them. If IGsaccept the President’s commission hanging on their walls,they accept the President’s budget. Again, period.

On the other hand, if IGs are asked to testify at, say, aprogram hearing not part of the appropriations process, theymust be committed to honest brokerage. Their testimony,including responses to questions, must reflect their indepen-dent status, even if they attack a program which they knowis an Administration favorite. That is what the IG Act, anddual reporting, are all about. That is why the wire is barbed.

IGs have one of the best jobs in the Federal govern-ment. Certainly, it is one of the toughest and most challeng-ing. And no challenge is fraught with more difficulty thanmanaging their relationship with agency heads and theCongress. If this is done with sufficient common sense, anunderstanding of the relative priorities of each, a healthydose of good humor, unremitting homework, support byprofessionally competent staff and, above all, solid andreflexive integrity, the barbed wire may cut occasionally butit won’t disable. ❏

1 Some IGs find this view not unwelcome, because Memberswho feel that way are unlikely to flood them with request forindependent reviews, a matter of growing concern to OIGswhose work plans are already increasingly constricted bylegislated audits, a downsized staff, and tighter budgets.

15



Frederick P. Hitz, Inspector General,Central Intelligence Agency

Not Just Another Day at the Office: The UniqueBusiness of the CIA Inspector Generalby Frederick P. Hitz, Inspector General, Central Intelligence Agency

T he Central Intelligence Agency(CIA ) Inspector General (IG)

has the same general statutorymission to detect fraud, waste, and

abuse as do other IGs. However, the job does involve somerather unique investigative issues and problems. Other IGsalso conduct investigations to determine what went wrongin a particular departmental program or operation. How-ever, the nature of CIA intelligence activities, their nationalsecurity context and complexity, and the large measure ofjudgment required of the officers and employees whoengage in those activities pose particular challenges to ourefforts to review and evaluate them.

In an effort to illustrate these challenges, this articleprovides unclassified summaries of two of the several majorinvestigations we have conducted since 1994. The two wehave selected concern the Ames espionage case and Agencyactivities in Guatemala. These summaries discuss thespecial questions that had to be addressed and the efforts wemade to ensure the facts were correct.

Much of what follows may appear to be no differentfrom the difficulties that IGs routinely encounter in theirinvestigative work. However, it must all be considered inlight of the additional burdens we face that are imposed bythe requirements of the national security classificationsystem, the statutory obligations imposed upon the CIA IGto protect intelligence sources and methods, and thepeculiarities of a clandestine espionage organization withfar-flung outposts.

Investigation of the AmesEspionage Case

On February 21, 1994, Aldrich H. Ames, a 30-yearemployee of the CIA, and his Colombian-born wife,Rosario, were arrested and charged with espionage onbehalf of the Soviet intelligence services. Ames’s espionageactivities directly resulted in the compromise and death of alarge number of CIA intelligence sources, in 1985 and 1986,

and in the compromise of a wide variety of CIA and otherintelligence operations.

Origins of OIG Review--Almost immediately after theAmeses’ arrest, serious concerns were voiced by the SenateSelect Committee on Intelligence (SSCI) and the HousePermanent Select Committee on Intelligence (HPSCI) aboutthe length and nature of the CIA’s counterintelligence (CI)investigation of Ames and the period of time that heremained undetected. A February 23, 1994, letter from theChairman and Vice Chairman of the SSCI asked that weaddress what happened and whether changes in existingsecurity procedures at the Agency were needed. OnMarch 10, 1994, Director of Central Intelligence (DCI), R.James Woolsey, advised senior Agency management that hehad asked me to undertake a “three-phase investigation”into issues raised by the Ames case and instructed Agencycomponents to cooperate fully with our investigation.

Scope of Review and Process--We formed a team ofsix investigators and support personnel, referred to as the IGCI Team, to review the Ames case. By the time of theAmeses’ plea agreement in late April, the IG CI Team hadbeen expanded to include 11 investigators, 2 intelligenceassistants, and 1 secretary. All Agency components weretasked to provide copies of all documents and materialspertinent to Ames and his wife; communications with theDepartment of Justice (DoJ), the Federal Bureau of Investi-gation (FBI), and other Federal agencies regarding the CIinvestigation of Ames; coordination between the Agencyand the FBI in the United States and abroad, includingmaterials relating to the FBI’s allegations of lack of coop-eration by the Agency in CI investigations; and internalcorrespondence between the Agency’s CI Center (CIC)(which had been primarily responsible for the CI investiga-tion) and all other components regarding the CI investiga-tion that led to the identification of Ames.

The documents that were collected were reviewed,indexed, recorded, and organized by subject and issue. FBIand Agency CIC interview reports, as well as IG interviewreports, and the transcripts of FBI, CIC, Damage Assess-ment Team (which was reviewing the overall damagecaused by Ames), and IG CI Team debriefings of Ames andhis wife also were collected, catalogued and distributed.Many documents that were collected, and others that wereproduced by the IG CI Team, were scanned electronically

16


Not Just Another Day at the Office (continued)

into a computer data base to facilitate their retrieval andcross-referencing in the course of our research. An exten-sive library of relevant documents was created and main-tained by the research assistants who worked with the team.By the conclusion of the investigation, these documentswere organized into over 85 three-inch volumes and foursafe drawers, and consisted of approximately 45,000 pagesof material.

The IG CI Team also was supplemented with specialistsas necessary. A retired senior Agency operations officerwas engaged as an independent contractor to preparecomprehensive summaries of the multiple CI and securityreports and studies that had been completed by the Execu-tive branch and Congress in the previous 10 years. Apsychologist from the Agency’s medical component wasdetailed to the IG on a full-time basis and given access to allrelevant materials for purposes of preparing a completepsychological profile of Ames.

More than 300 persons were interviewed at least once.Many individuals were interviewed in more than onesession, some three or four, and a few five or more times.The average individual interview session was 3 hours inlength and the longest interviews, extending over four tofive sessions, consumed over 20 hours in total duration. Allcurrent Agency employees who were interviewed wereadministered an oath or were asked to produce swornstatements in cable or memorandum form.

Persons interviewed included present and former DCIsand Deputy DCIs, other senior CIA management officials,senior FBI officials and a number of FBI Special Agents,and DoJ representatives. Members of the IG CI Teamtraveled overseas and domestically to interview present andformer Agency personnel. Throughout late June, July, andearly August 1994, members of the IG CI Team werepresent during the debriefings of Ames by the IntelligenceCommunity’s Damage Assessment Team (DAT) andsubmitted questions to the debriefers as appropriate. Inearly August, Ames was interviewed directly by the IG CITeam for 3 days and the psychologist who was detailed tothe IG participated in DAT interviews of Rosario andAmes’s first wife.

Special Coordination Issues--Initially, the three-phase approach described in the DCI’s March 1994memorandum required that we refrain from investigativeactions that would risk complicating the ongoing criminalprosecution of the Ameses. At the time our investigationbegan, DoJ was proceeding on the assumption that theAmeses would have to be put on trial, and we wereconcerned that IG interviews could complicate or interferewith the prosecution. Thus, at the outset, we limited ourefforts to collecting and reviewing documents and con-ducting interviews that did not involve how the caseagainst Ames was developed, but concerned only generalCI and security policies, procedures, and practices from1983 to 1991. We also agreed to coordinate our interviewswith DoJ to ensure that we did not inadvertently createadditional statements of potential government witnesses.The limit concerning the scope of our interviews was lifted

after the plea agreement was reached with the Ameses inlate April. DoJ was afforded the opportunity thereafter toreview the list of subjects we planned to interview in orderto avoid interference with other potential criminal investi-gations. Coordination with DoJ was accomplishedexpeditiously throughout the 7 months of the investigationand did not inhibit the progress of our investigation in anysignificant manner.

Nature of the Issues--Our investigation focused onCIA CI and security policies and the conduct of CIApersonnel, and did not describe or evaluate in any detail theactions of personnel from, or the policies of, any otherdepartment or agency. In developing the investigation, theIG CI Team addressed a series of questions in some detail.Among others, these included:

What were Ames’ strengths, weaknesses, and vulner-abilities? How, when, and why did Ames engage in hisespionage activities on behalf of the Soviets?

How was Ames chosen for positions that provided himwith access to sensitive information? What did managersknow regarding Ames’ vulnerabilities and the suspicionsabout Ames? Was action taken to restrict his access after hebecame a suspect?

Who was responsible for the CI investigation that ledto Ames and was it managed properly? Why did it require9 years? How were indications of substantial changes inAmes’ financial situation handled?

Had Agency use of polygraphs and backgroundinvestigations been sufficient? Were Ames’ polygraphs andbackground investigations handled properly?

Was the Ames CI investigation coordinated properlywith the FBI? Were CIA personnel who conducted the CIinvestigation properly qualified by training and experience?Were sufficient resources and management attentiondevoted to the Ames CI investigation?

Did a senior Agency official warn Ames that he was thesubject of a counterintelligence investigation, as had beenreported by some employees?

Findings--In the end, we concluded that the issues inthe Ames case related to accountability, both individual andmanagerial. Although a very damaging spy was eventuallycaught, the course to his unmasking could have been morerapid and direct had sufficient and more appropriateresources been dedicated to the task. While those fewAgency personnel who were engaged in the CI investigationdid the best they could given their limited number andexperience, our investigation concluded that the intelligencelosses of 1985-86 were not pursued as vigorously orthoroughly as the severity of those losses merited. We alsofound that an earlier and more comprehensive evaluation ofAmes’ record of performance and on-the-job behaviormight well have prevented him from having been placed inthe sensitive positions from which he was able to betray theSoviet cases he did in 1985 and 1986. A number ofrecommendations for personnel actions and systemicimprovements were included in our Report of Investigationand adopted by the DCI.

17



Guatemala InvestigationOrigins--On January 27, 1995, just after our investiga-

tions staff was returning to a normal pace following theAmes case, we found ourselves involved in an investigationinto allegations relating to CIA ties to a Guatemalanmilitary official who was reportedly involved in the death ofU.S. citizen Michael DeVine and the disappearance ofEfrain Bamaca, a Guatemalan insurgent espoused to a U.S.citizen. The investigation was expanded in February 1995based upon a letter from the SSCI that raised additionalissues. In March 1995, Congressman Robert Torricelli, amember of HPSCI, made public allegations about CIAactivities in Guatemala that resulted in a substantial furtherexpansion of the investigation. Finally, on March 30, 1995,President Clinton directed the Intelligence Oversight Board(IOB) to conduct a government-wide review, relying asmuch as possible on the relevant departmental IGs, of allallegations surrounding the 1990 death of DeVine, the 1992disappearance of Bamaca, and any related matters. As aresult, on April 7, 1995, the IOB issued Terms of Referencefor the Presidentially-directed review to the IGs at the CIA,Department of State, Department of Defense, and Depart-ment of Justice.

Additional Issues--In addition to the questions aboutthe fates of DeVine and Bamaca, the IOB’s Terms ofReference requested that CIA’s IG determine what intelli-gence was available to CIA regarding ten U.S. citizens anda Guatemalan anthropologist who had suffered humanrights abuses in Guatemala since 1985. The IOB Terms ofReference also included the question of whether or notintelligence support for the Government of Guatemala wasconsistent with applicable Presidential directives anddecisions since 1984. This required a review of Agencyspending in Guatemala, including allegations that CIAfunding was secretly increased in December 1990 andOctober 1994 to offset cuts in military support that wererequired by changes in U.S. Government policies. Althoughnot included in the Terms of Reference, an August 18, 1995IOB memorandum to the CIA IG requested a review of allCIA relationships since January 1984 with Guatemalansagainst whom allegations of human rights abuses had beenmade. An additional area of inquiry was whether CIA hadutilized its intelligence collection resources appropriatelyand placed sufficient emphasis on collection regardinghuman rights violations.

An ongoing related case into alleged human rightsabuse by an Agency contact in Guatemala was folded intothe mix of Guatemala-related issues, and in May 1995,Congressman Torricelli made an additional allegationconcerning CIA knowledge of narcotics trafficking inGuatemala. Finally, at the request of the IOB, an inquiryalso was conducted into allegations that CIA was conceal-ing information from IG, IOB, and Congressional investiga-tors by sending documents to former employees.

Organizing the Effort--Because of the complex natureand scope of the issues that were presented in connectionwith the Agency’s activities in Guatemala, a two-phasedapproach was used to address the subjects of this investiga-

tion. The first phase of the investigation initially involvedtwo investigators who began in January 1995 to review filesand interview knowledgeable employees. By early May, theeffort had expanded to an investigative team of 17 investi-gators and associated support personnel.

During this phase, more than 56,000 pages of materialswere reviewed and over 200 interviews were conducted.Those interviewed included present and former DCIs andDeputy DCIs and other present and former senior Agencyofficials, as well as present and former Ambassadors andother personnel of other departments and agencies. Regula-tions and guidance for the collection and handling ofinformation relating to human rights abuses, reporting toCongress and Ambassadors, asset payment policies andpractices, and asset validations were reviewed. Relevantrecords of the intelligence oversight committees wererequested and reviewed insofar as they were available.Present and former members of the oversight committeestaffs were interviewed. National Security Council,Department of Justice, State Department, and Departmentof Defense personnel in the U.S. and at the Embassy inGuatemala were also interviewed, as were Mrs. DeVine andthe private investigator she had hired originally to investi-gate the DeVine killing.

Following the July 15, 1995 completion of the firstphase of the OIG investigation, a new team of 10 investiga-tors and 2 support personnel was formed to undertake theinvestigation’s second phase. This portion involved whatCIA knew about the various human rights victims, thefunding issues, and allegations of human rights abuse byGuatemalans with whom CIA had relationships. Investiga-tors in this phase reviewed several hundred thousand pagesof material and interviewed a wide variety of Agency andnon-Agency employees.

Findings--The first phase resulted in five Reports ofInvestigation and an overview volume. No evidence wasfound to indicate that Agency personnel had advanceknowledge of any plans or intent to kill DeVine or in anyway directed, participated in, or condoned the DeVinekilling. Nor was any evidence found to indicate thatAgency personnel in any way planned, directed, partici-pated in, or condoned the capture, possible torture, andsubsequent disappearance of Bamaca. However, a numberof issues came to light during this investigation relating toAgency practices, procedures, and notification requirementsthat resulted in a range of administrative and personnelactions by the DCI.

Four additional Reports of Investigation were com-pleted during the second phase of the investigation.Again, no information was developed that indicatedAgency employees were involved in any of the allegedwrongdoing. However, a number of recommendationswere made and acted upon in order to improve Agencypractices and procedures.

18


ConclusionI believe our efforts in the Ames and Guatemala

investigations resulted in a balanced and fair presentation ofthe various facts associated with the issues that theyaddressed. I also believe that our conclusions and recom-mendations in these cases were appropriate. Although therewere differences of opinion regarding the appropriatestandards of professionalism that should have been ob-served by Agency personnel in each instance, we did notencounter serious disagreement on the salient facts that wehad found in either investigation and Agency managementresponded positively to most of our recommendations andsuggestions.

Clearly, investigations such as these are difficult andenormously draining undertakings in terms of both organi-zational and personal energy and resources. In the end, wehad to make painful judgments about the reasonableness of

Not Just Another Day at the Office (continued)

activities that were conducted years earlier based oninformation available to the relevant personnel at the time.This required a fine balance between unfair second-guessing of inherently risky operational decisions and thecarefully considered belief that personnel had not met thestandards of judgment and professionalism that the Agencyhas a right to expect. Because of the nature and complexityof the subjects of our investigations and the consequencesthat stem from them, we put a premium on objectivity,intelligence, experience, and maturity in our personnel,nearly all of whom are chosen from the ranks of profes-sional officers serving throughout the Agency. Thatemphasis in our selection of IG personnel, along with ourinsistence on attention to detail and thoroughness in ourinvestigative work has served us well in identifyingweaknesses and areas for improvement that will, in thelong, run, strengthen the Agency and its ability to performits vital function.❏

19



Alvin Tucker, Deputy ChiefFinancial Officer, Departmentof Defense

The ProblemBecause fraud robs millions ofdollars from public and private

organizations each year, increasing the integrity of financialsystems is one of the Department of Defense’s ( DoD) toppriorities. The September 1995, issue of the Journal ofAccountancy presented some enlightening fraud facts thatwere gathered from a survey of 3,000 large and midsizedcompanies and clearly emphasizedthe need for tighter computersystems controls. (See Figure 1.)

To address this problem, manyFederal agencies are intensifyingefforts to safeguard the taxpayer dol-lars that have been entrusted to them.DoD is taking aggressive action toprotect the financial assets they con-trol. Operation Mongoose is one ofthe major programs within DoD thatis focused on reducing vulnerabili-ties to fraudulent intrusions.

One SolutionOperation Mongoose is the Department of Defense’s

fraud detection and prevention unit that was established tominimize fraudulent attacks against Department of Defensefinancial assets. This initiative, started in June 1994, isjointly sponsored by the Under Secretary of Defense,Comptroller, and the Department of Defense, InspectorGeneral (DoDIG). The Defense Finance and AccountingService (DFAS) serves as Program Manager, while technicalsupport to the initiative is provided by the Defense Man-power Data Center (DMDC), the Under Secretary of De-fense, Reserve Affairs, and the Department of the Treasury,United States Secret Service. (Figure 2 shows roles andresponsibilities of activities involved in this initiative.)

This team effort utilizes state-of-the art computertechnology and data matching techniques to detect and deter

Operation Mongoose Matches ‘Em andCatches ‘Em: How Computer Matches ImproveDoD’s Internal ControlsAlvin Tucker, Deputy Chief Financial Officer, Department of Defense

fraud. Data matches from multiple sources, including theSocial Security Administration, the Department of VeteransAffairs, the Office of Personnel Management and theRailroad Retirement Board, are used to identify potentiallyfraudulent payments to individuals and contractors from theDoD pay systems. The data matching process starts with theidentification of fraud indicator templates by subject matterexperts from the program’s functional areas. The DefenseManpower Data Center (DMDC) then performs computerdata matches involving literally millions of systems transac-tions. Questionable observations are passed to the DoDIGfor further examination or appropriate criminal investiga-tion. (Figure 3 shows process interactions.) To date, thisprocess has identified millions in suspect personnel andvendor payments that require futher investigation by

the DoDIG.

Operation Mongoose currentlyhas five major program areas underreview: Retired Pay, Civilian Pay,

Military Pay, Vendor Pay andTransportation Pay. TheDefense Manpower DataCenter is developing protocolsthat will allow the Mongooseteam to electronically matchdata from several computersystems and data bases todetect fraud in these programareas. Although only partiallyimplemented, these procedures

and protocols translate into sizable savings for DoD. But,savings are a by-product, not the objective. DoD believes itis more important to focus on expanding its formal frauddetection systems and protocols so that the most moderntechnology available can be used to better secure ourpayment systems.

To increase the integrity of retired pay accounts, anautomated process that matches and certifies actual deathdata with annuitant claims is used. DFAS along with theSecret Service then conducts face-to-face interviews withU.S. Military retirees and annuitants who live outside thecontinental United States. Interviews are conducted inlocations where statistical data for several evaluationcriteria show significant deviations from the norm. Forexample, countries or territories with a high percentage of

20


Internal Controls

Notification by Employee "Whistle Blower"

Internal Auditor Review

Specific Investigation by Management

Notification by Customer

Accident

Anonymous Letter

Notification by Supplier

Specific Investigation by Employees

Notification by Police

Notification by Government Agency

Specific Investigation by Third Party

External Auditor Review

Other

Source: KPMG Peat MarwickJournal of Accountancy, Sep 95

0% 60%40%30%20%10% 50%

2%

5%

52%

51%

47%

42%

34%

28%

26%

15%

14%

11%

8%

7%

How are Frauds Discovered

The Cost of Fraud

15% 8%

18%

38%

21%

$1 million or more

$100,000 - $999,999

$25,000 - $99,999

$5,000-$24,999

Under $5,000

Operation Mongoose (continued)

Figure 1. Combating Fraud: Know the Facts

21


retirees over age 72, or countries that either do not report orare slow in reporting death notifications to the United Statesmight be selected for retiree and annuitant verifications.

Retiree and annuitant verifications are also planned forthe continental United States. However, because of the sizeof the retiree population within the states (approximately 2million), another approach must be used to conduct verifica-tions. The strategic plan for the stateside interviews iscurrently under development. The Omnibus BudgetReconciliation Action of 1993 requires States to allowredisclosure of death data to Federal benefit payingagencies. The data received as a result of this legislationwill reduce the complexity of stateside retiree and annu-itant verifications.

To increase the effectiveness of the interview process,the Mongoose team developed an electronic collectioninstrument, which contains automated interview forms,retiree and annuitant pay profiles and other payroll informa-

tion for each payee. This instrument was developed afterthe initial verifications in the Philippines were completedand was used during interviews in Guam, Puerto Rico,Spain, Italy and Germany. The electronic collectioninstrument will also be used in the Japan and Koreaverifications that are scheduled to begin this month.

The scope of the retired pay verifications has grownconsiderably since the first trip to the Philippines in fall of1994. In addition to collecting information on the retireesand annuitants, we also provide a number of customerservice type activities, such as initiating pay changes,answering benefit related questions and renewing retiredservice member and dependent identification cards. TheSocial Security Administration and the Department ofVeterans Affairs are partnering with us in this endeavor.Both agencies participated in the Spain and Italy verifica-tions and they will also participate in future efforts.


DFAS – KANSAS CITY

• Military Pay

Military Departments

• Non-Financial Data• Personnel Data

DFAS – INDIANAPOLIS

• Military Pay Data• Transportation

Payments

DFAS – CLEVELAND

• Retired Pay Data• Garnishment Data• Military Pay

DFAS Centers

• Research Mismatch– Operating Location– Defense Accounting Office

Operation MongooseProgram Manager

Defense Manpower Data Center

Civilian Personnel Office

• Civilian Personnel Data

Contracting Offices

• Contractor Pay Data

DFAS – COLUMBUS

• Vendor Pay• Civilian Pay

Operating/LocationsDefense Accounting Office

• System Data• Civilian Pay

DFAS – DENVER

• Annuitant Pay Data• Civilian Pay• Military pay

Department of Defense InspectorGeneral, Defense Criminal

Investigative Service

• Investigates Potential Fraud• Conducts Audits• Analyzes Integrity Breaches

Figure 2. Operation Mongoose Information Flow for Matching Process

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Operation Mongoose (Continued)

Figure 3. Operation Mongoose Roles and Responsibilities

Operating Locations/Defense Accounting Office

• Provide System Data

Defense ManpowerData Center

• Develop Fraud Indicators• Develop Test Criteria

U.S. Secret Service

• Provide Technical Service

USD (ReserveAffairs)

• Provide Manpower• Support Retiree & Annuitant

Veriification Process

Under Secretary of Defense(Comptroller)

• Oversee Initiative• Provide Guidance, Direction

DFAS-HQDeputates

• Provide SME's• Coordinate & Comment

on Data Matches• Evaluates Anomalies

DFAS Centers

• Designate Focal Point• Respond to Requests for Data

and Actions• Provide System Data (Centralized)

DFAS-HQProgram Manager

• Provide Guidance, Direction• Coordinate Program Actions• Set Priorities

Department of DefenseInspector General

• Develop Fraud Indicators• Coordinate Criminal Investigation• Analyze Computer Matches• Evaluate Integrity Breaches

To pinpoint potential fraud in the vendor pay area,vendor pay systems are matched with contracting anddisbursing systems to find discrepancies. The data in thosesystems is bumped against several fraud indicators and anumber of data integrity checks. The abnormalities thatsurface from those matches are passed to the Mongooseteam. Analysts perform comprehensive reviews of theentire contract payment process for each item that isreferred to them. To ensure proper payment, they look atthe contract, the invoice and the actual payment to see ifthey match. When they don’t, the case is turned over to theappropriate agency for investigation. This process hasproven to be very effective. Two unusually large vendorpay cases are currently under investigation.

The civilian pay data matches have also exposed avariety of fraudulent payments. Mongoose has uncoveredghost accounts, fraudulent incentive awards, personnelreceiving payments from more than one payroll office,

personnel receiving illegal active and severance pays, andpersonnel receiving improper dual compensation offsets foractive civilian and military retired pays. Of the more than300 cases that are currently under investigation, severalcases have been prosecuted and over $60,000 has beenrecovered. More importantly, these findings have led to theidentification and correction of major internal control andsystemic weaknesses within the DoD civilian pay systems.

Military pay accounts are also under close scrutiny.Data matches in this area are being expanded to includeReserve and Guard Forces. Mongoose is currentlyconcentrating research on two military entitlement pays:(1) Bachelor Allowance for Quarters/Variable HousingAllowance (BAQ/VHA) and; (2) Special and IncentivePays. Data matches have revealed that there are a numberof military personnel that are living in Government housingand receiving BAQ/VHA. Matches have also disclosedpersonnel who are receiving special pay, such as scuba,

23


(2) produces standard reports; (3) tracks all costsand savings associated with each case; and, (4) aidsin preventing fraud through benefits derived frominformation sharing and lessons learned, as well asdynamic interrogation capabilities.

• Consolidation of DoD finance systems will alsogreatly reduce pay system vulnerabilities. Twosystems that are fully operational and an integralpart of the Mongoose Operation are the DefenseRetiree and Annuitant System which houses over2 million accounts, and the Defense Debt Manage-ment System which standardized the collection ofdebts from military and civilian personnel not onactive payrolls, as well as contractor payments. By1997, the Defense Civilian Payroll System willreplace 27 payroll systems. Military pay systemswill have been reduced from 22 to 2 by 1999. And,the Defense Transportation Payment System, whenfully implemented, will standardize all DoDtransportation payments.

After only 2 years of existence, the Mongoose teamhas made significant progress in improving the integrity ofDoD’s pay systems and reducing their vulnerability tofraud. Tens of millions of financial transactions have beenbumped against each other to detect potential cases offraud or abuse. Those computer matches have generatedhundreds of cases for DoDIG investigation, as well asseveral cases for criminal prosecution. Because of thisinitiative, millions of dollars are being saved, thousands ofdollars have been recovered, and business processes andpay systems will be improved. Although there are severalfraud prevention efforts within DoD, I rank OperationMongoose as one of the front-runners in identifyingpotential weaknesses in underlying controls that make itmuch harder for would-be culprits to intrude or abusefinancial pay systems.❏

jump or Explosive Ordinance Disposal (EOD) pay, but arenot assigned to specialty pay billets.

The most recent addition to the Mongoose datamatching analytical effort is transportation pay. Subjectmatter experts met and developed both freight and personalproperty fraud indicators for this area in February 1996.Although protocols for this area are still under develop-ment, transportation pay analysts have already forged arelationship with the National Motor Freight TransportationAssociation and received Standard Carrier Alpha Code datathat will be used in data matches. In addition, preliminarydata matches have produced hundreds of potentiallyfraudulent transportation payments that require furtherresearch.

Continuous process improvement is one of the corner-stones of the Mongoose effort. The business principles thatare used to design the data matches and other businesspractices are frequently reviewed and refined to ensure thatthey are effective, efficient and therefore reduce thenumber of cases that are generated for research. Theprogress that has been made as a result of these reviewshas been substantial.

Other actions are underway that will spur the progress ofthis initiative.

• The President’s Council on Integrity and Efficiency(PCIE) and Chief Financial Officer’s (CFO)Council sponsored a joint-agency fraud conferencein May 1996 that provided information on com-puter matching initiatives currently in progressacross the public and private sectors. That sympo-sium facilitated interactions between Federalagencies that fostered more and better computermatching alliances.

• A tracking system has been developed that(1) tracks all cases that are under review orinvestigation and provides status on them;

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25



The United States will spend more than $1 trillion forpublic and private health care this year. The Depart-

ment of Justice estimates that up to 10 percent of that amountwill be siphoned off by fraud and abuse. Since the Depart-ment of Veterans Affairs (VA) is one of the primary healthcare providers in the Nation, the potential for fraud is amajor concern and priority of the VA Office of InspectorGeneral (OIG).

The VA is the largest Government health care providerin the country. Through its system of 172 hospitals, 376out-patient clinics, 133 nursing homes, 39 domiciliaries,and 202 readjustment counseling centers, VA serves almost3 million veterans annually involving 25 million episodes ofpatient care. VA spends approximately $17 billion a year onhealth care and employs over 200,000 staff that arededicated to providing quality patient care.

To help ensure that our Nation’s veteransreceive quality and reasonably priced patient care,the VA OIG has established a comprehensive andcoordinated effort aimed at providing a healthcare environment that is protected againstfraud, waste and abuse. In an organization aslarge and diverse as VA’s health care system,this is a formidable challenge. The OIG hastaken on this challenge and effort to identifyand prosecute fraudulent activities and recoverfunds, which has been met with success. Thefollowing examples of fraudulent activitiesrelating to VA health care illustrate the diversityand magnitude of this challenge.

In the context of VA OIG oversightefforts, medical care fraud encom-passes both criminal activity directlyassociated with providing patient careand criminal activity that impacts onVA’s health care system, as well as VAas a whole. The following examplesrepresent both areas. These examples are not intended todepict an organization that is plagued with corruption. Infact, just the opposite is true. VA is a well managed andefficient organization that puts veterans first. However, aswith any large component of Government, fraud affectsVA’s health care operations.

In a time of budgetary constraint, every dollar lost tofraud takes on added significance, as it translates into a

Two Aspirins Are No Cure ForMedical Fraud Headachesby William T. Merriman, Deputy Inspector General, Department of Veterans Affairs

dollar less for veterans’ health care. While the financial lossto VA and the Government as a result of fraud can besignificant, the impact that fraud can have on the quality ofpatient care provided to our nation’s veterans is our moreimpassioned concern.

Product SubstitutionAmong the worst examples of fraud against the

Government and, in our case, against the men and womenwho have served their country, involve suppliers whofurnish substandard products. When contract negotiators setforth specific requirements for items the Departmentprocures, they expect the supplier to comply with the terms

of the contract. I need to point out that VA, for the mostpart, is buying commercial products like those foundin most hospitals or health care institutions. Compli-ance, therefore, should not be problematic. As anexample, VA contracted for crutches with stainless

steel cuffs of a specific tensile strength to supportthe weight of patients who relied on the crutchesfor mobility. The supplier used a metal other thanstainless steel, knowingly with substantially lessstrength than called for in the contract specifica-tions. Because of the failure to follow contractrequirements, the cuffs broke and patients fell,causing injury. The supplier was prosecutedsuccessfully.

In another case, an investigation discoveredthat a supplier falsified certifications that certainbed liners and pajamas were fire retardant when,

in fact, they were not. This case resulted in acriminal conviction.

In addition to criminal convictions,confirmed product substitution cases can have

serious financial impact on the supplier. Forexample, a contractor agreed to a $600,000 civil

settlement for providing substandard saline solution,which is one of the most widely used intravenous items inour hospitals. In a more recent case that culminated earlierthis year, a contractor paid $6.4 million to settle charges thatit sold VA medical centers foreign made products from non-conforming countries instead of American made productsrequired under the terms of the contract.

26


Two Aspirins Are No Cure (continued)

Contractor OverchargesWithin the last 2 years, we have recovered tens of

millions of dollars from contractors who have overchargedthe VA for medical supplies and equipment. VA-administeredFederal Supply Schedule contracts contain a most favoredcustomer clause. In instances where VA is not getting themost favored price, the contractor should disclose it duringcontract negotiations, including the reasons for the pricingdifferences. If this does not occur, the difference between themost favored customer price and the price actually charged tothe VA may be recovered from the contractor.

We have found that the most effective manner inpursuing these types of cases is through a joint effort usingstaff from our investigative, contract review, and counselorsto the IG offices, and by coordinating with VA’s offices ofgeneral counsel and acquisition and material management.By effectively bringing to bear the expertise of the staffs ofthese offices, the Government is better able to ensure that itutilizes all means to bring these cases to completionsuccessfully.

During the first half of Fiscal Year 1996, we haverecovered about $22 million using this coordinate approach.We return a considerable portion of this recovery to the VASupply Fund and they use it to purchase more medicalsupplies and equipment for VA hospitals.

Bribery/KickbackWith over 200,000 health care related employees, VA

unfortunately has some individuals who have exploited theirpositions for gain. The usual fraudulent bribery/kickbackscheme occurs when an employee aids in directing acontract to a specific vendor in return for money or otheritems of value.

Fraud cases involving bribery and/or kickbackschemes can adversely affect VA in many ways. Thesecases have the potential to result in the procurementprocess being circumvented due to an employee notcaring about getting the best price for the work to beaccomplished, ensuring proper performance of the work,or for the caliber of the product to be supplied. Thesecases may also prohibit other honest and responsiblecontractors from being awarded the contract.

Although these actions may not directly affect the carerendered to patients, they potentially drive up the overallcost of health care. For instance, a recently concludedundercover operation identified corrupt VA employees atone VA hospital. These employees accepted bribes inexcess of $100,000 in return for awarding contracts thatshould have gone to other low bid competitor contractors.The investigation resulted in the prosecution of the VAemployees and the contractors.

Drug DiversionControlled substances and high-priced pharmaceuticals

diverted from VA stocks have substantial black marketvalue. For controlled substances, the market may be foundin the illicit drug traffic that exists throughout the UnitedStates. For example, a tablet of Dilaudid that costs the VAapproximately 30 cents, sells “on the street” for $25-$45.Unfortunately, with prices as high as this, there are going tobe dishonest employees willing to steal and divert VA drugsfor personal use or sale.

For some high-priced pharmaceuticals, however, theoutside market is often commercial retail drug stores andother establishments that, to increase profit, engage in thereceipt and distribution of stolen property. In a recent case,for example, drug thefts from VA facilities in different partsof the country eventually were funneled to a large retailpharmacy operation. In a short period of time, VA employ-ees who were stealing drugs from the VA received approxi-mately $250,000. This figure represents just a fraction ofthe value of the drugs stolen.

While the VA has been responsive to recommendationsfor improvements to its programs by increasing the securityfor its drug inventories through a number of initiatives, suchas computerized tracking of stocks and a just-in-timeinventory system, drug diversion continues to be a majorfocus and concern of the VA OIG and the Department.

Fee BasisAt times, VA may be unable to provide required

services at its medical centers. This may be due to eligibleveterans residing in areas too distant from a medical centerto access VA services easily. In these situations, VA allowsoutside practitioners to provide the required service and billthe Department for services rendered. The classic fraudu-lent activity in the fee basis program is billing for servicesnot provided. As an example of such fraud, consider thepractitioner who charged VA for extensive home visits for aveteran at a time when the veteran was, in fact, receivingtreatment as an in-patient in a VA medical center. In othersituations, practitioners continue to bill VA for home oroffice visits even after the veteran has died.

ImpersonationVA provides, for the most part, free medical care to

most of the veterans who use its system. We find that non-veterans attempt to assume the identities of veterans toreceive medical attention for existing problems, or inattempts to obtain medications for self-gratification orresale. We recently found where an individual successfullyimpersonated a veteran and received the equivalent of asmuch as $300,000 in medical services. Since some of VA’smedical care is directed at poor and elderly veterans, it isnot very difficult for these non-veteran criminal imperson-ators to illegally obtain and use the identifications of theirveteran victims.

27


Workers Compensation FraudA growing concern to Congress, and various Federal

departments and agencies, is the mounting costs associatedwith workers compensation for job-related injuries toemployees. For VA, the annual charge back by the Depart-ment of Labor is approximately $145 million, the thirdlargest in the Government. Most costs relate to VA healthcare workers and are borne by VA’s health care appropriation.

While most of the payments are necessary to provideincome to employees during times when they cannot workbecause of a job-related injury, some are made as a result offraudulent certifications by employees that they are inca-pacitated and are not working. Unfortunately for theGovernment, the relative ease in securing payments underfalse pretenses has given recipients a sense of security intheir continued acceptance of these payments, eventhough, these employees could return to work, if only ina limited capacity.

Under new procedures implemented last year, all VAmedical centers are now responsible for a portion of thepayments made to their employees as part of workers’compensation. These dollars are taken from the medical careappropriations given to each medical center and, thus, cannotbe used for the care of patients. In concert with the VeteransHealth Administration (VHA), VA OIG has initiated a uniqueprogram at selected medical centers geared to investigatingindicators of workers compensation fraud. The VHAsupplies staff and pays the salaries of individuals who arerecruited by OIG to conduct undercover investigationsrelating to the worker’s compensation program.

In one pilot program, involving the offices of UnitedStates Attorneys for two judicial districts, investigationshave resulted in criminal prosecutions of VA employeeswho have certified that they are not working, and have notworked, during the period of receipt of payments. Some ofthese individuals are operating their own businesses andmaking substantial incomes. Recent audit work indicatesthat this problem may be widespread and as much as 25percent of those currently receiving workers compensationin VA may be eligible to return to work.

ConclusionIn the past 2 years, we have found that the greatest

increase in fraudulent activity has been in the health carearea, a trend noted generally by those departments andagencies of the Federal Government involved in health careissues. As resources continue to decrease, we are facedwith the painful choices of which types of investigationsand audits we will pursue. For us, the decision has beenmade easier because of the primary and long-establishedreason for VA’s existence: To care for him who has bornethe battle and for his widow and his orphan. In short, aprimary goal of the VA OIG is to create a work environmentthroughout VA that is safe and protected against fraud andother illegal activities, so that we may all be in a betterposition to better serve our Nation’s veterans.

The VA OIG will continue to take the steps necessary toidentify and deter fraud in the largest health care system inthe Federal Government. When fraud is identified, we willpursue criminal conviction to the fullest extent of the law.❏

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29


Chris Amato, Special Agent,Investigative Operations Directorate(Arlington, Virginia), Office ofInspector General, Department ofDefense

Lockheed-Egypt: An Investigationof Foreign Corrupt Practices Act Violationsby Chris Amato, Special Agent, Investigative Operations Directorate (Arlington, Virginia),Office of Inspector General, Department of Defense

team to bolster its belief that there was substantial evidenceof not just a false certification to DoD, but also potentialviolations of the FCPA. The prosecution team, consisting ofa DCIS investigator, an auditor from the Defense ContractAudit Agency, and prosecutors from the U.S. Attorney’sOffice, had learned through various sources that Dr. Taklawas a member of the Egyptian Parliament seated on theForeign Affairs Committee at the time of the payments.

The next stage of the investigation focused on activitiesoverseas. Among the witness interviews and various othertasks to complete while in Egypt, two objectives wereparamount. The first objective was to secure a qualifiedEgyptian official who could testify authoritatively in U.S.Court that payments of commissions on FMFfunded contracts without the prior approval of theEgyptian Gov- ernment were prohibited byEgyptian regulations. The second majorobjective was to obtain authenticated

documentation from Egyptcertifying Dr. Takla

was, in fact, aParliament member

and thus aforeign official asrequired under

the FCPA. This critical document was ultimatelyobtained after a frustrating year long wait, only days

before trial.

The prosecution team completed a Mutual LegalAssistance Treaty Request asking Switzerland to provideDr. Takla’s bank records. When Dr. Takla filed her opposi-tion to the request, the Swiss Central Authority froze morethan $1 million in the account. This money was viewed bythe U.S. as rightfully belonging to the Department ofDefense in the form of FMF funds. In Switzerland,videotape depositions were taken of witnesses and, at onepoint in time when it was learned there might be moredocuments at Lockheed’s office in Geneva, a Swiss magis-trate granted search authority. Only at the last minute whendocuments were produced was the search called off.

The work overseas and in the United States led to thedrafting of an 85-page summary of the case. On June 22,1994, Lockheed and two executives were indicted onviolations including the FCPA.


In August 1995, Suleiman Nassar,former Lockheed Corporation

Vice President and Federalfugitive, appeared in U.S. District

Court in Atlanta and pled guilty to violating the ForeignCorrupt Practices Act (FCPA), the U.S. foreign anti-briberylaw. Nassar’s plea followed a year of hiding in his nativehomeland of Syria, and came on the heels of a guilty pleaby his former employer, Lockheed, also to a violation of theFCPA. The pleas by Lockheed, Nassar and anotherLockheed executive were the result of a 3-year investigationconducted by the DefenseCriminal Investigative Service(DCIS) and prosecuted bythe U.S. Attorney’s Officein Atlanta.

The case focused onthe 1989 contract betweenLockheed and Egyptcalling for the sale of threeC-130 aircraft for approximately $79 million. The investi-gation uncovered payments by Lockheed to its Egyptianconsultant, Dr. Leila Takla, in exchange for her assistance inmaking the sale. The contract, which was funded by U.S.taxpayer money through the Defense Security AssistanceAgency (DSAA) Foreign Military Financing (FMF)program, required Lockheed to certify that no consultantfees were being paid out of FMF grant money. The DCISwas alerted to a possible violation when DSAA, during aroutine review, discovered Lockheed had an agreement topay a $1.8 million commission to Dr. Takla. This informa-tion conflicted with Lockheed’s previous certification to thecontrary. Once DSAA discovered the agreement, Lockheedcanceled its consultant arrangement, but subsequently wired$1 million to Dr. Takla’s Swiss account in consideration ofthe earlier agreement.

The investigation began with the review of a massiveamount of records subpoenaed from Lockheed. The reviewtook months to complete but ultimately led the prosecution

30


Following his indictment, Nassar failed to appear inAtlanta and was declared a fugitive. Nassar was eventuallylocated through a variety of investigative techniquesincluding the use of a mail cover, pen register, creditchecks, and assistance from Interpol. It was learned Nassarhad returned to his native Syria, but since there was noextradition agreement between Syria and the United States,other means had to be found to bring Nassar to Atlanta. Acheck with the Financial Crimes Enforcement Network(FinCEN) disclosed various assets of the Nassar family,including two homes in the Washington, D.C. area. Uponvisiting the homes, the investigator learned the propertieswere not only for sale, but one was scheduled to closewithin a week. It was also learned that at this time Nassarwas liquidating his Lockheed pension and savings. Theseactivities strongly indicated Nassar had no intention of everfacing charges. Court orders froze Nassar’s assets valued atclose to $1 million. Material witness arrest warrants wereissued for Nassar’s wife and daughter living in Switzerland.

On the eve of trial, Lockheed agreed to plead guilty toone count of conspiracy to violate the FCPA and pay$24.8 million in criminal and civil fines. This representedthe highest fine and penalty ever recovered under thebribery provision of the FCPA. All attention now focusedon Nassar who remained in Syria.

The prosecution team met with Syrian officials whoopted to jail Nassar with the possibility of trying him in theSyrian criminal justice system. Nassar, locked up and assetsfrozen, formally requested he be allowed to return to theUnited States to face charges. Nassar remained in Syrianprison for the next several months until his release in July.Escorted by agents of the State Department and DCIS fromDamascus through Frankfurt, Germany, Nassar arrived inAtlanta where he was fined $125,000 and sentenced to 18months of imprisonment, a first ever for an individual on aFCPA violation. Nassar is currently serving his sentence atthe Federal prison in Cumberland, Maryland. ❏

Lockheed-Egypt (continued)

31


Thomas J. Bonnar, Directorfor Program Review, DefenseCriminal Investigative Service,Office of Inspector General,Department of Defense


Tailhook: Investigative Challengesand Lessonsby Thomas J. Bonnar, Director for Program Review, Defense Criminal Investigative Service,Office of Inspector General, Department of Defense

IntroductionFederal Office of InspectorsGeneral are occasionally facedwith the challenge of large scale

investigations where the issues are highly unusual, thepolitical interest is urgent, and media scrutiny is intense.Such investigations can place a significant burden on anagency by stretching already scarce investigative andadministrative support resources. The Department ofDefense OIG investigation of the 1991 Tailhook Sympo-sium is an example of just such a demanding investigation.

BackgroundThe Tailhook Association, a private organization

dedicated to the support of naval aviation, derives its namefrom the hook that catches an arresting cable as a fixedwing aircraft lands on the deck of an aircraft carrier. TheTailhook Association membership consists primarily ofactive duty, Reserve and retired Navy and Marine Corpsaviators as well as defense aerospace industry contractorrepresentatives.

The first “Tailhook” gathering was held in 1956 as asmall reunion of naval aviators. Over the years, as theTailhook Association membership substantially increased,the scope of the annual conventions also grew to the point atwhich they were attended by thousands of people. Fre-quently high level military and government leaders wereinvited to attend as guest speakers. The annual gatheringsprovided a forum for recognizing special achievement innaval aviation and for the professional exchange of ideasand information among naval aviators, military and civiliangovernment leaders, and aerospace industry executives andtechnical representatives.

As the membership and scope of the conventionsincreased over the years, so did official Navy support to theTailhook Association. The Navy openly encouragedofficers to attend the annual gatherings, and increasingly

provided support through the use of naval aircraft fortransportation and by allowing military personnel to handleadministrative matters.

Though the official agenda of annual Tailhook conven-tions has been educational and professional, the unofficialsocial and party aspects of the convention have been themajor attraction for many attendees. Over time thegatherings took on an increasingly bawdy tradition, espe-cially among active duty Navy and Marine Corps juniorofficers. Incidents of rowdiness at conventions in the mid-1980’s led some Navy leaders and Tailhook Associationmembers to express concerns that some naval aviationofficers viewed the annual conference as an opportunity toact indiscriminately, without fear of censure or retribution,in matters of public drunkenness and sexual conduct.Despite these reported incidents and the expressed concernsby a few high ranking Navy officers and Tailhook Associa-tion members, apparently neither the Navy nor the Associa-tion took any significant actions to control increasinglyoutrageous behavior.

In September 1991, the Tailhook Association held its35th annual symposium, “Tailhook 91,” at the Las VegasHilton Hotel. An estimated 4,000 to 5,000 people attended,including the Secretary of the Navy, the Chief of NavalOperations, and a large number of active duty and Reserveflag rank officers. Following the convention, a femaleNavy lieutenant reported that she had been indecentlyassaulted by a large crowd of drunken men. The assaultoccurred in a public hallway adjacent to the many hospital-ity suites hosted by various aviation squadrons.

The allegations led to two Navy inquiries conductedbetween October 1991 and April 1992. The Naval Investi-gative Service conducted a criminal investigation directed atidentifying the persons who had committed the firstreported assault and other assaults that subsequently cameto light. Concurrently, the Naval Inspector General con-ducted an administrative inquiry focusing primarily on theNavy relationship with the Tailhook Association and thepersonal conduct of officers at Tailhook 91.

In May 1992, the Navy inquiries came under scrutinyby the news media and by Navy and DoD leaders whoquestioned the adequacy and scope of the Navy investiga-tions. Specific questions were raised concerning (1) why

32


the criminal investigation was limited to the assaults and notexpanded to examine other criminal conduct that came tolight; (2) whether the administrative investigation ad-equately examined the accountability of Navy leadership toprevent and address the actions at Tailhook 91; (3) whythere was an apparent reluctance to interview admirals whohad attended Tailhook 91; (4) whether there were misman-agement and improper influence by the Navy chain ofcommand in directing the investigations; and (5) why a keyinterview was missing from a final report of investigation.

In light of these concerns, on June 18, 1992, theSecretary of the Navy requested the DOD Inspector Generalto reexamine the entire matter.

DOD OIG InvestigationThe tasks confronting the DOD OIG initially appeared

to be overwhelming. The investigation would need toaddress a variety of criminal and administrative issues. Theinvestigative team would need to quickly review and digestover 2,000 pages of Navy investigative reports. There wasa need for the investigation to proceed and be completedquickly in response to the mounting concerns in thePentagon and increasing media and congressional interest.

The DOD OIG faced many of the same difficultchallenges that confronted the Navy investigators. Wit-nesses, victims, subjects and suspects were literally locatedaround the world—many of them deployed at sea aboardaircraft carriers. Witness recollections were expected to besketchy. The Tailhook 91 attendees left Las Vegas a full9 months before the DOD OIG became involved. Most ofthe assaults and other inappropriate acts occurred in verycrowded and poorly lighted conditions. Many of thewitnesses had been drinking heavily, in some cases continu-ously, over a 3-day period. All these factors combined topresent a formidable investigative task. The likelihood thatvictims might be able to positively identify assailantsappeared remote. Most of the men in the crowded hallwayswere dressed similarly, often in shorts and T-shirts, and theyhad the military look of naval aviators. As a group, theywere young, physically fit, clean-shaven with short hair, andpredominantly Caucasian. It was also expected that theinvestigators would encounter a lack of candor, if notoutright hostility from many of the officers who, as navalaviators, had a strong sense of group identity and loyalty.Also, many officers resented the repeated investigations ofTailhook 91.

The DOD OIG took a very deliberate approach to theinvestigation. The first step was to review and analyze theentire Navy investigative file. This was accomplished by asmall group of senior level investigators who defined theintended goals of the investigation, determined the re-sources needed, and established responsibilities.

The DOD OIG investigation went beyond the singleissue of identifying the persons who committed assaults toinclude issues of general misconduct and the failure of

Navy leadership. In practical terms, the investigative effortwas divided into two major areas. The first task was toreview the adequacy of the Navy investigations andexamine the role of senior Navy leadership in those investi-gations. The other major task, requiring the greatestcommitment of resources, was to identify the events ofTailhook 91; describe why they occurred; and, of course,attempt to identify individuals who committed indecentassaults and other specific violations of the Uniform Codeof Military Justice (UCMJ). The overall task was made allthe more challenging because of the need to balanceadministrative and criminal investigative objectives.

The DOD OIG investigative team consisted of morethan 50 investigators. Approximately 40 special agentcriminal investigators were drawn from the Office ofAssistant Inspector General for Investigations, DefenseCriminal Investigative Service (DCIS). Another dozenadministrative investigators came from the Office ofAssistant Inspector General for Departmental Inquiries.The investigators were supported by scores of clerical andadministrative employees drawn from throughout the OIG,but in large measure from the Office of Assistant InspectorGeneral for Administration and Information Management.That component supported the investigation in manyessential ways, including providing computer hardware,software and specialized programming; special travelarrangements, mail, records and information managementservices, editing, and printing services.

The unique circumstances required that teams ofinvestigators travel to military installations and otherlocations where large numbers of Tailhook attendees hadbeen identified. Rather than approach the case by followingspecific investigative leads in a strictly logical progression,the Tailhook Task Force, as it came to be known, found itnecessary to conduct large numbers of interviews dictatedmainly by the geographic dispersion of witnesses andrelated travel and logistical constraints. This made the needfor timely, complete and accurate analysis of information allthe more critical. A variety of computer applications greatlyenhanced the investigators’ ability to analyze large amountsof data in a timely, efficient and effective way.

The Tailhook Task Force completed the major portionof the investigative work between July 1992 and December1992. Almost all of that investigative effort was accom-plished by keeping the investigative team in an almostconstant travel status. Significant follow-up investigationcontinued until the fall of 1993. The Tailhook Task Forcecompleted almost 4,000 detailed interviews at more than100 locations around the world, including military installa-tions throughout the United States, in Japan and the MiddleEast, aboard three aircraft carriers and even in the WhiteHouse. The total DoD IG investigative and support effortexpended on the Tailhook case was well in excess of 30workyears.

Some specific strategies, tactics and lessons learned bythe DoD IG Tailhook Task Force include:

Tailhook (continued)

33


Early Planning and CoordinationAre Essential

It is absolutely essential that all investigators have anappreciation for the “big picture.” Allow enough time toprovide a comprehensive briefing to the investigative teamon investigative goals, objectives, policies and procedures.

Establish a permanent headquarters staff, with suffi-cient numbers of dedicated investigative, clerical and othersupport personnel. Clearly define the headquarters staffresponsibilities to establish and maintain an accurate filingsystem, coordinate resources, analyze incoming reports, anddisseminate investigative and administrative informationand assignments to the investigators in the field.

Delegate WillinglyUse other organizations to your benefit. For example,

the DOD OIG tasked the Navy and Marine Corps toidentify and locate all active duty and Reserve officerswho attended Tailhook 91. The DOD OIG also requestedNavy and Marine Corps support in terms of providinglegal counsel and by making logistical arrangements forthe investigators.

Technology is a Wonderful ToolThe Tailhook Task Force made extensive use of

computers to manipulate the extremely large quantity ofinformation. For example, computer applications wereused to conduct a variety of investigative analyses, totrack and prioritize investigative leads, and to trackinterviews completed.

Perhaps most crucial to the investigative effort was theuse of a text search and retrieval software program toanalyze and research investigative reports. This softwareallowed investigators in the field to quickly review allinvestigative reports as they prepared for interviews.Frequently, this preparation identified key information orquestions that could be addressed in subsequent interviews.The system was also used extensively to compare differingwitness accounts of the same events, conduct research forthe DOD OIG’s published reports regarding Tailhook,“clear” officers who had no apparent culpability, prepare formilitary judicial and administrative hearings, and respond torequests for access to documents under the Freedom ofInformation Act.

The value of the text search and retrieval tool is depen-dant on having it frequently updated with the most currentinformation. This requires a well organized and closelymonitored system to ensure that all investigators prepare theirreports timely and consistently. Each investigative team mustexpeditiously forward these investigative reports to headquar-ters in order that the updated information can be distributed toand used by other teams of investigators.

Standardization is a KeyAlthough unusual investigations require innovative

approaches, it is important that the entire investigative teamunderstand and consistently use standardized procedures.Nowhere is this more important than in the area of reportwriting. All investigators must use standard terminology,acronyms and precise spellings if the text search andretrieval software described above is to be used to itsmaximum benefit for record retrieval and data analysis.

Stay Flexible and CommunicateAnticipate and adjust as necessary the resources needed

to complete the investigation. Don’t underestimate the task.

Keep the investigative teams informed. This includesthe overall goals of the investigation as well as providingthe team with timely updates on investigative developmentsand realistic assessments of the investigative tasks. Inaddition to headquarters communication, encourageinvestigative teams in the field to communicate andcoordinate directly and frequently with each other to ensurethat important investigative leads are covered efficientlyand effectively.

Tailhook has come to represent a watershed event in themilitary. The events of Tailhook 91 have had the resultanteffect of significantly expanding the roles of women in themilitary. All of the Military Services have reevaluated theway in which they deal with the issue of sexual harassment.Even today, newspapers continue to mention Tailhook in thecontext of new allegations of sexual misconduct and incontinuing repercussions for some career military officers.

Tailhook has also resulted in some recommendedchanges in the investigative arena--in both the Navyinvestigative organizations and the DOD OIG. Perhaps theexperience of the DOD OIG in conducting the Tailhookinvestigation may be of benefit to other organizationsconfronted with cases of a similar nature or magnitude. ❏

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35



Nuclear Safety and Whistleblowersby Leo Norton, Acting Inspector General, Nuclear Regulatory Commission

The protection of the public health and safety is thereason for the existence of the Nuclear Regulatory

Commission (NRC). The NRC was established as anindependent Federal agency pursuant to the Energy Reorga-nization Act of 1974 which abolished the Atomic EnergyCommission (AEC). The NRC was assigned the regulatoryfunctions of the AEC pertaining to the commercial, indus-trial, medical and institutional uses of nuclear materials.

To carry out its duty to protect the public health andsafety, the NRC’s primary activities are: establishingstandards and regulations; reviewing applications andissuing licenses for the use of nuclear materials; and,inspecting facilities where nuclear materials are used inorder to determine compliance with safety regulations andlicense requirements. The NRC employs about 3200personnel to oversee the operations of 113licensed nuclear power plants and approxi-mately 8500 other licensees who use nuclearmaterials for such matters as research, radiog-raphy and medical treatment.

The NRC Office of the Inspector Generalwas established in April 1989 as a result of the1988 amendment to the Inspector General Actof 1978. David C. Williams arrived at theNRC as the first Presidentially appointedInspector General in December 1989.

The NRC had longopposed the extension of the IGAct to the agency as beingunnecessary and inappropriatefor an independent, regulatoryagency. In 1987, then NRC Chairman Lando Zechtestified in a Senate hearing:

“[I]t is difficult for us to see how providing the Com-mission with an Inspector General subject to Presidentialappointment and removal would better assure effectiveness,efficiency, and integrity in the NRC’s operations.”

Against this background of agency opposition to thecreation of an OIG, it was initially difficult for many agencymanagers to accept that OIG investigations and audits couldmake highly significant contributions to the NRC’s publichealth and safety mission. At the current time, however,approximately three-fourths of the OIG special agents areinvolved in investigations bearing upon how the agencyperforms its safety role.

OIG investigations into safety-related issues have disclosedsuch matters as:

The NRC’s failure over a 10-year period to investigateand act on reported problems with a fire barrier materialused to protect electrical cables necessary to ensure the safeshutdown of a nuclear reactor. This defective material wasinstalled in about 80 of the Nation’s nuclear plants. OIGinvestigated and reported on this matter in 1993; however, acomplete resolution has not been achieved despite intenseagency and industry efforts. Until a technical resolution isagreed upon, manned fire watches are on the lookout forfires which might damage the cables.

OIG discovered that at a northeast U.S. nuclear plant,the licensee for about 20 years had been violating its agency

approved specifications in the manner in which itunloaded nuclear fuel from the reactor. NRC staffhad permitted this to go on because they were notaware of the requirements imposed on the licenseeby the agency. After the OIG report was issued andintense interest from Congress and the media, theNRC has formed several task forces to examine itsfailures and its expectations of inspectionpersonnel. All three reactors at this sitehave been shut down indefinitely.

In the aftermath ofthe Three Mile Island(TMI) accident in 1979,the NRC imposednumerous new require-

ments on new and existing nuclear power plants. Amongthese, the NRC directed that every plant had to develop acomputer program which could be used to predict whatwould happen to the reactor in the event of a loss of coolantaccident (LOCA - the TMI event). In December 1995,allegations arose that a different northeastern U.S. operatorhad misled the NRC and operated in spite of a defectiveLOCA computer program. NRC technical evaluation andinspection showed that the alleged defects existed, and thepower generating limits of the plant were significantlylowered. The OIG investigation developed considerableevidence concerning an intentional violation by the licensee

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and, more importantly, uncovered significant flaws in theNRC license amendment process. The necessary correctiveactions are being undertaken.

Each of these serious safety concerns was brought tolight only through the efforts of employees in the nuclearindustry. Thus, I believe that NRC OIG’s greatest contribu-tion to public health and safety has been our work regardingthe agency’s handling of whistleblower complaints.

As I previously mentioned, the NRC has responsibilityfor regulating and inspecting the operations of 113 nuclearpower plants and about 8500 other licensees. The magni-tude of the licensed activities is so great that the NRC canonly inspect a small fraction of them, and the NRC mustrely on licensee and contractor employees to report safetyconcerns. If nuclear industry employees are retaliatedagainst by their employers, a significant source of safetyconcerns will be lost, and the public health and safety willbe jeopardized. In 1993, then NRC Chairman Ivan Selinacknowledged in a Senate hearing:

“The NRC receives more than 800 allegations ayear, many of which raise valid issues of which theNRC would otherwise not be aware.”

Section 210 (now 211) of the Energy ReorganizationAct of 1974 divides the responsibility for handling retalia-tion allegations between the NRC and the Department ofLabor (DOL). The NRC has the duty to ensure thatlicensees and others do not participate in the harassment andintimidation (H&I) of persons who raise safety concerns.The DOL has the responsibility for directing appropriatecompensation for H&I violations.

Beginning in the early 1990’s, OIG received a numberof complaints about the inadequacy of NRC and DOLefforts to provide protection for nuclear industry employeeswho were terminated or suffered other harassment afterraising health and safety concerns. OIG initiated aninspection effort in 1992 to understand the nature of thecomplaints and the magnitude of the problems. We foundthat over a 4-1/2 year period, the NRC had received 609retaliation complaints, but the NRC initiated only 44investigations and issued 7 enforcement actions.

During an OIG inspection, nuclear workers told us ofvarious retaliatory actions for having raised safety concernssuch as: being fired, receiving death threats from co-workers, being demoted, being burned in effigy, andreceiving work assignments that increased the employee’slevel of radiation exposure. In addition to issuing our reportof findings, Inspector General Williams testified to theresults of our work in July 1993 before the Senate Subcom-mittee on Clean Air and Nuclear Regulation.

In response to the OIG report and the congressionalhearings, the NRC formed a high-level task force toreassess the NRC’s program for protecting allegers againstretaliation. The task force report, issued in January 1994,acknowledged the deficiencies found by OIG and concludedthat “the NRC had not taken sufficient steps... to create andpromote an environment... in which employees feel free toraise concerns without fearing retaliation.” The task forcemade 47 specific recommendations to improve the programfor protecting whistleblowers against retaliation.

As all members of the OIG community realize, onecannot assume a problem has been corrected because it hasbeen identified. Therefore, in February of this year, wedecided to determine the success of the recommendationsmade by the NRC’s whistleblower task force. We foundthat less than half of the 47 recommendations had been fullyimplemented (full implementation had been scheduled forDecember 1995). Only 3 of 11 recommendations whichsenior agency management identified as high priority hadbeen fully implemented.

Following the issuance of our report in March 1996, theagency has stepped up its efforts and full implementation isexpected in the summer of this year.

In conclusion, my experience convinces me that OIGscan and should perform a critical function in protecting thepublic health and safety. We must make sure that ouragencies address safety issues in a thorough and timelyfashion without undue outside influences. Especiallyimportant is to protect the pipeline for safety allegations.All people, but especially those employed in the regulatedindustry, must have confidence to bring safety deficienciesto the government’s attention without fear of reprisals.❏

Nuclear Safety (continued)

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By Alfred M. Zuck, executive director of the NationalAssociation of Schools of Public Affairs and Administration

Paul Light, Monitoring Government: InspectorsGeneral and the Search for Accountability. (Washington,DC: Brookings, 1993), 274 pp.; $29.95 hardcover,$ 11.95 paper.

The one federal government-wide growth industry inthe 1980s was the audit and investigation program of theOffices of the Inspectors General (IG). In a period in whichtotal federal employment increased only marginally, thestaff of the Inspectors General increased almost one-fourth.By 1989, the Department of Education had a ratio of IGstaff to total agency staff of 1:14. The amazing growth ofthis segment of the federal government certainly is onewhich deserves attention and analysis. That is preciselywhat Paul C. Light has done in Monitoring Government:Inspectors General and the Search for Accountability. Thisbook is the first in-depth examination of the evolution of theconcept of inspector general and its transformation into oneof the significant efforts to enhance accountability of federalgovernment officials and programs.

The search for accountability, which is used as asubtitle of the book, is an important theme that permeatesthe book. A major strength of Monitoring Government isthe comparison of three aspects of accountability: compli-ance accountability, performance accountability andcapacity-based accountability and the reasons for theadoption of compliance accountability as modus operandi ofthe Offices of the Inspectors General. All major forcesconverged on the desirability of compliance monitoring inpreference to performance monitoring or institutionalmonitoring following the enactment of the IG Act in 1978.The Congress was interested in utilizing the IGs as aresource for obtaining information on agency operations toassist in congressional oversight activities. The President,and OMB as the President’s management arm, was inter-ested in pursuing the political agenda of identifying fraud,waste and abuse in Federal programs. Moreover, as Lightpoints out, compliance monitoring is less difficult and lesscostly than the alternative approaches of performancemonitoring or institutional monitoring. Another factor,however not emphasized, is the culture and tradition of theaudit and investigation fields, which were transferred tocreate the Offices of Inspectors General. The tradition and

Book Review: The Age of Inspectors GeneralReprinted with permission from Public Administration Review, January/February 1996,Vol. 56, No.1, pp.105-106Commentary Author: James F. Hoobler

culture of audit and investigation staff is one of post audit ofadherence to implementing prescribed rules and regulations,the traditional bureaucratic paradigm. Light’s research basefor his analysis of the legislative history, organization, andstaffing of the Offices of Inspectors General and theirworking relationships with agency heads, the Congress, andthe Office of Management and Budget is extensive. Hisaccess to unpublished reports and sources complements theextensive survey data. The data produced by this researchare very useful and establish benchmarks against whichfuture analysis and evaluation can proceed. The analysis isenriched by the use of the scandal in the Department ofHousing and Urban Development as a case study. Interest-ingly, rather than a success story, it demonstrates the extentto which neither the agency head nor the Congress waslistening to the IG and using his reports for correctiveaction. The one weakness in the research design anddatabase is the absence of data and evaluation of the OIGsby program mangers, the individuals most directly affectedby their audit and investigation activities. While the majorfocus of Monitoring Government is an institutional analysisof the OIGs, the ultimate assessment of the impact of OIGswill need to include the assessment of program operatingofficials and program outcomes, which the author freelyacknowledges and addresses in the final chapters.

While the major portion of the book is devoted to afascinating and well-documented institutional history of theIGs from the enactment of the IG Act in 1978 to the begin-ning of the 1990s, Light devotes two important chapters tomeasuring the impact of IGs and the future of the IG concept.

After a review of the results of the IGs in statisticalterms; (e.g, dollars saved or put to better use and number ofindictments and convictions achieved), Light raises thecritical issue of the need to focus on program performance.He goes further and raises the question as to whether IGshave been doing the wrong job by putting too muchemphasis on compliance and not enough on performanceand capacity building. These are key questions which needto be raised and given considerable attention by the publicadministration community. They have particular signifi-cance in the current debate about the relevance of thetraditional bureaucratic paradigm of the Weberian model.In both the public and private sectors, the current manage-ment literature and debate relate to efforts to overcome thebureaucratic gridlock of hierarchical organization, the

38


division of labor into discrete tasks, rigid rules and regula-tions (i.e., command and control systems). The compliancemonitoring approach of IGs utilizes the Weberian model.It does not accommodate concepts of increased employeediscretion, empowerment, entrepreneurship, groupperformance, horizontal organizations, customer orienta-tion, or outcomes assessment which are called by some thepost-bureaucratic paradigm. Recognizing that the publicsector has not yet adopted, and may not adopt, what mayevolve into a new paradigm, the movement is likely to bein that direction.

Another aspect of the accountability issue which needsto be addressed is the continuing diminution of the authorityand responsibility of program managers for programoutcomes. The establishment of the IGs was another of thecontinuing steps taken by the Congress and the executivebranch to disaggragate management functions into separateorganizations and officials (IG, chief financial officers,etc.), adding additional layers of reviewers, monitors,second guessers. Rather than integrating and consolidatingmanagement authority in the hands of program managers toenhance their authority to deliver program service, themanagement functions and authorities have beendisaggragated and assigned to new officials and organiza-tions thereby complicating the capacity of managers tomanage. The public administration community needs tobegin to focus on management integration as a step towardachieving positive program outcomes.

Book Review (continued)

Without addressing the possible impact of a post-bureaucratic paradigm, Light suggests that the IGs shouldfocus more on improving government performance andrebuilding administrative capacity. He goes so far as tosuggest that the IGs may be the safe harbor for assigning thetask of program analysis and design. It is true that OMBhas not provided any reasonable assurance that it has thecapacity for rebuilding the government’s institutionalmemory or perhaps more importantly, the capacity to designnew management approaches to improving the delivery ofgovernment programs and services. The suggestion that theIGs may play this role rests on the premise that they are lesssubject to the political pressures for short-term solutionsrather than long-term institutional effectiveness. Recogniz-ing the theoretical possibility of less political influence, theculture of the IG community, and the nature of staffing interms of skills and experience would need to changesubstantially. Skills in policy analysis, program evaluationand program management experience would seem to benecessary. The OIGs are a most unlikely organization tofind these skills or if found, to nurture them.

Paul Light’s Monitoring Government: InspectorsGeneral and the Search for Accountability is a majorcontribution to the literature on accountability in govern-ment. It makes significant recommendations for the futurerole of Inspectors General which need to be included in theemerging debate on alternative approaches to improving thedelivery of government programs.

U.S. Small Business AdministrationWashington, D.C. 20416March 20, 1996

Dr. David H. RosenbloomEditor in Chief/PARThe American UniversitySchool of Public Affairs4400 Massachusetts Avenue, N.W.Washington, D.C. 20016-8070

Dear Dr. Rosenbloom:

While I do not often engage in formal rebuttals ofpositions taken in professional journals, I feel compelled tobring an important matter to your attention as the PublicAdministration Review’s (PAR) Editor in Chief. Thepurpose of my letter is to respond to Mr. Al Zuck’s com-ments, “ The Age of Inspectors General, “ set forth in PAR’sJanuary/February 1996 issue. As you will recall, Mr.Zuck’s comments on the inspector general community weremade in the context of his book review of the Paul Light’sMonitoring Government: Inspectors General and theSearch for Accountability.

Let me begin by saying that I think it is unfortunate thata professional journal of PAR’s stature would print such areview without substantiating the author’s claims. In myopinion, Mr. Zuck, as a public affairs/administrationprofessional, has a dual responsibility: (1) as ExecutiveDirector of the National Association of Schools of PublicAffairs and Administration, he should be educating futureleaders of our country as to what is really happening in theadministration and management of our Federal Govern-ment, and (2) as a reviewer for PAR, he should be expectedto verify his facts before taking a position as ill-informed ashe has on the role and value of the Government’s cadre ofinspectors general (IGs). I believe he has failed on bothcounts. I will defer to Paul Light on Mr. Zuck’s assessmentof his book, but I cannot ignore his uncalled for commentson the Federal Government’s IGs and the inspector generalcommunity.

For the record, you should know that the Federal IGsgreeted Mr. Light’s book openly in 1993 and, in fact, invitedhim to speak at their Annapolis conference. Moreover, thecommunity accepted Light’s observations in the profes-sional spirit that they were offered and took appropriateaction to reinvent itself. In January 1994, at meetings of thePresident’s Council on Integrity and Efficiency (PCIE) andExecutive Council on Integrity and Efficiency, the FederalGovernment’s IGs adopted the enclosed Vision Statement

Response By James F. Hoobler, Ph.D.

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and Statement of Reinvention Principles. Shortly thereafter,many Offices of Inspector General (OIGs) conductedformal assessments of their efficiency and effectiveness bysurveying program operating officials and documenting theOIG’s program impact, as perceived by program managers.By doing so, the community has already fulfilled Mr.Zuck’s desire to query program operating officials as to theimpact of OIGs in their host departments and agencies.Moreover, if Mr. Zuck’s had bothered to ask, he would havediscovered that the IGs have clearly moved away from theWeberian model’s compliance auditing and directed more oftheir oversight effort towards performance auditing, systemsinspections and program assessments.

Mr. Zuck laments what he perceives as “…continuingdiminution of the authority and responsibility of programmanagers for program outcomes.” He offers the establish-ment of the IGs and the Chief Financial Officers (CFOs) asevidence of the legislative and executive branches’ efforts“… to disaggragrate [sic] management functions into separateorganizations and officials…adding additional layers ofreviewers, monitors, second guessers.” He further argues:

“Rather than integrating and consolidating managementauthorities in the hands of program managers to enhancetheir authority to deliver program service, the managementfunctions and authorities have been disaggragated [sic] andassigned to new officials and organizations thereby compli-cating the capacity of managers to manage. The publicadministration community needs to begin to focus onmanagement integration as a positive step toward achievingpositive program outcomes.”

Mr. Zuck’s views are not supported by the facts.Federal program mangers have not been rendered impotentby either the IGs or the CFOs. Notwithstanding theInspector General and Chief Financial Officer Acts,program mangers have retained all of their responsibilitiesand authorities. It is true, however, that they are now beingheld more accountable for their decisions due to the finework of the IGs and CFOs. I would argue, therefore, thatlegitimate oversight of our public institutions and theirmanagers is a far cry from “second guessing” as suggestedby Mr. Zuck. Neither IGs, CFOs, nor GAO reviewers havethe power to require program mangers to alter their behav-ior and to manage for results; all any of these oversightprofessionals can do is to document problems of fraud,waste, and abuse for the consideration of program managersand their respective department and agency heads. And, ofcourse, they are expected to keep the President and theCongress fully informed of what they have found and toconvey management’s response to their recommendations.

I am surprised that Mr. Zuck failed to mention theGovernment Performance and Results Act (GPRA). Thisrecent and significant piece of legislation affords everyprogram manager a formal opportunity to articulate his/herpolicy goals and objectives and to share supporting strate-gies and performance plans with the Congress and thegeneral public. In short, it does not appear that the Con-gress is trying to strip away program officials’ managementfunctions or authorities. On the contrary, the Congress isdoing its best to encourage Federal program managers to do

precisely what Mr. Zuck wants ——manage their responsi-bilities and share their performance. Moreover, I shouldhasten to add that the GPRA does not even mention a rolefor either the IGs or the CFOs.

Finally, Mr. Zuck takes issue with Paul Light’s sugges-tion that the inspector general community focus more onimproving government performance and rebuilding admin-istrative capacity, as well as engaging in program analysisand design. Again, Mr. Light can fend for himself; how-ever, my reading of his text suggests he was arguing for theIGs to play more of a consultative role with their hostdepartments and agencies in the formulation and implemen-tation of programs. Indeed, that is what the administration’sreinvention initiative is all about. I assure you that none ofmy colleagues have any desire to compromise their inde-pendence under law by taking over the responsibilities ofprogram managers, but it would be irresponsible for the IGsnot to advise our customers, both management and theCongress, of ways in which programs can be improved. Infact, this is precisely what we have pledged to do in theabove referenced Vision Statement and Statement ofReinvention Principles.

Like Mr. Zuck, I, too, would question Paul Light’ssuggestion that IGs should take over program analysis anddesign; these functions clearly belong to policy officials andprogram managers and must remain so. I do, however, takeissue with Mr. Zuck’s assertion that OIGs lack appropriateanalytical skills to provide relevant program oversight. Iwould strongly recommend that he investigate the currentstaff capabilities of the OIGs in the Federal Governmentbefore passing judgment on skills and experience resident inthe inspector general community. Comments like thefollowing are unfounded and unwarranted for publication ina professional journal like PAR.

“Recognizing the theoretical possibility of less politicalinfluence, the culture of the IG community, and the natureof staffing in terms of skills and experience would have tochange substantially. Skills in policy analysis, programevaluation and program management would seem to benecessary. The OIGs are a most unlikely organization tofind these skills or, if found, to nurture them.”

As the current chair of the PCIE’s Committee onInspection and Evaluation, I must challenge Mr. Zuck’sobservations and judgments. In an effort to educate him onthe level and breadth of “ skills and experience” currentlybeing used within the inspector general community, I amalso enclosing copies of the PCIE’s evaluation standardsissued in 1993 and a July 1995 Survey of Inspection andEvaluation Units in the Inspector General Community. Itrust these materials will assist Mr. Zuck’s participation“…in the emerging debate on alternative approaches toimproving the delivery of governmental programs.”

Thank you for the opportunity to express my concerns,

Sincerely,

James F. Hoobler, Ph.D., Inspector General

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41


Stuart C. Gilman, Special Assistant tothe Director U.S. Office ofGovernment Ethics


The Context ofCorruptionThe stability of the government of

Egypt is one of the keys to peace in the Middle East. Formany Americans the challenges confronting Egypt are theterrorism of Muslim extremists, maintaining the peace withIsrael, entrenched poverty and/or extreme overpopulation.A critical factor, which seldom makes this list, is wide-spread corruption. In fact, corruption is the underlyingcause of many of the problems identified above.

Many Americans also feel that corruption in “underde-veloped countries” is not only expected but part of theculture. Bribery, illicit gifts and influence peddling aresimply viewed as part of the values in those sections of theworld. Belying this, the delegates to the InternationalConference on Ethics in Government1 uniformly emphasizedthe debilitating effect of corruption on their societies.Representing more than 50 countries, the delegates stressedtheir broad commitment to eliminating corruption. Theyacknowledged the unevenness of enforcement, but believedthat fundamental democratic change and economic growthcan only occur when they succeeded in dampening thepernicious effects of this evil.2

One of the major addresses at the conference wasdelivered by Ahmed Abdel Rahman the Director of theEgyptian Administrative Control Authority (ACA). Hediscussed the need for training and consultation for the ACAwith the Director of the U.S. Office of Government Ethics(OGE), Stephen D. Potts.

An American Yankee Visits the Pharaoh’s Court:An International Experience in Fighting Corruptionby Stuart C. Gilman, Special Assistant to the Director, U.S. Office of Government Ethics

Soon after this, the Office of Government Ethics wasinvited by both the Egyptian government and our Ambassa-dor to Egypt to send a delegation to Egypt. The invitationwas met with a great deal of anticipation and excitement onour part. Our Ambassador requested that the Director ofOGE send a group to “work with the Administrative ControlAuthority (ACA), a newly enhanced agency with broadresponsibility for controlling corruption.” The work was toinclude identifying common areas of interest and concernbetween the two agencies, and providing training andconsultation on the technical aspects of ethics rules,regulations and enforcement.

The Inspectors General of the Agency for InternationalDevelopment and the Department of Commerce supportedthe travel and the Egyptian government hosted us while wewere in Egypt. When we departed Thanksgiving weekend,the five of us3 did not know what the week of training andconsultation would bring. We were especially concernedabout the level of sophistication and technical understand-ing of our colleagues at the ACA. Would concepts such asconflicts of interest, recusals, trusts, administrative sanc-tions or financial disclosure make any sense translatedeither in Arabic or into this very different culture?

The Administrative ControlAuthority of Egypt

The ACA was created to combat administrative andcriminal corruption throughout the country. It has 15offices throughout Egypt and is the responsible control4

entity for the government at the national, governate (state)and local level. It is also responsible for examining thesesame issues for the vast array of government corporationsand organizations. The ACA combines the functions of the

1 This conference was sponsored by the United States Informa-tion Agency and the Office of Government Ethics in November,1994. Copies of the proceedings are available from U.S.I.A. orfrom the author at the U.S. Office of Government Ethics.2 For a more detailed discussion on the cultural dynamics ofglobal values and their relationship to corruption see S.C. Gilmanand C. Lewis, “Public Service Ethics: A Global Dialogue,” PublicAdministration Review, Oct./Nov., 1996.

3 The delegation was comprised of the Director of OGE, theDesignated Agency Ethics Official from the Department ofCommerce, an Associate General Counsel from OGE, OGE’sAssociate Director for Program Assistance and Review andmyself.4 The concept of “control authority” is roughly equivalent toRoman oversight authority in the United States.

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IGs, with more limited functions like an ethics office (OGE)and whistle-blowing authorities (like the Office of SpecialCounsel and the FBI).

The Authority’s five overall objectives are: 1) guaran-teeing the achievement of specific organizational goals; 2)guaranteeing greater discipline in the administration ofprograms; 3) resisting deviations from standard practices inadministration and auditing; 4) assisting governmentofficials in carrying out their functions; and 5) being activeproblem-solvers within the government.

Mr. Rahman, the head of the ACA, was appointeddirectly by President Mubarak. He is a highly respectedformer army general. From the limited view which we had,his leadership has taken a small, somewhat ineffectiveorganization and has changed it into a significant forcewithin Egypt. He has done this with a variety of creativemanagement techniques, a sharp and well-defined mission,and a bulldog determination to eradicate corruption. Hisstrategy has been twofold: first, to aggressively root out themost blatant forms of corruption, and second, to ensure theintegrity of his own organization.

It appeared to us that even with all of this commitment,Director Rahman is a practical administrator. He fullyadmits and understands the enormity of his task. Egypt is acountry with severe poverty and population problems.These problems are simply exacerbated when corruption isthrown into an already volatile mix. Many Federal agenciesalso have concerns about Egypt, the second largest recipientof U.S. aid. Rahman also readily admits that the ACA haslimitations, often driven by limitations in resources andpersonnel. He has had to make difficult choices.

Rooting Out CorruptionEven with the limited capacity of the ACA, they

showed us an astonishing record of success. In manyrespects, the activities of the ACA are similar to those of theIG and ethics communities in the U.S. (See Table 1).

As the categories in Table 1 demonstrate, the ACAreceives assignments not only from the national executivebut also from state executives. As important, additionalassignments originate from the more than 22,000 com-

Requirements by State Sector Number % Completed in 93/94

Assignments by the Prime Minister 22 100%

Assignments by Ministersand Governors 442 83%

Investigative Requirements byInvestigating Authorities 227 100%

Complaints submitted by citizens 22,138 92% (examined)

Illegal Gain Cases 95 85%

Inquiries about candidates fortop management posts 4947 96%

Investigations of those who areto receive state medals 60 96%

Total Activities 27,865 93%

Table 1.Administrative Control Authority of Egypt

Accomplishments for Fiscal Year 1993/1994 5

American Yankee (continued)

5 The data in both Tables 1 and 2 were provided by Director Ahmed Abdel Rahman at the International Conference on Ethics in Government,Washington, DC in November, 1994.

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plaints submitted by citizens. Given the number of admin-istrative and criminal referrals and the recovery of dollaramounts, the system appears to be fairly successful, at leaston the surface. Table 2, with categories remarkably similarto those used by many IGs, gives a fairly reasonablesnapshot of the monetary accomplishments of the ACA.

However, several questions remain about the meaning-fulness of the numbers. As impressive as the record is, whatis its relationship to the actual level of crimes, misappro-priations and ethics violations? An even larger question canbe raised about the materiality of the violations: Was theACA getting the “big fish” or simply inflating the numbersby netting minnows? In a sense, these are the same naggingquestions which haunt our own enforcement communities inthe U.S.

Ensuring the Integrity of the ACAThe question of “who guards the guardians?” is almost

as old as antiquity. It is a question that the leadership of theACA has had to answer. Finding this answer is especiallydifficult in the context of hiring and keeping professionalinvestigators and auditors at salaries which are often only afraction of the compensation of the comparable private

sector job. There are approximately 600 professional ACAstaff and almost double that number in support staff. Theprofessional salaries are held down by the Egyptianparliament. Although the salaries may be nominal, ACAleadership has found other ways to support their profes-sional staff -- and with the support of the Parliament!

For example, because of the expense of vehicles inEgypt, each of the professional “members” is provided witha car and a driver. In addition, the ACA has its ownfacilities for maintaining and repairing these autos, includ-ing a machine shop and body repair. They have a smallapparel sales facility to ensure the professional dress of theirmembers. They have food services, which provide meals toemployees -- and families at significant discounts. Thekitchen and the bakery on the premises provide meals forthe members, as well as for (us) their guests. The bakerywas especially memorable! They even use one floor of thebuilding as guest quarters -- which is where the delegationfrom OGE stayed.

The main ACA headquarters is a modern, 14-storybuilding in Heliopolis, one of the largest suburbs of Cairo.It provides many of the amenities and conveniences which

Major Goals Activities and Results

Preventive Control Cancelling and correcting (11) tendersand agreements valued at 1.038 billionEgyptian Pounds6

Discipline of * 96 Dismissals of Public Servants

Public Servants * 256 Administrative Punishments

* 97 Transfers for misbehavior

* 616 Referrals of public servants to the prosecutor

Public Funds Restored * Realized: £111.031 million Egyptian

to the State * Expected: £54.841 million Egyptian

* Preserved: £35.199 million Egyptian

* Expected return as a result of criminal prosecutions- £148.167 million Egyptian

Table 2.Analytical Breakdown of Operations for theAdministrative Control Authority of Egypt


6 The current exchange rate is 3.1 Egyptian pounds to one American dollar, so this savings is approximately $330 million.

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we often take for granted: comfortable office space and aparking garage attached to the building. In addition, theACA has a fitness center in the building, its own securityand it even houses the fire department for the neighborhood.

Professional support for members (that is, the profes-sional staff) is also significant. As examples, the ACAhouses state of the art computers to help in audits and aphotography and video group to provide support forundercover operations. They use a variety of investigativemechanisms and audits. They do not carry firearms. Andalthough they can perform arrests with a warrant from amagistrate, if they think violence is likely they will requesthelp from the police.

The emphasis on professionalism and professionalsupport has bred an esprit de corps and commitment on thepart of ACA professionals. The pride they take in theirorganization and the sense of fully supporting their missionwere present in every conversation we had with them.These professionals are not “pollyannas.” They recognizethe massive struggle they are up against and how pervasivecorruption is in Egypt. They are pragmatists, who are tryingto form an effective strategy to combat the forces ofcorruption while recognizing the political limitations(e.g., the courts) and realizing that it is impossible to doeverything at once.

Observations and theConsulting Experience

What is impressive about the ACA leadership is thealmost unquenchable desire to learn new tech-niques and refine old ones in capturingand facilitating the IG/ethics function.There is a broad commitmentamong the leadership to developa strong training ethic withinthe organization. On apersonal level, the ACAis one of the mostaccomplished“learning organiza-tions” I have everseen. For ex-ample, theyrequire seniormanagers to develop tri-lingual skills in Arabic, Englishand French and have actually created alanguage lab in their facility, so that employees can fulfill thisrequirement. They hire instructors from the AmericanUniversity in Cairo and expect supervisors and managers toparticipate weekly. Senior staff meetings are regularly heldin either English or French. One reason for this effort is thatmuch of the information the ACA receives on enforcementtechniques and methods comes in those two languages.

The purposes of our lectures and consultations were toprovide insight into our Standards of Conduct (and adminis-

American Yankee (continued)

trative enforcement), financial disclosure and training. Oneof the frustrations for the Egyptians is the slowness andineffectiveness of their judicial process. We provided amodel of an effective set of administrative rules andprocedures which would more likely get the “bad guys” outof the system. We also covered the auditing of financialdisclosure statements and our financial disclosure system.We stressed especially how the system can be monitoredand used to identify financial elements of corruption. TheEgyptians were also very interested in the methods we usedto train civil servants and how these could be fitted intotheir overall efforts to prevent corruption.

Although Egypt does have some parallel systems, manyare less than effective. For instance, the financial disclosuresystem is not public and officials file disclosure forms every5 years. And, although there are administrative remedies,agencies are very limited in any unilateral action againstcorrupt employees. There is little or no training, and manymembers of the ACA were curious about how to developeffective training tools and courses.

What impressed the American delegation most wasthe knowledge our “students” already possessed. Contraryto our initial fears, the supervisors and managers whoattended our training sessions exhibited a substantialknowledge of the concepts and enforcement problems inethics. They demonstrated this knowledge throughinsightful and penetrating questions which often focusedon obstacles that we have still not resolved in the U.S.,such as “What do you do if a senior level official refusesto file a financial disclosure upon leaving office?” “How

do you get people in authority to support those withenforcement responsibilities?”

Also of interest were the issueswhich we had taken for granted

simply because we are Ameri-cans. An example of these

issues include the separationof powers. We assume that

cabinet secretaries are inthe executive branch.

Yet in many coun-tries, like Egypt,they are bothlegislative andexecutive. This

kind of distinctioncan potentially play

havoc to a uniform set of rules.

The ACA leadership often contrasted their experienceswith our own. For example, our Egyptian colleagues weresurprised at how extensive the responsibility and authorityof the ethics offices (OGE, IGs and OSC) are. They wereespecially intrigued with certain American systems. Theseincluded the existence of an ethics office in the ExecutiveOffice of the President; that the President and Vice-President have to file financial disclosure forms; and thatthey are available to the public!

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Also of interest were the similarities with our ownsystem. Their major problem was how to get prosecutors totake cases and follow through with criminal prosecution.This is a difficulty, we assured them, that we all share.

SummaryThe opportunity to work side by side with our ACA

colleagues in Egypt has given me an entirely new perspec-tive on our work in the United States. Although there areremarkable similarities in the types of offenses, enforcementproblems and administrative issues, the degree and intensityof corruption the ACA in Egypt faces is vastly greater. Forthis reason, all the members of our group uniformly

admired the ACA leadership’s commitment and desire to doa more effective job. The ACA, like many similar organiza-tions around the world, needs the support, technical helpand encouragement of other anti-corruption agencies.

The internationalizing of anti-corruption efforts,including agreements such as the recent Inter-AmericanAnti-corruption Convention, reminds us of how much wecan learn from each other. This experience was also areminder of how small the world has become and howmuch all societies have in common, both in terms of ourproblems and our promise. Only through the sharing ofanti-corruption ideas, structures and techniques can wehope to control the last, worst enemy of democracy:political corruption. ❏

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