Council of Inspectors General on Integrity and Efficiency

FALLI\\,l~TER 2009-2010 Council of Inspectors General Invitation to Contribute Articles on Integrity and Efficiency to the Journal of Public Inquiry

Members of the Council

Agency for International Development Department of Interior The Journal of Public Inquiry is Department of Agriculture U.S. International Trade Commission Inspector General Reform Act a publication of the Inspectors The Amtrak Department of Justice of 2008 created the Council of Appalachian Regional Commission Department of Labor General of the United States. We Inspectors General on Integrity Architect of the Capitol Legal Services Corporation solicit articles from professionals and and Efficiency. This statutory U.S. Capitol Police Library of Congress scholars on topics important to the council supersedes the former Central Intelligence Agency National Aeronautics and Space President’s Council on Integrity Department of Commerce Administration Inspector General community. and Efficiency and Executive Commodity Futures Trading Commission National Archives Council on Integrity and Consumer Product Safety Commission National Credit Union Administration Articles should be approximately four Efficiency, established under Corporation for National and Community National Endowment for the Arts to six pages (2,000-3,500 words), Executive Order 12805. Service National Endowment for the Humanities Corporation for Public Broadcasting National Labor Relations Board single-spaced, and e-mailed to: The CIGIE mission is to The Denali Commission National Science Foundation [email protected] address integrity, economy, and Department of Defense Nuclear Regulatory Commission effectiveness issues that transcend Office of the Director of National Office of Personnel Management To join the mailing list, please provide individual government agencies; Intelligence Peace Corps Department of Education Pension Benefit Guaranty Corporation your name and address by e-mail to: and increase the professionalism Election Assistance Commission Postal Regulatory Commission [email protected] and effectiveness of personnel by Department of Energy U.S. Postal Service developing policies, standards, Environmental Protection Agency Railroad Retirement Board and approaches to aid in the Equal Employment Opportunity Securities and Exchange Commission establishment of a well-trained Commission Small Business Administration and highly skilled workforce Export-Import Bank of the United States Smithsonian Institution in the offices of the Inspectors Farm Credit Administration Social Security Administration General. Federal Communications Commission Special Inspector General for Afghanistan Federal Deposit Insurance Corporation Reconstruction The CIGIE is led by Chair Phyllis Federal Election Commission Special Inspector General for Iraq K. Fong, Inspector General Federal Housing Finance Board Reconstruction of the U.S. Department of Federal Labor Relations Authority Department of State Agriculture, and Vice Chair Carl Federal Maritime Commission Tennessee Valley Authority Clinefelter, Inspector General of Federal Reserve Board Department of Transportation the Farm Credit Administration. Federal Trade Commission Department of Treasury The membership of the CIGIE General Services Administration Treasury Inspector General for Tax Government Accountability Office Administration Disclaimer: The opinions expressed in the Journal of Public Inquiry are Journal includes 69 Inspectors General Government Printing Office Special Inspector General for the Troubled those of the authors. They do not represent the opinions or policies of any from the following federal department or agency of the U.S. government. of Public Inquiry Department of Health and Human Services Asset Relief Program agencies: Department of Homeland Security Department of Veterans Affairs Department of Housing and Urban Development LetteR FROM tHe eDItOR-IN-CHIeF

The importance of the Journal of Public Inquiry can best be illustrated by the content provided in the Fall/Winter 2009-2010 edition, which highlights the critical role inspectors general play in the federal government from investigations to congressional testimony to prioritizing accountability. The Journal increases public awareness and ensures that government decision-makers, Congress, and the public are cognizant of the pivotal role inspectors general play in the economy, efficiency, and effectiveness of our respective agencies and departments. This is a time of enormous challenge and responsibility for many of us who are working as “agents of positive change” in the federal government. We are in a different environment, one where new issues and technologies add complexity to the multitude of programs and operations we oversee. We do have challenges ahead, but this is also a time of great opportunities. We are committed in our mission to provide objective, independent, and professional oversight. However, the expectations from our respective agencies, Congress, and the public remain high. Statutory inspectors general are crucial to improving the efficiency of the executive branch through our expertise in audits, investigations, evaluations, and our knowledge of particular programs and operations. And here lies the opportunity. The focus must turn to the generation of ideas and solutions. Partnerships must be cultivated and relied upon. We must come together in forums, such as the Journal, to delve into the heart of our mission and discover the changes we can make towards the advancement of our community. The Journal includes six articles related to investigations, which address initiatives such as how to maximize recoveries in fraud cases and how to utilize a forensic document laboratory. One author shares his experiences in training foreign government officials unfamiliar with the IG concept, while another discusses the manner in which earlier inspectors general decisions likely influenced the perceptions of current IGs regarding their oversight responsibilities. FBI Director Robert Mueller, and Inspectors General Daniel Levinson and Brian Miller address different audiences in speeches on cyber security, health care, and federal law enforcement. In addition, we include testimony of Inspector General Paul Martin on the challenges facing NASA and the testimonies of Inspector General Arnold Fields and Deputy Inspector General Kenneth Moorefield before the Commission on Wartime Contracting regarding challenges in Afghanistan. So much of our future gives me pause for positive thought – not only in the difference we are making for our country, but in the ideas shared in this Journal. I encourage anyone with interest in the oversight community to read and lend support to the Journal. We are grateful to the editorial board and the authors for their significant contributions to our community.

Gordon S. Heddell Inspector General Journal of Public Inquiry Show Me the Money! Inspectors General: 1 Maximizing Agency 25 Prioritizing Department of Defense Recoveries in Fraud Cases Accountability Inspector General Staff Written by Michael Davidson Written by James Ives Department of Homeland Security Department of Defense Office of Inspector General Office of Inspector General Editor-in-Chief Gordon S. Heddell A Special Expertise: RSA Cyber Security 32 Conference Publisher 5 Forensic Document Laboratory Speech by Robert Mueller, III John R. Crane Federal Bureau of Investigation Written by Nancy Cox and Kirsten Singer Editor Department of Veterans Affairs American Health Jennifer M. Plozai Office of Inspector General 36 Lawyers Association Conference Graphic Design Assistant Model Protocol for Speech by Daniel Levinson Jacob A. Brown 10 Search Strings in Public Department of Health and Corruption Cases Human Services Office of Inspector General Editorial Assistants Written by Colin May Department of Defense Helen Aaron & Jamie Critchfield Field Operating Agency Federal Law 41 Enforcement Training Journal Editorial Board Inspectors General Center Graduation 15 Supreme Impact Speech by Brian Miller Gregory H. Friedman Written by Brian Haaser General Services Administration Inspector General Department of Agriculture Office of Inspector General Department of Energy Office of Inspector General Key Issues and 43 Challenges Facing NASA J. Russell George Postal Service’s Share of CSRS Pension testimony by Paul Martin Inspector General 19 National Aeronautics and Treasury Inspector General for Responsibility Space Administration Tax Administration Written by Mohammad Adra Office of Inspector General and Renee Sheehy U.S. Postal Service Afghanistan Mary L. Kendall Office of Inspector General Acting Inspector General 48 Reconstruction Department of the Interior Training an Ex- testimony by Arnold Fields Special Inspector General for 22 Communist Country on Afghanistan Reconstruction Allison Lerner the Inspector General Inspector General Concept Challenges with Afghan National Science Foundation Written by Dennis Raschka 52 National Security Forces Department of Housing and Urban Development Training Contracts Richard Moore Office of Inspector General testimony by Ken Moorefield Inspector General Department of Defense Office of Inspector General Tennessee Valley Authority 1 Denotes the end of an article.

Kathleen Tighe Inspector General Disclaimer: The opinions expressed in the Journal of Public Inquiry are those of the authors. They do not represent the opinions or policies of any department or agency of Department of Education the U.S. government. United States Department of Homeland Security Office of Inspector General

[INVESTIGATIONS] Show me the Money! Maximizing Agency Recoveries in Fraud Cases The coordination of all remedies - criminal, administrative, and contractual - is critical when investigating and resolving a fraud case

By Michael J. Davidson Largely through the investigative efforts of the Office of Inspector General agents and other law enforcement entities, the XYZ Corporation and one or more of its employees is convicted and fined after defrauding the government. The miscre- ant corporate employees are incarcerated and the Department of Justice follows up with a civil False Claims Act lawsuit to extract additional penalties. Any relevant contracts will be terminated and a refer- ral is made to the victim agency’s Suspen- sion and Debarment Official to debar the company and the defendant employees from future contracts. You close the case and move on to other things because there is nothing left to do, right? Wrong! its initial period of availability. After the official or agent of the government re- One important, and often over- five year period expires, the appropria- ceiving money for the government from looked aspect of a fraud case is facili- tions account is deemed closed and all any source shall deposit the money in the tating the return of money back to the unobligated funds must be returned to treasury as soon as practicable without victim agency in order to make it whole. the treasury’s general fund. This article deduction for any charge or claim.” The More often than not, the agency still attempts to familiarize the OIG com- statutes mandate is a broad one. As one needs the goods, services or funds that it munity with some of the legal avenues to court noted, it applies to “money for the lost through fraud. Fortunately, the law return money, goods, and services to the government from any source . . . . The provides several mechanisms to make victim agency. original source of the money—whether the victim agency whole, but many of from private parties or the government— these require advanced coordination and THE MISCELLANEOUS is thus irrelevant.”1 The improper reten- familiarization with the relevant legal tion of funds not only would violate the authority. The early coordination of an RECEIPTS STATUTE miscellaneous receipts statute, but also agency recovery is not only important in The primary legal obstacle for returning would likely constitute an improper aug- terms of the practical necessity to include money to agency coffers is the miscella- mentation of an agency’s appropriation. this in any plea or settlement negotia- neous receipts statute, which establishes However, like most laws, the tions, but also because of the legal time the general rule that all money received miscellaneous receipts statute has excep- limits on the agency’s ability to spend the by or for the United States must be re- tions, which may allow an agency to re- money. Pursuant to 31 U.S.C. § 1553(a), turned to the treasury Department. Spe- 1 Scheduled Airlines traffic Office, Inc. v.De- all time limited appropriations cease to cifically, the miscellaneous receipts statute, 31 U.S.C. § 3302(b), states that “an partment of Defense, 87 F.3d 1356, 1362 (D.C. be available for obligation five years after Cir. 1996) (emphasis in original).

Visit www.ignet.gov 1 tain monies received. The Government noted that “Government agencies that Accountability Office has opined that are victims of offenses involving fraud the statute does not apply when 1) an and deceit are entitled to restitution un- agency is specifically authorized by stat- der 18 U.S.C. § 3663A(a)(1), the Man- ute to retain money or 2) the money is a datory Victim Restitution Act.”4 qualifying refund to the agency’s appro- However, there are some limi- priations.2 GAO defined a refund “to tations on recovery. First, 18 U.S.C. § include ‘refunds of advances, collections 3664(i) provides that when the United for overpayments made, adjustments for States is a victim, “the court shall ensure previous amounts disbursed, or recov- that all other victims receive full restitu- eries of erroneous disbursements from tion before the United States receives any appropriation or fund accounts that are restitution.” Further, in Federal Motor directly related to, and reductions of, Carrier Safety Administration, B-308478 previously recorded payments from the (Dec. 20, 2006), GAO discussed resti- accounts.’”3 tution in the context of the refund ex- False Claims Act recovery.6 the author- ception and limited agency retention of ity to retain this money derives from the CRIMINAL RESTITUTION restitution to those amounts properly statutorily created DOJ three Percent Specific statutory authority exists that classified as a refund. In other words, the Fund, whose originating legislation first permits a victim agency to retain monies restitution must reflect an amount paid appeared in 1993, but was repealed and received in the form of criminal restitu- in error, overpaid or an adjustment of reenacted in 2002 with more expansive tion. The Victim and Witness Protection a previous amount dispersed. Unfortu- parameters for DOJ’s use of collected Act of 1982, 18 U.S.C. § 3663, amend- nately, GAO did not discuss the applica- funds.7 the fund is used to pay for vari- ed by the Mandatory Victim Restitution bility or scope of the Acts. ous DOJ debt collection expenses and to Act of 1996, 18 U.S.C. § 3663A, pro- support the U.S. Attorney Offices’ Fi- vides this authority. The Victim and Wit- CIVIL FALSE CLAIMS ACT nancial Litigation Units. ness Protection Act authorizes a court to the civil False Claims Act, 31 U.S.C. §§ Second, GAO has opined that order a criminal defendant to make res- 3729-3733, is the government’s prima- an agency may retain a portion of a re- titution to the victim of the crime. The ry weapon against fraud. the Act dates covery as a form of refund. Specifically, Mandatory Victim Restitution Act made from the Civil War but was significantly GAO has opined that “the refund ex- victim restitution mandatory for certain strengthened in 1986 following the pro- ception . . . allows agencies to retain the property crimes, crimes of violence, and curement scandals of the 1980s. Since portion of a settlement that represents consumer product tampering offenses. 1986, DOJ has recovered more than $24 amounts erroneously disbursed due to The definition of a “victim” is virtually billion in False Claims Act settlements a false claim.”8 this exception permits identical for both statutes. and judgments, including recovery of an agency to retain that portion of the Significantly, a federal agency $2.4 billion in FY 2009 alone.5 Signifi- recovery that represents its “direct loss,” is considered a victim entitled to resti- cantly, for purposes of this article, sec- or what is often referred to as “single tution. to illustrate, in Refert v. United tion 3729(a) of the Act provides for the damages” in the False Claims Act con- States, 519 F.3d 752, 759 (8th Cir. recovery of treble damages and penalties. text.9 However, GAO rejected an agen- 2008), the court, in a health care pros- Although the False Claims Act cy’s request to retain treble damages and ecution, upheld an order of restitution does not specifically authorize a victim penalties. GAO applied to False Claims to the Indian Health Service, which is agency to retain any money recovered Act awards the general rule that penalties part of the Department of Health and in a case, authority exists elsewhere for may not be retained by an agency, but in- Human Services, that covered the costs both the DOJ and a victim agency to re- stead must be deposited in the treasury’s of emergency care services obtained tain a portion of a case recovery. First, through false representation. The court DOJ retains three percent from the total 6 National Science Foundation-Disposition of False 2 Tennessee Valley Authority-False Claims Act Claims Recoveries, B-310725 (May 20, 2008), at Recoveries, B-281064 (Feb 14, 2000), at 2; 4 519 F.3d at 759. n.3 (“DOJ deducts a 3-percent fee for its services Federal Emergency Management Agency-Disposi- 5 Press Release, Dep’t of Justice, Justice Depart- from the total recovery”). tion of Monetary Award Under False Claims Act, ment Recovers $2.4 Billion in False Claims Cases 7 See 28 U.S.C. § 527 note. B-230250 (Feb. 16, 1990), at 2. in Fiscal Year 2009; More Than $24 Billion Since 8 NSF, at 4. 3 FeMA, at 2. 1986, (Nov. 19, 2009). 9 Id.; TVA, at 3.

2 Journal of Public Inquiry ance program.12 Significantly, the Fund for such investigations.”16 the fact that received no appropriations to pay for its the agency received appropriated funds administrative expenses or to reimburse to conduct investigations distinguished it for any losses. 13 these opinions from the TVA and FEMA Second, in Tennessee Valley opinions. Authority-False Claims Act Recoveries, the agency was permitted to retain, by GOODS AND SERVICES depositing in the tVA Fund, not only One point that becomes particularly im- “moneys erroneously disbursed on the portant when negotiating a settlement basis of the false claim,” but also “in- with a criminal defendant or civil False vestigative costs . . . directly related to Claims Act defendant is that the miscel- the false claim.”14 the tennessee Valley laneous receipts statute only applies to Authority was a wholly owned govern- the receipt of money and not to the re- ment corporation financed by the sale of ceipt of goods or services.17 Accordingly, power, the revenue from which was de- the miscellaneous receipts statute restric- general fund as a miscellaneous receipt.10 posited into the tVA Fund. GAO deter- tions are not triggered when an agency Additionally, GAO determined than any mined that the refund exception applied receives goods or services, rather than amounts exceeding an agency’s actual to “investigative costs that are directly money, as part of a settlement agree- losses must also be deposited as miscella- related to the false claim. these are a di- ment. Further, the receipt of such goods neous receipts.11 In sum, a victim agency rect consequence of the false claim paid, or services does not require an “offsetting may only retain that portion of an award 15 and increased tVA’s losses.” transfer from current appropriations to or settlement that represents the agency’s However, in two clarifying opin- miscellaneous receipts” and the miscel- actual losses that are directly related to ions, GAO severely limited an agency’s laneous receipts statute remains inap- the underlying misconduct. authority to recover investigative costs plicable even if the agency could have when the agency received an appropria- received money, rather than goods or ser- INVESTIGATIVE COSTS tion for the conduct of investigations. In vices, and such money would have been At least two earlier GAO decisions sug- the Federal Motor Carrier Safety Admin- otherwise returned to the treasury.18 It gested that an agency could retain inves- istration opinion discussed above, GAO may be easier for a defendant to settle a tigative costs as part of a False Claims restricted agency retention of investiga- case by providing replacement goods and Act award or settlement. First, in Fed- tive costs in the form of criminal restitu- services rather than by paying a mone- eral Emergency Management Agency-Dis- tion to amounts meeting the definition tary settlement. Indeed, it is not uncom- position of Monetary Award Under False of a refund. Next, in National Science mon for DOJ to settle False Claims Act Claims Act, B-230250 (Feb. 16, 1990), Foundation – Disposition of False Claims cases and require the provision of goods at 3, GAO permitted FeMA to deposit Recoveries, B-310725 (May 20, 2008), or services to the victim agency as part of into the National Insurance Develop- GAO rejected a request from the Nation- the settlement agreement.19 Further, 18 ment Fund not only that portion of the al Science Foundation Inspector General U.S.C. § 3664(f )(3)&(4) specifically au- False Claims Act award representing to credit to the IG’s appropriations that thorizes restitution in the form of prop- the amount erroneously paid out of the amount of a False Claims Act recovery erty replacement or services.20 Fund because of false insurance claims, representing the IG’s investigative costs. but also the amount of administrative GAO reasoned that recovery of the IG’s 16 NSF, at 4. expenses the Fund incurred investigat- 17 Bureau of Alcohol, Tobacco, and Firearms— investigative costs did not qualify as a Augmentation of Appropriations—Replacement of ing the insurance claims and preparing refund because they were “not payments Autos by Negligent Third Parties, B-226004 (July the case for trial. the National Insurance made in error, overpayments, or other- 12, 1988). Development Fund was a revolving fund wise adjustments to amounts previously 18 Id.; see also Procurement Fraud Division that received funding from several sourc- (PFD) Note, The Miscellaneous Receipts Statute disbursed,” rather such costs “are pay- and Permissible Agency Recoveries of Monies, Army es including insurance premiums and ments properly made from an appropria- Lawyer (March 2001), at 36. fees; and in turn served as the funding tion that is available for incurring costs 19 PFD Note, supra, at 35 (DoJ settlement source for FeMA’s federal crime insur- agreement with a defense contractor that 12 Id. at 1. included millions of dollars worth of goods and 13 Id. at 3. services). 10 FEMA, at 4. 14 TVA, at 3. 20 Bureau of Prisons-Disposition of Funds Paid 11 Id. 15 Id. at 3. in Settlement of Breach of Contract Action,

Visit www.ignet.gov 3 CONTRACT RELATED a pecuniary loss as a direct result of the Michael J. Davidson RECOVERIES commission of the offense underlying a An agency may recover, and retain, mon- forfeiture.” 28 C.F R. § 9.2(m),(v). ey through various contractual mecha- In cases of judicial forfeiture, nisms. A principal vehicle for recovery the victim agency can submit a peti- includes reprocurement costs associated tion for remission of forfeited assets to with contracts tainted by fraud. For ex- the Assistant U.S. Attorney handling the ample, in Appropriation Accounting-Re- case, who in turn will forward the peti- funds and Uncollectibles, B-257905 (Dec. tion, with recommendations concerning 26, 1995), GAO posited that money re- the petition from the United States At- covered under a fraudulent contract, in torney’s Office and the seizing agency, this case from an embezzler, qualified as a to DOJ’s Asset Forfeiture and Money refund that the agency could deposit “to Laundering Section. 28 CFR §§ 9.1(b) Michael J. Davidson is a supervisory the credit of the allotment/appropria- (2); 9.4(f). this generally will decide the contract and fiscal law attorney with the tion against which the payments previ- petition after all relevant assets have been Office of the Principal Legal Advisor, ously were charged . . . .” Similarly, in forfeited and a final order of forfeiture is Immigration and Customs enforcement. the event of a contract breach, including received. He has previously served as a litigation fraud-based terminations for default, the and supervisory attorney with the agency may retain any funds received as CONCLUSION Department of the treasury. He also a remedy for the default and use them the coordination of all remedies – crimi- practiced law as an Army judge advocate, to fund a replacement contract, includ- nal, civil, administrative, and contractual retiring from the Army after 21 years of ing money that exceeds the cost of the – is critical when investigating and suc- service. original contract, so long as the excess cessfully resolving a fraud case involving His prior assignments have money serves to make the agency whole the United States. One such remedy is included branch chief with the Army and the agency procures similar goods or the recovery of funds to the victim agen- Procurement Fraud Division, as special services. cy lost to fraud so that the agency can assistant U.S. attorney in Arizona obtain the goods and services that it still specializing in procurement fraud and FORFEITURE FUNDS needs, and that Congress originally in- public integrity prosecutions, and as a Finally, an agency may seek the recovery tended it receive. As described in this ar- special trial attorney with DOJ’s civil of money through forfeiture funds. At ticle, several legal avenues exist to recover fraud section. least two such funds contemplate pay- those funds, but the procedures are often Mr. Davidson earned his ment of forfeited funds to federal agency complex and require advanced planning Bachelor of Science degree from the victims - the DOJ Asset Forfeiture Fund and coordination. 1 U.S. Military Academy, his J.D. from and the treasury Forfeiture Fund. title the College of William & Mary, a LL.M. 18 United States Code in Military Law from the Army’s Judge Section 981(e)(6) au- Advocate General’s School, a second thorizes the Attorney LL.M. in Government Procurement Law General, the Secretary from George Washington University, of the treasury, and the and a Doctor of Juridical Science in Postal Service to trans- Government Procurement Law from fer forfeited property as GWU. His doctoral dissertation focused restoration to victims on procurement fraud. of an offense. A victim is defined as a person, including a legal en- tity, “who has incurred B-210160 (Sept. 28, 1983).

4 Journal of Public Inquiry United States Department of Veterans Affairs Office of Inspector General

[INVESTIGATIONS] A Special Expertise: Forensic Document Laboratory Much like a fingerprint, an individual’s handwriting is unique, and therefore identifiable to a single person �

By Nancy Cox and Kirsten Singer the Veterans Affairs Office of Inspector General is tasked with perhaps one of the most honorable of all IG missions: to protect and provide care, support and recognition for America’s veterans and their families. the VA OIG fulfills this mandate through five primary Of- fices: Investigations, Audit, Healthcare Inspections, Contract Review, and Man- agement and Administration. each of these offices provides critical services to veterans and each has access to a highly specialized unit that frequently provides convincing resolution in investigations -- the VA OIG Forensic Document Labo- ratory. established within the Veterans Administration in the 1950s, the Foren- sic Document Laboratory was originally known as the “Identification and De- document instrumentation and con- to Charles Lindbergh in the “trial of the tection Laboratory” of the Investigation ducts all aspects of traditional document century.” Over time, the examination of Service, Office of Appraisal and Secu- examination. questioned documents came to be recog- rity, Washington, D.C. then, as today, nized as a skill that required specialized a majority of the laboratory’s casework Forensic Document training to achieve competency. involved disputed documents submitted Expertise the term “questioned docu- by VA claimants. When the VA OIG was Forensic document examination – also ment” usually refers to any kind of paper created in 1978, the laboratory was in- known as “questioned documents” or that contains handwritten or machine corporated into its mission capabilities, “handwriting analysis” – is one of the markings whose authenticity or origin is and continues to provide invaluable as- oldest of the forensic sciences. In 1910, at issue. Questioned writings, however, sistance in criminal and administrative the forensic document profession gar- may also be found on such “documents” investigations. today’s laboratory serves nered official status in the United States as walls, boxes, doors, and even on vic- 128 VA OIG criminal investigators na- with the publication of the book “Ques- tims of homicide. Known primarily as a tionwide and conducts approximately tioned Documents” by Albert S. Osborn, discipline that examines and compares 100 examinations a year involving thou- an examiner who later identified Bruno questioned and known writings to de- sands of documents. the laboratory is Hauptmann’s writing in ransom notes termine authorship, this expertise also equipped with state-of-the-art forensic

Visit www.ignet.gov 55 encompasses a myriad of other kinds of document examiner? there are a variety complies with standard procedures, the document examinations, including au- of undergraduate and graduate degree judge can presumably determine the reli- thenticating and dating documents; de- programs that offer forensic document ability of an expertise and admit it for ciphering indented, erased, obliterated, examination courses, and these provide a trial. the forensic sciences continue to charred and water-soaked documents; good general foundation for this forensic be challenged by Daubert, but forensic examining and comparing typewritten science. But the true expertise is acquired document examination has become the entries; and conducting paper and ink through an apprenticeship program, last- model for addressing Daubert challenges analyses. the explosion of technology ing at least two years, under the purview in the forensic community. in the latter half of the twentieth cen- of qualified, experienced forensic docu- the forensic document examin- tury expanded the role of the document ment examiners. Literally thousands of ers of the VA OIG conduct each exami- examiner to include the examination of handwriting samples must be examined nation independently and objectively, is- documents generated using such ma- over time before an examiner develops suing a written report at the completion chines as photocopiers, faxes, and com- the expert ability to discriminate individ- of an examination and testifying to their puter printers. ual handwriting features from those that findings in court when called to do so. By far, the most frequently re- are more common. the training period to further ensure quality and accuracy, quested forensic document examination also includes the many other aforemen- independent technical and administra- is the comparison of questioned writing tioned document examinations, as well tive reviews are conducted by a second with the known writing of a subject to as report writing, testimony prepara- Forensic Document Laboratory exam- determine whether or not the subject tions, and moot courts. Following this iner for every document case. produced the questioned writing. Much rigorous training period, a fully-trained like a fingerprint, an individual’s hand- forensic document examiner is then eli- VA Document Cases writing is unique, and therefore identifi- gible to apply for national certification the role of forensic document exami- able to a single person. Unlike a finger- through the American Board of Forensic nation in the criminal justice process is print, however, handwriting can not only Document examiners. the Board was significant. A qualified examiner may be change over time, it is also susceptible to established in 1977 with a grant from the asked to resolve many issues concerning other influences, such as disguise, illness, Department of Justice to provide, in the the origin or validity of a document in medications, and writing surface. these interest of the public and the advance- nearly every type of crime. While inves- variables, combined with the twenty-first ment of science, a program to recognize tigations of the VA OIG are diverse rang- century’s predilection to replace original qualified forensic document examiners ing from procurement fraud, bribery, documents with copies, resulted in the in government and private laboratories. embezzlement, and identity theft, to pa- need for examination conclusions that the Board certification process requires tient abuse, sexual assault and homicide, express the extent of a document exam- a credentials review, after which the can- a common denominator in each case is iner’s certainty based on the evidence didate must successfully pass compre- the documents. Disputed or incriminat- at hand. these conclusions range from hensive written, practical, and oral exam- ing documents are often critical evidence identification to elimination, with de- inations. the laboratory currently has in a multitude of offenses. grees of certainty in between. this con- two Board certified forensic document Over the last three years, ap- clusion terminology has been standard- examiners with a combined experience proximately 85 percent of the cases ized and published by the American of more than 35 years. Both examiners submitted to the laboratory have been Society for testing and Materials, and are active in regional and national fo- examined in order to determine author- is referred to as Standard Guide e1658, rensic science organizations, and one of ship of a questioned document while the Standard terminology for expressing the examiners is a national subject mat- remaining 15 percent involved other as- Conclusions of Forensic Document ex- ter expert in Daubert legal admissibility pects of documents including alterations aminers. the Forensic Document Labo- challenges. Daubert refers to a 1993 Su- and indentations. A conclusion regard- ratory adheres to this standard, as well as preme Court decision in which judges ing a document’s authenticity (e.g., gen- 17 other published forensic document were assigned the responsibility of being uine date/time period) was reached in 90 examination standards -- the greatest the “gatekeepers” for allowing expert tes- percent of the cases. More than half of number of AStM standards published timony at trial. By applying criteria such the disputed handwriting cases examined by any forensic discipline to date. as whether an expertise is generally ac- by the laboratory substantiated some How does one become a forensic cepted, has an established error rate, and level of fraud. these forensic document

6 Journal of Public Inquiry examinations have contributed not only years probation, and ordered to pay resti- parison of questioned and known writ- to numerous convictions and reimburse- tution. the loss to VA was over $95,000 ings (Figure 3). ments, but also avoidance of unnecessary dollars. In a not-so-recent case, but one or unwarranted costs. Most important- In another case involving an al- that is distinct for its bravado, a veter- ly, these examinations have enabled the tered DD-214, an honorably discharged an’s wife provided a letter to VA that she proper disbursement of benefits to veter- veteran attempted to expand his list of claimed to have received from President ans and their families. medals from two to seven, including John F. Kennedy in November 1960. an unearned Purple Heart medal and a In the letter, the President assures the Stolen Valor Combat Infantry badge (ironically, one wife that not only is he “fully aware of Unequivocally, cases that receive the of his two genuine awards was a Good her husband’s condition and needs,” but highest priority are those that imperil life Conduct Medal). In this case, the foren- that his claim for benefits compensation or liberty. However, the VA OIG recog- sic document examiner determined that would be investigated by “the proper le- nizes another category that is nearly equal the questioned DD-214 and an origi- gal authorities.” the letter itself is typed, in gravity – the false claim, manufacture, nal file copy originated from the same but contains a signature in the name or sale of any military decoration, medal, source document, with some notable dis- John Kennedy. Perhaps the wife believed badge or other award. Known as Stolen crepancies. the additional typewritten that by invoking the President’s name Valor, this offense became a federal crime awards on the wayward document were and personal interest in her case that no for all military awards through the Stolen not only out of vertical and horizontal one would question the legitimacy of the Valor Act of 2005. each military award alignment with the original typewritten letter. Nevertheless, it was swiftly deter- has an associated monetary compensa- entries, they were also typed using two mined that the signature in question was tion, so “adding” awards to a military different font styles (Figures 1 and 2). a poorly executed forgery of a genuine record can increase a veteran’s compen- Kennedy signature. sation. the document most often ex- Figure 1. An example of an altered today’s criminal investigations ploited in this pursuit is the Department DD214. “SILVER STAR” was added involve much the same type of decep- of Defense Form DD-214, Certificate of to the form and is not in vertical align- tion. In a recent criminal investigation, Release or Discharge From Active Duty. ment with the other original entries. a former associate director of a Con- this form is completed at the time of solidated Mail Outpatient Pharmacy, discharge from the military, and chron- his wife, and her staffing company were icles a veteran’s years in service, as well charged with conspiracy to commit wire as the various military awards that have fraud. the associate director had created been earned throughout a career. Figure 2. Two different type fonts were the stafﬁng company in 2000 to provide the Forensic Document Labo- used in the alteration of the DD214. temporary pharmacists, at a higher pay ratory frequently has a critical role in de- Examples of the different font styles rate, to the Outpatient Pharmacy. He termining whether an original DD-214 are highlighted in red. then sought Small Business Administra- has been altered, or even counterfeited. tion certiﬁcation as a woman-owned, Detection of such fraud obviates mon- minority-owned small disadvantaged etary loss to VA, but more importantly, business and 8(a) Program participant, it protects the value of these revered then falsely claimed that the company emblems of courage. In a recent Sto- was solely managed by his wife. the VA len Valor investigation, a veteran altered OIG Forensic Document Laboratory his DD-214 as well as other military determined that the director had not records. the veteran claimed to have only fraudulently signed his wife’s name been wounded in combat and to have on the business’ originating documents, earned several medals of valor, includ- but he continued to do so on the daily ing the Purple Heart and Silver Star. As transactions. the associate director was a result, the veteran used his fraudulent Handwriting also charged with wire fraud for making military history to bolster his credibility Comparisons materially false misrepresentations to VA and receive unearned increased VA ben- the majority of the forensic examina- and other government officials. Between efits. the veteran was prosecuted and tions conducted by the VA OIG Forensic 2000 and 2007, the defendants and oth- sentenced to 366 days incarceration, 3 Document Laboratory involve the comer unindicted co-conspirators used the

Visit www.ignet.gov 7 company to bill the VA for more than $8 whether the veteran actually did sign his dant was sentenced to 12 months and million in services. or her name. In 60 percent of the cases, one day of incarceration, three years’ VA administers a number of the evidence indicates forgery. probation, and ordered to pay restitution financial benefit programs for eligible of $42,758 to two female victims after veterans and their family members. Figure 3. When conducting a hand- pleading guilty to making a false state- Among the benefits that are VA guaran- writing examination, the questioned ment and wire fraud. teed home loans, education, insurance, writing is compared to the known and other monetary benefits. When writing of an individual. The Foren- Figure 4. Indentations can be deci- those eligible to receive such benefits pass sic Document Laboratory constructs phered from previously written en- away, the temptation for others to con- charts like the one below as demon- tries. tinue receipt of the benefits occasionally strative evidence for each conclusion. results in the lack of notification to VA of the recipient’s death. to detect such lapses, the VA OIG conducts an ongoing “death match” project that identifies deceased beneficiaries. In one of many “death match” cases, the Forensic Docu- ment Laboratory compared the questioned endorsements on 22 beneficiary Dating Documents checks with the writing of the deceased From 1901 through World War II, a beneficiary’s son, and determined that group of Filipino soldiers in the Philip- the beneficiary’s son had written all of the pines – known as the Regular Philippine questioned endorsements. He was sen- Scouts – were recognized as an integral tenced to 3 years’ probation and ordered extension of the U.S. Army in the Pa- to pay $21,529 in restitution to VA. In cific. Considered “the backbone” of the another case, the VA OIG received infor- American defense against Japan during mation that a deceased veteran had con- WWII, veterans of the Regular Philip- tinued to receive VA pension benefits for pines Scouts who served with U.S. forces before October 6, 1945, are entitled to six years after his death in 2000. Records Indented Writing revealed that over $122,000 had been the same VA benefits as any veteran of Sometimes the document evidence is electronically deposited after his death. the U.S. military. In an effort to receive, not immediately visible. “Indented writ- VA was able to reclaim over $57,000 or increase, VA compensation, some ing” refers to the writing impressions from the existing account, and when the Filipino citizens will submit medical left behind, usually on paper beneath laboratory concluded that it was highly or military documents as evidence that the writing surface (Figure 4). In an in- probable that a family member had been such compensation is due. When there vestigation involving the impersonation endorsing the purloined checks, a guilty is a question of authenticity, the VA’s of a physician, documents were sent to plea resulted. Sentencing consisted of 48 Regional Office Insurance Center in the Forensic Document Laboratory for months probation, and over $65,000 in the Philippines submits the questioned indented writing analysis. the foren- restitution. documents to the laboratory to deter- sic document examiner developed and the Forensic Document Labo- mine whether these documents were deciphered indented writing on a pad ratory also frequently provides assistance truly produced in their purported time of paper obtained from the individual’s in administrative cases in areas of VA period, usually the 1940s. In a recent residence. the indented writing includ- that are outside of the OIG, in particu- case, the overwhelming smell of coffee ed names and phone numbers of various lar the VA’s Regional Office Insurance wafted out as the questioned document nurses and hospitals. the OIG investi- Center. the majority of the cases from was removed from its packaging. Cof- gation determined that an applicant at the center involve contested insurance fee, tea, milk and vinegar are liquids the VA Medical Center was fraudulently beneficiary forms. Before the center will commonly used to artificially age paper presenting himself as a military officer disperse payment on a contested benefi- (Figure 5). the questioned document and surgeon with extensive education ciary form, the document in question is in this case was a Commonwealth of the and professional experience. the defen- submitted to the laboratory to determine Philippines, Philippine Army enlistment

8 Journal of Public Inquiry Record, allegedly typed on February 28, Assisting Other OIGs Conclusion 1946. Under magnification, however, Because the Inspector General communi- the Office of Inspector General is dedi- the entire text of the document, includ- ty shares many of the same criminal and cated to helping the Department of Vet- ing the “signature,” was found to have administrative issues, and the VA OIG erans Affairs to serve America’s veterans been produced using an inkjet printing is one of only a few IGs with direct ac- and their families. Integral to the VA process, which was not available until cess to forensic document examination, OIG’s success is its highly-skilled and the mid-1970s. the laboratory provides forensic examina- well-trained Forensic Document Labo- tions to any of the other 68 statutory IG ratory. together, they ensure that the Figure 5. When documents age natu- offices on a case-by-case basis. Recently, core values of integrity, economy and ef- rally, discoloration is expected to be the laboratory completed examinations fectiveness are not only maintained, but consistent throughout the document for the Federal trade Commission, Small thriving as they impact veterans, Veterans (below). Conversely, when a docu- Business Administration, and Health and Affairs and the nation. 1 ment is artificially aged, the results are Human Services IG offices. sporadic and inconsistent areas of discoloration (bottom). Nancy Cox Kirsten Singer

Nancy Cox is the director of the Kirsten Singer has been a forensic Forensic Document Laboratory for document examiner for 23 years. the Department of Veterans Affairs She began her career with the Vir- Research Office of Inspector General. Ms. ginia Division of Forensic, followed the VA has one of the largest reposito- Cox oversees the centralized Labo- by the treasury Inspector General ries of personnel files containing origi- ratory which provides support for for tax Administration and U.S. nal documents dating back for decades. all of the Office of Inspector Gen- Postal Inspection Service forensic Recognizing the abundance of potential eral. She has been a forensic docu- laboratories before coming to the for research, the laboratory is currently ment examiner for twelve years. VA OIG Forensic Document Labo- conducting various research projects, She began her career with the U.S. ratory in April 2009. Ms. Singer such as the evolution of a person’s signa- Secret Service before coming to is certified by the American Board ture over time, whether indented writ- the VA OIG Forensic Document of Forensic Document examiners, ings are still present on documents that Laboratory in May 2006. Mrs. Cox where she served on the board of di- are over twenty years old, and what im- is certified by the U.S. Secret Ser- rectors for five years, and is a mem- pact medical ailments have on handwrit- vice as well as the American Board ber of the American Academy of ing. this research may provide insight of Forensic Document examiners Forensic Sciences and the American into examinations supporting criminal and is a member of the Mid-Atlan- Society for testing and Materials. investigations with added benefit to the tic Association of Forensic Scien- Ms. Singer received her bachelor’s forensic document profession. the labo- tists. Mrs. Cox received her bach- degree from the University of Vir- ratory is also developing a virtual library elor’s degree from the University of ginia and holds a Master of Foren- of historical versions of the DD-214 for Maryland. sic Science degree from the George reference in Stolen Valor cases involving Washington University. alterations and wholesale counterfeiting of this document.

Visit www.ignet.gov 9 United States Department of Defense Field Operating Agency

[INVESTIGATIONS] Model Protocol for Search Strings in Public Corruption Cases The protocol was developed based on the fact that fraudsters use common hiding places and methods to make illicit payments

By Colin May Corruption, bribes and kickbacks are among the most corrosive problems de- mocracies face. they erode public trust in the government and degrade the rule of law. Individuals that corrupt elected and appointed government officials with cash, gifts, and rewards, must be investigated and prosecuted. this article proposes a methodology for examining computers and digital evidence, specifically e-mail communications, for evidence of public corruption. In using this protocol, corruption investigations will be more productive, efficient, and allow for investigators and prosecutors to better identify cases suitable for prosecution. its nearest rival: check tampering. Most states have bribery, con- Corruption Basics Corruption is a silent conspiracy spiracy, and financial disclosure statutes where a government employee, elected in place for public servants. Bribes, as An introduction to corruption is neces- official or appointed officer, enters into defined by federal law (title 18 United sary in order to better assist the reader in an illicit compact to enrich another party States Code, Section 201) are essentially the concepts presented here. Corruption and themselves. Prevalent in the infa- monetary rewards, promises, or value- is defined by the legal scholar and his- mous tammany Hall political organiza- bearing items that are given to a public torian John Noonan as “an inducement, tion in New York City, corrupt officials official in exchange for influencing an improperly influencing the performance violate the public trust. these officials official act or improperly influencing the of a public function.”1 According to the care more about themselves, their elec- official. Bribes are different from extor- Association of Certified Fraud examin- tions, and their benefactors than the tion, where the “bribe-giver” is forced ers Report to the Nation 2008, corrup- greater good of the community. For ex- to give something of value to the bribe- tion accounts for nearly 30 percent of ample, convicted felon and former Con- taker, who is usually a public official. In the reported occupational fraud.2 the gressman Randall “Duke” Cunningham addition to extortion statutes, mail and median loss to corruption schemes is (R-CA) created a “bribe menu,” specify- wire fraud laws, and false statements $375,000 – almost $240,000 more than ing that for every x-dollar contract, he ningham. Indictment, dated November 28, 1 Noonan Jr., John t. Bribes. Macmillian: New expected y-dollars in gifts, gratuities, and 2005 http://news.findlaw.com/wp/docs/crim/ York, 1984, p. xi cash. Cunningham, the now disgraced uscnnghm112805cinf.pdf and San Diego Union 2 ACFe, Report to the Nation 2008, p. 14, naval aviator, pleaded guilty.3 tribune. “Randy ‘Duke’ Cunningham Case.” available at http://www.acfe.com/resources/publi- http://www.signonsandiego.com/news/politics/ cations.asp?copy=rttn 3 United States v. Randall Harold “Duke” Cun- cunningham/

10 Journal of Public Inquiry are used by prosecutors as the primary this mirrors the ACFe results that show COMPUTERS, E-MAIL, AND means of acting against corrupt public that private organizations are also simi- CORRUPTION officials. 4 larly defined: “in order to be classified No one can argue that computers and the ACFe further refines cor- as a conflict of interest scheme, the em- information technology has changed ruption fraud schemes into three major ployee’s interest in the transactions must the landscape of our global commerce categories: bribery, gratuities, and con- be undisclosed. the crux of a conflict platform, nor of the American culture. flicts of interest. Bribery, as described of interest case is that the fraudster takes Whether it’s been made better or worse above, is conducted through two prima- advantage of his employer; the victim or- is for the philosophy and sociology mary vehicles: contract bid rigging and in- ganization is unaware that its employee jors to debate. But the change in our voice kickbacks.5 Bid riggings are “con- has divided loyalties.”10 daily lives is not minor—and as we adapt tracts [that] are rigged, or manipulated, Some examples of conflict of these technologies, so do criminals. Law for criminal purposes…to obtain the interest violations from the Office of enforcement across the country investi- contract award [and]…defrauding the Government ethics’ Prosecution Survey gate identity theft, criminal fraud, and victim,” the government.6 Kickbacks are include: computer misuse on a daily basis, and portions of money that are given back • Lester Crawford, the head of the the epidemic of crimes involving digital to the corrupt official as remuneration. Food and Drug Administration, technology and computers has just be- Gratuities are essentially gifts given for owned stock with his wife in “sig- gun. “consideration” of past or future official nificantly regulated” companies that acts. the U.S. Supreme Court stated the the FDA had primary oversight au- difference best: “bribery requires intent thority over. He failed to both re- Making Illicit Payments & transfers ‘to influence’ an official act or ‘to be in- port the stock ownership and recuse fluenced’ in an official act, while illegal himself from any dealings with, or √ Corrupt gifts and favors gratuity requires only that the gratuity be decisions about, the companies. In √ Cash payments given or accepted ‘for or because of’ an fact, Crawford “participated person- √ Checks & other instruments official act.”7 ally and substantially” in meetings √ Hidden interests Conflicts of interest are schemes that discussed issues related to the √ Fictitious loans that violate “the legal principle that a two companies in which he owned √ transfers at other than fair market fiduciary, agent, or employee must act stock. value in good faith, with full disclosure, and • A senior executive/branch chief at √ Future promises in the best interest of the principal or the National Institutes of Mental √ Floating employer.”8 An analysis of the crimi- Health was approached by Pzifer √ Lapping nal prosecutions reported by the Office Pharmaceuticals to collaborate with √ Cooking of Government ethics shows that the the senior executive and his branch most common criminal prosecution by on Alzheimer’s disease research. the complex nature and sophistication the federal government is for violation Pfizer then paid him a significant re- of hiding tools, coupled with the fragile of 18 USC 208, “Official Actions Af- taining fee and travel expenses that nature of digital evidence, make the ex- fecting Personal Financial Interests.”9 totaled over $250,000. He did this amination of computers for evidence of without disclosing it, as required. 4 Strader, J. Kelly. Understanding White Collar criminal activity very important. Crimi- Crime. Second edition. LexisNexis: Newark, NJ • the General Services Administra- nals use the Internet and/or e-mail to 2006, p.169-170 tion’s director of property manage- trade, share, conceal, distribute, com- 5 Association of Certified Fraud examiners. ment in Kentucky was living with a municate, and coordinate information, Fraud examiners Manual. (2006 Austin, tX) GSA contractor, with whom she had 11 FeM 1.701-1.738 documents, files, and other media. 6 Silverstone, Howard and Howard R. Davia. oversight of the contracts. Her chil- Strader warns that “as commercial trans- Fraud 101: techniques and Strategies for Detec- dren also worked intermittently for actions increasingly become electroni- tion. Second edition, Wiley: New York, 2005, the company while she made GSA cally-based, most types of white collar p.113 contracting decisions without dis- crime will involve computers to some 7 Supra note 3, at 173 closing their relationship. 12 8 Supra note 4, at 1.730 extent,” including corruption cases. 9 United States Office of Government ethics. 11 National Institutes of Justice. “Investigations “Conflict of Interest Prosecution Survey Index” st.html#Anchor-18664, retrieved 18 February Involving the Internet and Computer Networks.” http://www.usoge.gov/laws_regs/other_eth- 2010 NCJRS, 2007 (NCJ 210798) www.ncjrs.org, p.1 ics_guidance/othr_gdnc/pros_srvy_indx_ 10 Supra note 3, at 173 12 Supra note 3, at 173

Visit www.ignet.gov 11 One prominent example of e- MODEL mail being used as evidence involved PROTOCOL Prima Facia Evidence • Airplane ticket Darleen Druyun. Because of her posi- When conducting an ex- • Bribe • ticket tion with the Air Force and her contract amination of computers, • Illegal bribe • train ticket authority over Boeing, Druyun was able • Gratuity • Deal a “search string” method o n) to secure positions at the defense plant is used. Search string is • Illegal gratuity • Bank account for her daughter and son-in-law. e-mails defined as “a sequence • Graft Investigation/Audit exchanged between Druyun’s daughter of characters, words, or • Kickback • Audit (possibly acting as Druyun’s surrogate) other elements that are • Special gift • Auditor and Boeing’s chief financial officer ne- connected to each other orrupti Improper Business • Auditor General gotiated her post-government employ- in some way. [It] usu- Relationship • State Auditor ment with Boeing. One e-mail includes ally refers to (Pub a string of c Cliy • Job • Investigation the chief financial officer stating “... words or a phrase that is • title • Investigator had a ‘non-meeting’ yesterday re: hiring used to search and locate • Contract • Special Agent [Druyun]... Good reception to job, loca- or retrieve a specific piece • Sweetheart con- • Prosecutor tion, salary, longer-term outlook. Rec- of information contained tract • Summons ommend we put together formal offer...” in a database or set of • Duties • Subpoena In her post-conviction debriefings with documents.”16 Strings • Spot • evidence tegor prosecutors, Druyun admitted making are vital to investigations • Wife’s job • Interview favorable decisions for Boeing, to ingra- and can uncover evidence • No-show job Cover-up/Tampering y Cags b y Cags tiate herself with the senior management needed to prosecute pub- • Noshow job • Hidden of the company. She was eventually lic corruption. Because • No show job • Corrupt convicted of criminal conflict of interest of the hidden nature of Cash Exchange • Secret charges, as was Boeing’s CFO.13 corruption, e-mails can • Hush money • Covert the Druyun case highlights uncover evidence of il- • Favor • Cover up the use of e-mail evidence in conspira- licit payments and asset • Favors • Cover-up cies involving public corruption. this transfers. ch Strin • Money • Conspiracy paper postulates a module to use when the protocol • Cash • Hiding conducting digital forensic examinations was developed based • Fee • Concealment of computers and e-mails, specifically. on the fact that fraud- Asset Transfer, • Concealed le Sear National Institute of Justice believes that sters use common hid- Concealment, Disguise • exposure “e-mails can be a starting point or key ing places and methods mpSa • Stock • Not get caught element in many investigations. [It] is to make illicit payments • trip • Secret the electronic equivalent of a letter, or and transfers to conceal, • travel • Special a memo, and may include attachments disguise, and retrieve the • Cruise • On the Qt or enclosures.”14 Investigators seeking profits of their crimes. It further information on the role of elec- is assumed that two con- tronic mail should consult the National spirators will communi- 4. Cash exchange District Attorney’s Association guides on cate via electronic mail at some point in 5. Asset transfer, concealment, or dis- e-mail available from www.ndaa.org.15 their relationship regarding several cate- guise 13 May, Colin. “Lessons Learned from Ac- gories of activities, behaviors, and inten- 6. Investigation or audit quisition Fraudster Darleen Druyun.” Fraud tions regarding their criminality. these 7. Magazine (ACFe, Austin). May/June 2006. Cover-up and tampering can fall into one or more of the following Searching based on the strings will en- http://www.acfe.com/resources/view-content. seven sets: asp?ArticleID=577 able a more organized, efficient, and

14 Supra note 10, at 1 1. Prima facia evidence productive examination of the suspect’s

15 NDAA, “Understanding e-mail: A Primer 2. Improper business relationship computer and e-mail account. One note for Local Prosecutors” from http://www.ndaa. 3. Specific issue/case identities org/pdf/understanding_email.pdf; also see of caution should be amplified: one or “The eCPA, IPSs, and Obtaining e-mail” from 16 Search String” definition from www.learn- two isolated positive search results are http://www.ndaa.org/pdf/ecpa_isps_obtaining_ thenet.com/english/glossary/string.htm; retrieved not indicative of corruption or fraud, email_05.pdf. Retrieved 18 February 2010 18 February 2010

12 Journal of Public Inquiry and each result must be reviewed in the its, exchanges, and similar actions Agent [specific name],” or terms that context of the e-mail, industry, language, are red flags of illicit activity and could indicate an on-going investi- case knowledge, and other evidence ob- search results that indicate signifi- gation, like “evidence,” “subpoena,” tained. cant banking activity must be inves- “search warrant,” “summons,” “pros- • Prima Facia Evidence – the search tigated. In drug and terrorism cases, ecutor,” and “interview.” Another strings for this category are designed this is an important indicator, as well significant issue that may be located to uncover information relating to as in public corruption cases. For is the fact that most officials are re- actual crimes committed. Includ- example, recently convicted Louisi- quired by law to report their assets, ed in this string are words such as ana congressman William Jefferson income, gifts, and other financial “bribe,” “kickback,” “gratuity,” “il- placed his cash “on ice,” by literally information on a financial disclo- legal gratuity,” and “graft.” Depend- hiding it in his freezer.18 Strings to sure form. the ethics in Govern- ing on the corrupt relationship, this search may include “cash,” “money,” ment Act of 1978 requires this for may include terms like “sweetheart and “consulting fee.” Consulting all federal officials and employees in contract,” “quid pro quo,” “fraud,” “fees” and “overpaying” a credit card sensitive positions. terms that are and “crime.” balance are also commonly used to alerting in this situation are “finan- • Improper Business Relationship – Mir- hide the source of illicit funds.19 cial disclosure form,” “financial dis- roring the elements of title 18, Sec- • Asset Transfer, Concealment, or Dis- closure,” or “ethics probe.” tion 208, this addresses a subject guise – In the Cunningham case, the • Cover-up and Tampering – Since cor- having a substantial relationship in a congressman was paid with assets, ruption is a two-part crime, natu- business venture or negotiating post- mainly boats and residences.20 Sig- rally, a conspiracy forms. Similar to government employment opportu- nificant assets that may be “loaned,” the investigation/audit search terms, nities. the successful search might given, or transferred, through third- cover-up or tampering language is include words like “job,” “title,” or party owners (to disguise their another red-flag that could lead to “job duties.” It may also include source) and could be located with prosecution based on several addi- the name of the job, such as “vice search terms such as “boat,” “motional statutes, witness tampering, president” or “consultant.” Another torcycle,” “plane,” “aircraft,” or any destruction of evidence, etc. Search common method is a no-show job, other type of asset given. Other strings for this category include “se- similar to the one for the wife of a terms used include “hidden owner,” cret,” “don’t talk,” “don’t tell any- prominent Maryland state senator;17 “hidden ownership,” “secret,” “trans- one,” “just between us,” “conspir- terms could include “separation fer,” “special,” or phrases like “just acy,” “coverup,” “cover-up,” “hush payment,” “future opportunity,” between us” or referring to the “gift” up,” or “hush money.” “my next job,” “salary,” “employing given to the individual. It should also be noted that the search [name of spouse or relative],” and • Investigation or Audit – After she terms given here are examples, and the “job for [name].” joined Boeing, Darleen Duryun full list of terms should be carefully • Specific Case Issues/Identities – De- complained in e-mails to Boeing’s brainstormed and evaluated by the in- pending on the case or investiga- CFO that she had been contacted vestigator, examiner, and case supervisor tion-specific information already by a company attorney conducting prior to conducting the actual search. obtained, searches can be made an internal investigation regarding e-mails are not the only place for hid- on these items. For example, if a her hiring. She asked the CFO for ing information, and all documents, web “quid pro quo” involved hiring a advice on “what to say.”21 this type searches, and other evidence – paper and target’s cousin, that name should of e-mail correspondence could be digital – should be examined properly be searched. Other examples may indicative of a problem. terms: “au- for any additional leads or corrobora- include business names, titles (see dit,” “auditor,” “investigation,” “in- tion. electronic searches also need to above), bank accounts, travel desti- vestigator,” “special agent,” “Special determine if the target uses a third-party 22 nations, etc. 18 United States v. William Jefferson. Indict- online file storage site. the fraud in- • Cash Exchange – Currency depos- ment, dated June 4, 2007. http://media. vestigator or computer examiner should washingtonpost.com/wp-srv/politics/documents/ have a working understanding of the 17 United States v. Thomas L. Bromwell, Sr. jefferson_indictment_060407.pdf crime they are searching for. For pub- Plea Agreement, dated July 20, 2007. http:// 19 Supra note 3, at 1.706 www.washingtonpost.com/wp-srv/metro/Brom- 20 Supra note 2 22 Communication with Thomas talleur, July wellThomasPlea.pdf 21 Supra note 12 2008

Visit www.ignet.gov 13 23 Common Hiding Places for Corrupt trustee. In Baltimore, Mayor Sheila on a hard drive or e-mail server. By using Dixon resigned in disgrace in January an organized procedure, the investigator Payments & transfers 2010, after a long and public probe into and examiner will be more successful, • Currency hoards public corruption. She was convicted of more efficient, and better understand the • Cashiers and travelers checks purloining gift cards meant for the poor. case they are investigating. 1

• Deposits to financial institu- While a second trial on perjury for alleg- Colin May tions edly lying on financial disclosure forms • Financial investments (com- was disposed of in her plea, an affidavit modities, securities, stocks, submitted for a search warrant of her bonds) home specifically described e-mail com- • Business Investments (on- / munications between her and a lover/ off-book schemes, dissolved city developer regarding travel and gifts, corporations, bookkeeping which she failed to report on her ethics devices for concealment) forms. 24 • Real property investments e-mail evidence is critical in all • Loans to friends, business as- criminal investigations and can help sociates, and relatives prove intent. Public corruption cases are • Overpayment of taxes the most difficult, because of the repu- Colin May is an investigator with • False debts and false lawsuits/ tations and power of the defendants. the U.S. Department of Defense. judgments Such cases are also the most damaging He joined the federal service in • Gifts and fraudulent convey- for the citizenry to understand, since it 2002, when he became an intern ances erodes public confidence of and support with the export-Import Bank of • trusts for, public functions. As the old saying the United States; the following • Purchasing assets or spending goes, “absolute power corrupts absolute- summer, he worked for the Bureau proceeds ly.” elected and appointed government of Citizenship and Immigration • Insurance policies (equity) officials sell their soul when they agree Services for the U.S. Department • Debt pay-off (credit cards/ to a corrupt relationship. of Homeland Security. mortgage payments) As Benjamin Franklin so aptly After a fall internship with • Proceeds: drugs, alcohol, sex, put it, “there is no kind of dishonesty the Postal Inspection Service in gambling, travel into which otherwise good people more Albany, N.Y., he graduated with easily and frequently fall than that of a bachelor’s degree in marketing/ lic corruption, money laundering, white defrauding the government.” We ex- management from Siena College collar crime, and fraud investigations, pect our public officials to act in the best and worked for the International there are two issues: 1) where the money interest of the community, not for per- Association of Chiefs of Police be- is hidden, and 2) how it was transferred. sonal enrichment. When this happens, fore re-joining the government. In it constitutes such a grave blow to our 2006, he became a certified fraud CONCLUSION combined sensibilities that we must act. examiner. Several recent cases illustrate the effect this protocol was designed to He received a master’s de- of electronic mail and correspondence in ensure that investigations into public gree in forensic studies from Ste- fraud and corruption cases. A Wall Street corruption do not neglect the large and venson University in 2008 and a Journal article on a failed subprime mort- rich amount of evidence likely contained graduate certificate in forensic ac- gage suspected of fraud was identified by 23 Wall Street Journal, “Banks Doubted Lendor, counting from Northeastern Uni- Wall Street banks as being a problem but Still Propped it Up.” Steve Stecklow, No- versity in 2009. long before it failed; the analysts docu- vember 10, 2009. http://online.wsj.com/article/ SB125771933475937109.html mented their concerns in e-mails, which 24 Baltimore Sun. “Sun Coverage: City Hall was then subpoenaed by the Bankruptcy Investigation” http://www.baltimoresun. com/news/local/baltimore_city/bal-council- probe,0,1060673.storygallery

1414 JJournalournal ofofPPublicublicIInquirnquiryy United States Department of Agriculture Office of Inspector General

[INVESTIGATIONS] Inspectors General Supreme Impact On a more personal note, I felt honored to be able to attend the full hour-long Supreme Court hearing of the case

By Brian Haaser It is rare for the U.S. Supreme Court to hear a case that directly impacts investigative work done under one’s own jurisdiction as an Office of Inspector Gen- eral investigator. However, during my 31-year career as an investigator for the Department of Agriculture OIG, I have witnessed it twice. the first instance—a case involving food stamp fraud—centered on determining whether the government had to prove that the defendant knowingly committed a crime: was ignorance of the law an excuse? the second instance—a still-undecided case 1con- cerning dogfighting videos—focuses on the limits of free speech: are commercial images of animal cruelty a protected form of expression? While we in the inspector general community know that our of a store had illegally bought a total of lated the law. In legal terminology, this investigations have deep programmatic $1,195 in food stamps for $800 in cash is called proving “specific intent” or mens and personal significance, we should also from one of our undercover agents. In rea, Latin for “guilty mind.” keep in mind that our work can some- food stamp fraud, people generally buy the district court judge saw it times impact the law of the land. the benefits below their face value and differently, however, and—over the de- then redeem them later with the govern- fendant’s objections—instructed the jury Blissful Ignorance or ment for their full worth. the store—a that the case turned on proving that (1) “Guilty Mind”? sandwich shop—was not authorized to the store owner had bought the food In the early 1980s, I was a desk officer take food stamps, so this seemed like an stamps illegally, and (2) he had knowing- at USDA OIG headquarters in Wash- open-and-shut case. It was not. ly and willfully bought them. Whether ington, D.C., and was responsible for the law states that a person who or not the owner knew he was violating monitoring food stamp issues that could “knowingly uses, transfers, acquires, or the law, he had indeed violated it; guilty- impact our investigative work. In one possesses [food stamps] . . . in any man- minded or innocent-minded, his mental case that I was following, the co-owner ner not authorized by [the statute] or the state did not matter. 1 After this article was written the United States regulations,” shall be guilty of a criminal So instructed, the jury convicted 2 Supreme Court issued its ruling on United States offense. According to the defendant, the owner. the owner appealed the case v. Stevens regarding 18 U.S.C. § 48, on April this wording meant that the government on the basis that the district court judge 20, 2010. In an 8 to 1 decision, the Court struck had to prove that he knew he was vio- should not have refused to instruct the down the law, stating “Section 48 is not so lim- lating the law, not just that he had vio- jury that “specific intent” is required in a ited but is instead substantially overbroad, and therefore invalid under the First Amendment.” 2 The Food Stamp Act of 1964 § 14, 78 Stat. prosecution under the statute. However, The law is no longer enforceable unless Congress 708 (1964) (current version at 7 U.S.C § the appeals court agreed with the original revises it to meet the standard set by the Courts. 2024(b)(1) (2009)).

Visit www.ignet.gov 15 judge’s rationale. By 1985, the case had made its way to the U.S. Supreme Court, which agreed to review it because the appeals court’s decision conflicted with recent decisions by three other appeals courts. the Supreme Court described the question at hand as being “whether in a prosecution under this provision [of the statute] the government must prove that the defendant knew that he was acting in a manner not authorized by statute or regulations.”3 For the court, which overturned the conviction, the answer was yes. the ruling rested chiefly on two points. First, the law was ambiguous as to whether “knowingly” applied solely to evidence needed to prove that the law Freedom of Speech or a knowledge of the action itself—acquir- was violated. “Cruelty Thing”? ing food stamps—or also to knowledge For USDA OIG, the ruling Unlike with food stamp fraud, the law of its being illegal (“in any manner not meant that we had to alter our standard is clear about the role of intent when it authorized”). Without evidence in the investigative procedures for food stamp comes to selling images of animal cru- statute of clear congressional intent, the fraud cases. We now obtain documents elty: “Whoever knowingly creates, sells, Supreme Court kept to its longstanding proving that our suspects received US- or possesses a depiction of animal cru- principle of leniency in such cases. Sec- DA’s educational material about what is elty with the intention of placing that ond, the court found that the effect of the and is not allowed in the food stamp pro- depiction in interstate or foreign com- government’s interpretation would be to gram. We interview witnesses to confirm merce for commercial gain, shall be “criminalize a broad range of apparently that our suspects knew it was illegal to fined under this title or imprisoned not innocent conduct.” For example, food buy food stamps. And during our under- more than five years, or both.”5 there stamp recipients who bought food from cover operations, we worked to record are exceptions when the image’s value is a store that charged them higher prices suspects acknowledging their crimes. not strictly commercial—for example, if than normal would be criminals, even if On a more personal note, I felt it has significant scientific or historical they were unaware of the markup.4 honored to be able to attend the full value—but if a person is just trying to Although the Supreme Court’s hour-long Supreme Court hearing of the profit from something that shows ani- ruling was narrowly restricted to food case. I had been to the court before as a mals being treated cruelly, then he or she stamps—you cannot get out of a speed- member of the public, for the permitted is a criminal. Or, as I recently found out, ing ticket by saying you did not know the five minute increment, but this was the maybe not. speed limit—I believe that the decision’s first time I was able to hear a case argued the law on depictions of ani- general principles merit consideration by in its entirety. I was struck by the audi- mal cruelty was not written specifically the investigations arms of other OIGs. ence’s silence. the room was quieter even to stop people from selling dogfighting Although investigators are not lawyers, than for federal court cases; we wanted to videos. As the congressional testimony our investigative techniques, evidence hear every word, follow every argument, and legislative history show, it was passed gathering, and general approach depend and understand every nuance of this in- to stop a type of fetish video known as heavily on exact legal interpretations. We stitution that holds the power to make a “crush video” from being distributed.6 must make sure that we are investigating decisions that can change our country. I “Crush videos” depict small animals be- precisely the crime that the law articu- was proud and privileged to be a small ing stepped on, usually by women in lates, and that we are gathering just the part of that process, not once, but twice. high heels or bare feet. the tortured cries 3 Liparota v. United States, 471 U.S. 419, 420- 5 18 U.S.C. § 48 (2009). 421 (1985). 6 See 145 CONG. ReC. 10685 (1999); See also 4 Id. at 426. 145 CONG. ReC. 25,893 (1999).

16 Journal of Public Inquiry of the animals are sometimes accompa- financial records. We were able to show money showed his intention to profit nied by a kind of dominatrix patter from that in total, the business had derived from depicting animal cruelty. the U.S. the women. In 1999, “crush videos” pro- $57,000 from selling dogfighting mer- attorney’s office agreed and decided to vided the impetus for Congress to make chandise during the previous two years. prosecute. depictions of animal cruelty illegal for the dogfighting equipment In January 2005, the case went interstate sale. included items such as “break sticks,” to trial. the evidence we gathered was Under the 1999 law, I super- which are used to pry apart fighting dogs’ sufficiently solid that the defense’s strat- vised a 2003 investigation that initially jaws when they lock their teeth into each egy was not to question whether the de- seemed straightforward. A Virginia other. there were also magazines, books, fendant had violated the law, but instead man’s home business, Dogs of Velvet and and videos of dogs training, fighting, and whether the law violated the Constitu- Steel, sold dogfighting videos and related killing other animals. In some of the vid- tion. the First Amendment states that merchandise across State lines. Led by eos, the business’s owner took the role of Congress shall make no law “abridging USDA OIG, this joint investigation also a sports announcer, narrating dogfights the freedom of speech,” which has been involved the U.S. Postal Inspection Ser- and then offering his post-fight analysis. understood to include books, images, vice and the State police departments of In another video, he described the action and other depictions such as video. Ac- Virginia and Pennsylvania. as domestic pigs were released, chased cordingly, the defense argued that the In January 2003, a USDA OIG down, and killed by trained fighting defendant’s dogfighting merchandise was special agent and a Pennsylvania State dogs—noting at one point: “We are get- protected by the Constitution and that police investigator responded to an ad- ting into a cruelty thing here.” the law itself was illegal. Further, the de- vertisement by Dogs of Velvet and Steel We set up our investigation to fense held that the videos had historical in an underground dogfighting maga- show that all the major elements of the value. this suggests that the defendant zine. they purchased several videotapes law had been violated. the graphic vid- should be thought of more as a docu- and items of dogfighting paraphernalia eotaped violence was a clear example of mentary filmmaker than as someone and arranged for them to be sent from animal cruelty. Mailing the videos and profiting from an animal’s pain; the vid- Virginia to an undercover address in other material was a clear example of eotaped events are cruel, but—according Pennsylvania. After receiving the items, engaging in interstate commerce. the to this line of thought—the tapes serve we obtained a warrant and seized the money earned from these sales proved as valuable historical records of a dis- business owner’s stock of videotapes, commercial gain. together, the owner’s tasteful practice. books, periodicals, and training equip- placement of an advertisement, deliv- the federal district court, how- ment, as well as his customer lists and ery of merchandise, and acceptance of ever, denied the defense’s motion to dis- miss the case on these grounds. After a three-day trial, the jury deliberated for about 45 minutes and then returned with a guilty verdict. In April 2005, the defendant was sentenced to 37 months in prison; he immediately appealed. In October 2006, a court of appeals heard the case. the government argued that depictions of animal cruelty should not be protected by the First Amendment and instead should be a prohibited category of speech like child pornography, which the Supreme Court had decided was not protected under the Constitution. the appeals court did not agree, ruling: “the Supreme Court has not recognized a new category of speech that is

Visit www.ignet.gov 17 unprotected by the First Amendment at hand). In October 2009, the court Brian Haaser in over twenty-five years. Nonethe- heard the case; it is expected to deliver a less, in this case the government decision sometime in 2010. invites this court to take just such If the Supreme Court finds that a step in order to uphold the con- animal cruelty depictions are a prohib- stitutionality of 18 U.S.C. 48 [the ited class of speech, then OIGs nation- animal cruelty statute] and to affirm wide may have to expand their investi- conviction. . . . Moreover, because gative practices. Although USDA OIG we agree with [the owner of Dogs of is responsible for investigating animal Velvet and Steel] that 18 U.S.C. 48 is cruelty cases, other OIGs could have an unconstitutional infringement on another avenue of employee misconduct free speech rights guaranteed by the to pursue if government equipment is Brian Haaser is currently the spe- First Amendment, we will vacate his used to make, view, or distribute such cial agent-in-charge of the North- 7 conviction.” images. In effect, the Supreme Court’s east Region, Department of Agri- ruling may broaden agencies’ culture Office of Inspector General. power to regulate speech in the Mr. Hasser’s responsibilities include workplace, which in turn would managing the investigative program broaden our responsibility to for OIG in 13 states and the Dis- investigate related violations. trict of Columbia (from Virginia to Having depictions of animal Maine). cruelty on work computers Mr. Haaser has been a would become as illegal as hav- criminal investigator with USDA ing child pornography. OIG from 1979 to the present. He On the other hand, if has extensive experience in con- the court agrees with the defen- ducting and supervising criminal dant, then an OIG investigation investigations regarding USDA re- will have led to a U.S. law being lated programs to include organized overturned; what Congress once illegal animal fighting ventures; reg- outlawed will become not only ulatory programs to include illegal legal, but a fundamental Ameri- import of live animals, agriculture According to the appeals court, can right that must not be infringed. products and pests, issues affecting the Constitution protected from in- the Supreme Court hears only the meat and poultry industry, and fringement, the business’s right to sell about one percent of the cases presented illegal activities involving the grad- 8 depictions of animal cruelty across state to it each term. So, being a witness to ing and wholesomeness of agricul- lines. one investigation that winds up in the tural products; feeding programs In December 2008, the Depart- court is rare; being a witness to two is for the poor; loan and insurance ment of Justice asked the Supreme Court extraordinary. Although each case had programs for farmers and busi- to review the case. the court accepted, small beginnings—$1,195 worth of food nesses; and crimes affecting USDA and the issue attracted heated interest. stamps and a few items of mail-order personnel to include bribery, em- twenty-two different organizations— merchandise—they both ended up hav- bezzlement, and assault. among them the Humane Society of the ing much larger repercussions. What is United States and the National Coalition the role of criminal intent? How far does Against Censorship—filed amicus curiae the freedom of speech go? Although we (“friend of the court”) briefs on behalf of as OIG investigators may not know it at one side or the other. (Such briefs lay out the time, any given investigation may ul- legal, factual, or social issues to deepen timately yield answers that will help de- the court’s understanding of the matter fine us as a nation. 1 7 United States v. Stevens, 533 F.3d 218, 220 (3rd Cir. 2008), cert. granted, 129 S. Ct. 1984 8 The Justices’ Caseload, http://www.suprem- (2009). ecourtus.gov/about/justicecaseload.pdf

18 Journal of Public Inquiry United States Postal Service Office of Inspector General

[EVALUATION] The Postal Service’s Share of CSRS Pension Responsibility Freeing the Postal Service from unjustified legacy costs is critical if it is to have the agility needed to face an uncertain future

By Mohammad Adra and Renee Sheehy When the Post Office Department became the Postal Service on July 1, 1971, there was no change to postal employees’ retirement benefits. employees continued to participate in the Civil Service Retirement System, and the Postal Ser- vice continued to make the same contributions that federal agencies did to the Civil Service Retirement and Disability Fund.1 the CSRS had historically been underfunded by agency contributions. As a result, the Postal Service was required to increase the funding of its employees’ pensions several times. the Postal Service is currently responsible for meeting any CSRS li- even though the Postal Service Postal Service’s CSRS contributions had ability for employees who started after was making the newly required payments earned an interest rate much higher than 1971. For employees with service both towards funding its CSRS liabilities in the 5 percent assumed by OPM, result- before and after the Postal Service’s es- full, no one calculated how well it was ing in a large surplus. tablishment, the federal government and meeting this goal until the Government OPM established assumptions the Postal Service share responsibility for Accountability Office drew attention to about how the Postal Service and the fed- CSRS pensions. the federal government the issue.2 the Office of Personnel Man- eral government would divide the CSRS pays for service through 1971, and the agement then evaluated the Postal Ser- obligations for postal employees who Postal Service pays for service after 1971. vice’s assets and liabilities in 2002 and worked before and after July 1, 1971. Responsibility for paying the discovered that the Postal Service would Under OPM’s methodology, the Postal CSRS costs resulting from inflation- overfund its CSRS obligations by nearly Service is responsible for all pay increases ary salary increases since July 1, 1971, $78 billion unless the required payments since 1971.4 OPM assumes no responsi- shifted from the federal government to were reduced to reasonable levels.3 the bility for inflationary increases to salaries the Postal Service by statute in 1974. In 2 GAO, United States Postal Service: Information from the Post Office Department era. In the late 1980s and early 1990s, a series of on Retirement Plans, (GAO-02-170, effect, OPM calculates the federal gov- laws obligated the Postal Service to fund December 2001). ernment’s share for these employees as if 3 The amount of the overfunding was initially retiree cost-of-living adjustments since estimated as $71 billion and later revised to $78 they retired in 1971 at their 1971 sala- 1971. billion. In addition, OPM’s estimate made the ries. Postal Service responsible for CSRS military ser- Under the current OPM system 1 The Postal Reorganization Act, however, did vice credits. GAO reported that the overfunding require the Postal Service to pay administrative increased to $105 billion if the federal govern- Postal Service had been overcharged for CSRS costs to the Civil Service Commission, the fore- ment retained responsibility for CSRS military military service credits to the Postal CSRS Fund. runner of the Office of Personnel Management. service credits. The Postal Accountability and 4 This allocation of CSRS liabilities concerns This requirement was later removed. enhancement Act returned the amount the employees with service prior to 1971.

Visit www.ignet.gov 19 for federal retirees, CSRS retirees receive 1971, is not based on years of ser- • Allocating pension responsibility on a percentage of their highest 3-year av- vice and is inequitable to the Postal a years-of-service basis would align erage salary for every year they served. Service. For example, Hay Group the pension methodology OPM uses thus, the critical factors for determining shows how the Postal Service could with the methodology OPM uses for the size of the annuity are years of service be responsible for 70 percent of the retiree health care obligations. Cur- and the high-3 salary. the fact that lower pension of an employee who worked rently, they are at odds with each salaries were received early in an employ- only 50 percent of his or her career other as they are applied to the Post- ee’s career is irrelevant to the final pen- for the Postal Service. al Service. sion calculation, because salaries increase • every time postal employees receive • Had the more equitable years-of- throughout that career. this method of a pay increase, their CSRS benefits, service allocation methodology been calculating the annuity is highly sugges- including any earned at the Post used to determine the value of the tive that years of service is the appropri- Office Department, grow in value. Postal CSRS Fund, the OIG esti- ate basis for allocating CSRS pension the Postal Service must pay for this mates its value on September 30, responsibility. increase not only for post-1971 ser- 2009, would have been approxi- the U.S. Postal Service Office vice, but also for the years of service mately $273 billion rather than of Inspector General commissioned the before 1971. An allocation method- $198 billion — a difference of $75 actuarial firm Hay Group to review the ology that assumes employees will billion.5 allocation of CSRS liabilities between receive no pay increases — not even • It has been determined that a $10 the Postal Service and the federal govern- to offset inflation — is not reason- billion unfunded liability currently ment. the report, Evaluation of the USPS able. exists for the CSRS pension fund. Postal CSRS Fund for Employees Enrolled • Furthermore, had new pension plans Reducing the $75 billion overpay- in the Civil Service Retirement System, de- been created for postal employees on ment by $10 billion still leaves a $65 scribes the results of Hay Group’s analy- July 1, 1971, and the Postal Service billion surplus. sis. made responsible for all liabilities, • If the $65 billion pension surplus Several key points emerge from it would have paid less than under were transferred into the Postal Ser- the report and the OIG’s analysis: the current methodology. the Postal vice Retiree Health Benefits Fund • OPM’s use of years of service and Service would not have had to fund and combined with the $35 billion the high-3 salary as the basis for de- the additional liability that results already set aside, the total value of termining CSRS pension benefits when a pay raise increases the value the health benefits fund would grow strongly suggests that responsibility of the years of service performed for 5 Hay Group estimates the difference in the val- for CSRS pension payments should the Post Office Department. ue of the Postal CSRS Fund as of September 30, be divided between the Postal Ser- • It is instructive that OPM uses a 2006, to be $58.7 billion. The OIG’s estimate vice and the federal government years-of-service methodology to al- extends Hay Group’s analysis to 2009. Both estimates only measure the change in the value based on years of service. locate the cost of retiree health care of the Postal CSRS Fund and do not include the • the current methodology used to premiums for retirees who split their reduction in liability from allocating a smaller allocate CSRS obligations for em- careers between the Post Office De- share of CSRS payments to the Postal Service in ployees with service prior to July 1, partment and the Postal Service. the future. This change in liability would further increase the Postal Service’s CSRS surplus.

20 Journal of Public Inquiry to $100 billion. Moreover, even at its current obligations to its retirees (both odology should be established based on 5 percent interest, the balance of the pension and health care) would be fully years of service. the resulting CSRS sur- fund would increase $5 billion or funded. plus can then be transferred into the re- more each year. Freeing the Postal Service from tiree health benefits fund. Such a transfer • the $100 billion balance in the re- unjustified legacy costs is critical if the is not unprecedented. A similar transfer tiree health benefits fund would be Postal Service is to have the agility it happened in 2007 and is scheduled to more than sufficient to cover the $87 needs to face an uncertain future. A new, occur for any CSRS surplus in 2015. 1 billion OPM estimates the Postal equitable CSRS cost allocation meth- Service has accrued in retiree health Mohammad Adra care liability as of the end of 2009. Renee Sheehy No further payments to the fund would be needed to cover this liability. • Since all of the Postal Service’s accrued liabilities for retiree health benefits would be fully funded, the seven remaining annual payments to the retiree health benefits fund, which average $5.6 billion each, could end. • In addition, Postal Service payments for the health benefit premiums of Mohammad Adra is the assistant Renee Sheehy is an economist with current retirees could start coming inspector general for Risk Analysis the Risk Analysis Research Center, U.S. from the retiree health benefits fund Research Center for the U.S. Postal Postal Service Office of Inspector General immediately. Service Office of Inspector General. He in Arlington, Va. Before starting with • the annual evaluation of the Postal has been with the OIG since 2002. Prior the OIG in 2005, Ms. Sheehy was with Service’s retiree health benefit assets to his OIG tenure, he worked five years the Postal Rate Commission for eight and liabilities would continue, and for the US Postal Service in pricing and years. She is a member of Risk Analysis the Postal Service could be assessed five years for the energy Information Research Center. if there were any future unfunded li- Administration in energy demand For the Risk Analysis Research ability. forecasting. Center, she has worked on projects the Postal Service was intended As the assistant inspector general, related to health and pension funding to be an independent, self-sufficient en- Mr. Adra is responsible for research and and the Postal Service’s retail network. tity, yet during the period when postal data mining activities geared toward She has also assisted with the Office of rates were set to cover costs, citizens and assessing risks and producing research Inspector General’s blog. businesses were charged far in excess of papers on applied public policy, economic Ms. Sheehy received her what was needed to fund CSRS benefits. analysis, and strategic issues pertaining to bachelor’s degree in medieval studies today, the Postal Service continues to the Postal Service. The research and data from Georgetown University, a master’s be assigned an unfair share of CSRS li- mining activities conducted by his office degree in medieval studies from Catholic abilities. Postal ratepayers should not be also support the work of the Office of University and she is currently working burdened with federal liabilities. Instead, Audit and the Office of Investigation. on her masters in economics at George they should be credited for their previ- Mr. Adra received his master’s Mason University. ous overpayments. ending the unfair al- degree in applied economics from location of CSRS liabilities would result John Hopkins University and an MBA in a CSRS surplus that could be used to from Humboldt State University. He fully discharge accrued retiree health care also received his bachelor’s degree in liabilities. this would put the Postal Ser- mathematics from the University of vice on a sound financial footing. All of Colorado.

Visit www.ignet.gov 21 United States Department of Housing and Urban Development Office of Inspector General

[OUTREACH] Training an Ex-Communist Country on the Inspector General Concept Members of our audience understood that we shared their struggle to ensure the integrity of government programs

By Dennis A. Raschka In September of 2009, the U.S. Depart- ment of Justice invited representatives from four Offices of Inspector General to deliver a three-day symposium in Kiev, Ukraine, on how the Inspector General Act is implemented in the United States. Presentations were given on the process of conducting audits, criminal investigations, evaluations and inspections, and hotlines. At the end of the symposium, the presenters and the attendees learned about the huge challenges facing Ukraine’s small cadre of auditors and investigators in bringing integrity to a nation that had been under communist rule until 1991.

The Invite In March 2009, DOJ arranged for a delegation of Ukrainian officials to visit forts in Ukraine, OPDAt incorporated and gave a brief overview on the types five OIGs in the United States. We, at resident legal advisors that were highly of audits and investigations we conduct, the Department of Housing and Urban experienced DOJ attorneys and experts and our hotline – the operation in which Development OIG, were contacted by on anticorruption measures. Rob Storch the majority of our visitors were keenly DOJ’s Office of Overseas Prosecutorial and Bohdan Vitvitsky were among the interested in learning. We learned that Development, Assistance, and training. two U.S. attorneys that worked exten- the Ukrainian ministries had also visited the office had been working with the sively on this program in Ukraine. three other OIGs: the Department of Ukrainian government ministries to as- Of the two Ukrainian ministries Agriculture, Amtrak, and the Depart- sist them in the development of internal that visited the United States, neither ment of transportation. At the conclu- investigative units that were envisioned had traditional law enforcement powers. sion of the presentations, we bid farewell as inspector-general type offices. the As a result, Rob Storch asked us to focus and assumed that was the end of our work of the office focused on fighting on what could be done with regards to business with Ukraine. A few months corruption within the Ukrainian govern- internal auditing, program review, and later, HUD Inspector General Kenneth ment and was part of a larger effort un- investigation in criminal cases, once Donohue received a letter from DOJ in- der the Millennium Challenge Corpora- they are turned over to those with juris- viting representatives of our office to go tion’s threshold Country Plan – a grant diction in their areas. to Kiev, Ukraine, to conduct a sympo- made through agreement with the gov- In our presentation, we covered sium on U.S. Inspector General activi- ernment of Ukraine. to coordinate ef- the basics of the Inspector General Act ties. the inspector general accepted the

22 Journal of Public Inquiry invitation, and arrangements began for The Symposium • A review of audit standards used in the four members of our staff to attend. We the symposium began on September United States. learned from Rob Storch that staff mem- 15, 2009. Among the topics covered • An explanation of the types of audits bers from three other OIGs and a retired were presentations on public corruption conducted and how audit planning is HUD OIG employee1 were also invited. in the United States and case studies of done. audits, investigations, and inspections. • Audit methodology and a discussion Planning Our presentation took place in a theater on how to audit contracts and procure- During the summer, the group coordi- and we spoke to 250 attendees from six ment. nated on an agenda and worked out as- different ministries. Rob Storch and Bo- • Auditing payroll and cash. signments for the presentations. Rob hdan Vitvitsky had arranged for simul- • Inspections and evaluations that cur- Storch and Bohdan Vitvitsky provided taneous translations of all presentations. rently are not done in Ukraine. insight into the political and operational As we spoke into the micro- • Investigative planning and techniques. realities of conducting anticorruption ef- phones, translators would immediately • Documentary evidence, and informant forts in Ukraine. translate our words to Ukrainian via a development. For example, kickbacks were wireless sound system. Attendees wore an established way of conducting busi- portable earphones to help them hear the Culture Shock ness and even extended into the judicial translations. When there were questions, We learned during the symposium that system. As for audits, they were merely the process was reversed and presenters in the investigative arena, some Ukrai- accounting exercises – if the books bal- heard the Ukrainian questions translated nian laws are different from the United anced, that was sufficient. there were to english. States due to the country’s history and also separate audit and investigative Overall, the translation was citizen distrust. One instance of this units. An organization that combined a smooth process, except in instances difference is seen with respect to Ukrai- all of these functions was alien to the where some were quite literal, and we nian surveillance; many Ukrainian in- Ukrainians. Audits seldom questioned had to avoid idioms the best we could. vestigators are prohibited from conduct- document authenticity, cost eligibility, or A few of us found out that some jokes ing video surveillance without a court indications of fraud. As a case in point, were met with silence because the trans- order. the investigators explained that the Ukrainians had a hard time under- lations did not pass along the subtleties this prohibition exists because there is standing why Americans had to prove of jokes based on word play. the Ukrai- great fear of a KGB – type of atmosphere eligibility for basic services such as hous- nians’ sense of humor is also evidently that existed under Russian dominance. ing vouchers, food stamps, and welfare. very different from our own. At other this point was underscored by the fact In the Ukrainian system, these times we scrambled to track where we that our hotel stood two blocks from were rights given to all citizens. We also were in the presentations because our the building of the Security Service of worked under tight deadlines to get our slides on the screen were all written in Ukraine. the Ukrainian security service powerpoint presentations completed in Ukrainian and we occasion- advance so they could be translated. ally lost our place. Regard- less of these small difficul- ties, the core message was 1 HUD OIG staff on the trip included Jim well-received. Heist, Assistant Inspector General for Audit; Members of our Frank Rokosz, Assistant Director, technical audience understood that Oversight and Planning Division, Office of we shared their struggle to Audit; and Ruth Ritzema, Deputy Assistant Inspector General for Investigation. Other staff ensure the integrity of gov- included Katherine Moore, Supervisory Auditor; ernment programs. Among Alan Klein, Senior Director, Office of Audit; and the topics covered at the Mike DeJoseph, Senior Agent, from DOt OIG symposium were: and Colin Carriere, Counsel to the Inspector General/Deputy Inspector General for Investiga- • An overview of the audit tions, from the Amtrak OIG. tom Ackerman, process to the agents and Special Agent with USDA OIG, represented the investigative process to the Inspector General Criminal Investigator the auditors. Building of SBU (Security Service of Ukraine) Academy.

Visit www.ignet.gov 23 is a cross between our Central Intelli- and e-mail complaints are not consid- Dennis A. Raschka gence Agency and Secret Service. Our ered valid complaints, and participants hosts explained that during the Second were seeking ideas on how to deal with World War, the building had served as that restriction. Participants were also the headquarters of the Gestapo. People interested in complaint intake and track- brought into the building would never ing systems. the symposium ended with come back out. After the war ended, the the presentation of certificates to each building became the headquarters of the participant. KGB, maintaining the same reputation as the Gestapo. the current Security Kiev Service of Ukraine is the successor to the Following the sessions, we toured the KGB and is still controversial as it is sus- city. It is a beautiful place overlooking Dennis A. Raschka has served in pected of illegal surveillance and eaves- the Dnieper River. Kiev is dotted with the Department of Housing and dropping. this situation has made it many gold-domed churches. Its unique Urban Development Office of In- difficult for legitimate law enforcement architecture and friendly people make spector General for over 35 years. to develop and gain a level of trust or co- for a small town feel even though it has a Mr. Raschka started his career as operation that is enjoyed in America. population of more than 3 million. the an auditor in Kansas City and later the situation is also further history of Kiev goes back to 966 A.D. moved to Washington D.C. He has complicated as Ukraine is considered However, the city has a long history of served as the director of the Fraud one of the top countries in the world for invasions and occupations. Ukraine cel- Control Division, and the Manage- public corruption. Previous studies by ebrates two independence days, which ment Information Division. Mr. the U.S. Agency for International Devel- do not include its recent break from the Raschka was selected as assistant opment and the Atlantic Council (a U.S. Soviet Union. We were about 100 miles inspector general for Management citizens group formed to promote the from Chernobyl, a place we would have and Policy from 2003 to 2009. He Atlantic treaty Association, which sup- liked to visit had time permitted. subsequently retired and then reports the North Atlantic treaty Organi- turned to the OIG as the executive zation) report that public corruption is Conclusion assistant to the Inspector General. deeply ingrained within Ukraine. Bribes All OIG instructors learned that Ukraine Mr. Raschka is the recipi- and political payoffs are common. the is seriously seeking ways to reduce the ent of many commendations and studies call, among other actions, for corruption that affects the operations special achievement awards includ- Ukraine to adopt an Inspector General of its society. Although we like to think ing HUD Distinguished Service unit in each ministry and pass stronger that the U.S. Inspector General model Award for his work in developing a anti-corruption legislation. can be universally adopted, it is obvi- tenant Integrity Program. He was ous that doing so will require special ad- also awarded the IG Special Rec- Symposium Close justments due to the culture and laws ognition Award for his work on Both the audit and investigation break- of the country. thanks to the Millen- income computer matching legisla- out sessions concluded with practical nium Challenge Corporation, we were tion and piloting computer match- exercises on the material. Participants afforded an opportunity to share the ing at HUD. In 2001 he received completed the symposium by presenting U.S. Inspector General model and our the OIG’s highest recognition, the their solutions to the case studies. they experiences in uncovering fraud, waste, Charles Haynes Memorial Award. also took the case studies seriously and and abuse to Ukraine. We are grateful Mr. Raschka has also received a gave creative answers, even challenging to our main hosts Rob Storch and Bo- Meritorious Presidential Rank the instructor’s solutions. hdan Vitvitsky. Although this grant has award. Mr. Raschka received his the finale was a presentation on ended, we send best wishes to our new degree in accounting from Valpara- how to set up a hotline. this exercise friends in Ukraine and hope that we have iso University in Indiana. generated many questions. Ukraine has helped them be successful in setting up a unique law that specifies only written their new units. 1 complaints can be accepted, and those must be responded to in writing. Phone

24 Journal of Public Inquiry United States Department of Defense Office of Inspector General

[OVERSIGHT] Inspectors General: Prioritizing Accountability IGs have become accepted as legitimate overseers of government operations, but they remain the subject of considerable debate

By James R. Ives Retaining the public’s trust requires holding government representatives accountable for actions, decisions, and mistakes. Since our nation’s inception, Congress and government executives have struggled to design effective mechanisms that can be utilized to ensure accountability. ensuring public servants are held accountable to multiple parties – to include the president, Congress, and the public at large – is no easy task. the extent to which governance has taken on new proportions and grown more decen- tralized throughout the past half-century has made ensuring accountability even more difficult. According to Paul C. Light: serve for 18-24 months on average, powerless the checks provided of one the past half-century has witnessed and information is often delivered government on another, and will become a slow but steady thickening of the by word of mouth through a process as oppressive as the government from federal bureaucracy as Congress and that has come to resemble the child- which we separated.”2 Likewise, Henry presidents have added layer upon hood game of telephone.1 David thoreau warned about the dan- layer of political and career manage- In making this statement, Light echoes gers of an ever-expanding national gov- ment to the hierarchy. there have the concerns of heralds who warned that ernment in stating, “that government never been more layers at the top of government expansion would negatively is best which governs least.”3 Results of government, nor more occupants at impact leaders’ ability to guarantee ac- international researcher tero erkkilä’s each layer. Information must pass countability. For example, President studies seem to indicate that Jefferson through layer upon layer before it thomas Jefferson warned that, “the true and thoreau’s concerns were well found- reaches the top of the hierarchy, if it theory of our Constitution is surely the ed. According to erkkilä, “Changes in reaches the top at all, while guidance wisest and best . . . (for) when all govern- Government due to the fragmentation of and oversight must pass through ment . . . shall be drawn to Washington power and the decline in role and scope layer upon layer on the way to the as the center of all power, it will render frontlines, if it ever reaches the 2 America’s Constitution, National Center for frontlines at all. It is little wonder 1 Light, Paul C. Fact Sheet on the Continued Constitutional Studies, retrieved November 10, that no one can be held account- Thickening of Government. July 2004. Washing- 2009, from http://www.nccs.net/articles/ril20. able for what goes wrong or right ton, D.C. The Brookings Institution. Retrieved html November 11, 2009, from http://www.brook- 3 Respectfully Quoted: A Dictionary of Quotations, in government, especially in a hier- ings.edu/papers/2004/0723governance_light. retrieved November 10, 2000, from http://www. archy where presidential appointees aspx. bartleby.com/73/753.html

Visit www.ignet.gov 25 of a state have been seen to create situ- criticism diminished subsequent to pas- more complicated than compliance ations whereby the traditional means of sage of the IG Act, and the IGs grew in accountability, as it “has to do with accountability no longer fully apply.”4 number as the concept became accepted. the ability of an agent to produce In 1978, Congress’ search for an Although IGs have become ac- things of value for the principal at effective accountability mechanism re- cepted as legitimate overseers of govern- the lowest possible costs in terms of sulted in creation of an unconventional ment operations, they remain the subject resources utilized.”8 Performance concept that would significantly alter the of considerable debate. Oftentimes, criti- accountability efforts typically in- government oversight and accountability cisms relate to claims that IGs have failed volve evaluating and benchmarking landscape. With passage of the Inspector to appropriately utilize their far-reaching performance in order to avoid prob- General Act of 1978, Congress entrenched oversight authorities in an effective man- lems before they occur, rather than OIGs within twelve executive branch de- ner. Pundits are especially critical of the punishing inappropriate activity af- partments and agencies.5 the purpose extent to which IGs rely upon compliance ter it occurs. of establishing these offices was to create accountability standards in an attempt to 3. Capacity-based accountability, which independent and objective units to con- enhance accountability, versus perfor- involves overarching, long-term duct and supervise audits and investiga- mance accountability and capacity-based assessments designed to evaluate tions relating to the programs and op- accountability standards. the extent to which departments erations of [federal] establishments, and and agencies (or governments as a to provide leadership and coordination Government whole) are appropriately “staffed, and recommend policies for activities Accountability – Three trained, structured, and equipped” designed to (a) promote economy, effi- Basic Approaches to the extent they can perform in an ciency, and effectiveness in the adminis- According to Light, there are three basic effective and efficient manner. Ca- tration of, and (b) to prevent and detect approaches that can be utilized to foster pacity-based accountability efforts fraud and abuse in, such programs and government accountability: generally focus on development of 6 operations. Although creation of the 1. Compliance accountability, which “workable programs and responsive 9 IG system was clearly indicative of Con- involves efforts to ensure govern- structures.” gress’ desire to ensure accountability, the ment employees’ and related actors’ Light argues that the 1978 IG Act is concept did not initially receive universal (e.g., contractors, grant recipients, unique in that it is “the only reform stat- support. In fact, President Jimmy Carter, etc.) actions conform to specific ute to combine all three contemporary various executive branch leaders, and the rules and regulations. Compliance strategies of accountability” in that it Department of Justice strongly opposed accountability typically involves invites “questions of design, implemen- 10 creation of a network of IGs. “Many in holding individuals accountable for tation, organization, and effectiveness.” the executive branch regarded the OIGs their actions through utilization of Although this is the case, IGs have been as ‘moles’ within their agencies, and DOJ punishments and sanctions, correct- criticized regarding the extent to which believed that the congressional intrusion ing problems after they occur, and they opt to focus on their compliance into executive branch operations was so deterrence of inappropriate behavior role through utilization of targeted au- substantial that it violated the Separation through publicizing punitive mea- dits designed to identify deficiencies typ- 7 of Powers doctrine.” executive branch sures. Investigations and targeted ically associated with individual failures; and criminal, civil, and administrative 4 erkkila, tero. Governance and Accountability – audits designed to identify potential A Shift in Conceptualization. Public Administra- fraud, waste, and abuse are typical investigations of alleged fraud, waste, tion Quarterly. 31, 1. April 1, 2007, p. 18. compliance accountability tools; corruption, and abuse on the part of 5 Kaiser, Frederick M. (2008). Statutory Offices 2. Performance accountability, which government employees, grant recipients, of Inspector General: Past and Present. Congres- involves identification of potential and contractors. sional Research Service Report for Congress. program weaknesses or inefficien- So why is it that some IGs opt to Washington, D.C. the Library of Congress. stress their compliance role? In order to 6 Inspector General Act of 1978. U.S. Code, cies. Accountability is promoted title 5, Appendix 3. Pub. L. 95-452, Sec. 1, through utilization of inspections answer this question, it is important to Oct. 12, 1978, 92 Stat. 1101. and reviews designed to ensure pro- take into consideration unique historical 7 Gates, Margaret Jane, Moore, Mark H. (1986). grams and personnel are performing and contextual factors that dominated Inspectors-General: Junkyard Dogs or Man’s Best in an efficient and effective manner. 8 Gates and Moore, p.75. Friend? Russell Sage Foundation. New York, 9 Light, 1993, p.4-15. NY, p.10. Performance accountability is much 10 Light, 1993, p.12.

26 Journal of Public Inquiry upon those that follow. and regulations.”13 Light indicates that, the theory of path de- “even a cursory review of contempo- pendency “assumes that rary public administration textbooks decisions are initially suggests that the dominant definition is open to revision, but one of command-and-control.”14 Pas- from a certain point sage of the IG Act is frequently attrib- in time onwards, de- uted to growing calls for government ac- cisions taken increas- countability stemming from high-profile ingly restrain present scandals that occurred throughout past and future choices. As decades. In fact, creation of one of our a result, decisions that nation’s first non-statutory OIGs at have been taken in the the U.S. Department of Agriculture in past may increasingly 1962 (preceding passage of the IG Act amount to an im- by 16 years) stemmed from a high-pro- perative for the future file scandal involving Billie Sol estes, a course of action.”12 texas businessman and close associate Additionally, histori- of Lyndon Johnson who engaged in a ans typically argue that massive fraud scheme involving cotton in order to better un- production. 15 estes swindled the federal the late 1970’s and 1980’s (oftentimes re- derstand an event, idea, or concept, we government and private parties out of at ferred to as the OIG’s “formative years”). should take context into account (those least $24 million through utilization of things that surround it in time and place false agricultural subsidy claims. He was History Matters! The and which give it meaning) in order to sentenced to serve eight years in prison, Formative Years establish how a development relates to but his conviction was subsequently Congress’s decision to give the IGs the other events and ideas that occurred overturned by the U.S. Supreme Court 16 authority to engage in all three kinds of during the same timeframe. Assum- in 1965. this outcome led to Congres- monitoring was unprecedented. IGs are ing these theories hold merit, decisions sional and public outcry for increased ac- expected to assure compliance with rules made within the IGs’ formative years, countability within federal departments designed to prevent scandals, but they many of which were likely impacted by that continued well into the 1970s. are also tasked with providing informa- the political landscape, undoubtedly had throughout the 1970s, additional high- tion regarding agency performance and far reaching impact upon development profile scandals developed. two particu- capacity.11 According to Light, IGs “are of institutionalized missions and func- larly significant examples include: not forced by structure or mandate to tions. this being the case, an assessment 1. Release of a top secret report en- concentrate on short-term compliance as of the IG system should explore the po- titled, “United States – Vietnam the be-all and end-all of the job,” howev- litical setting which existed during the Relations, 1945-1967: A Study er, limited availability of resources forced years that immediately preceded - and Prepared by the Department of De- early IGs to prioritize from inception. followed - passage of the IG Act. fense” (commonly referred to as the When created, most OIGs were pro- Pentagon Papers) by the New York vided with exceptionally lean budgets, The Age of Government Distrust times in 1971, which revealed that which necessitated hiring skeleton crews. According to Light, “the definition President Richard Nixon and other Given their far-reaching authorities, pri- of accountability in government has government leaders deliberately oritization was a necessity. remained relatively constant over the 13 Light, 1993, p.12. past fifty years: limit bureaucratic dis- 14 Light, 1993, p.12. cretion through tightly drawn rules 15 Light, 1993, p.31. Path Dependency 16 Intergovernmental Relations Subcommittee Many social scientists and public admin- 12 Koch, Jochen, Schreyögg, Georg, and Sydow, (1966) Operations of Billie Sol estes: eighth istration scholars contend that social pro- Jörg. (July 2, 2005). Path Dependence and report by the Committee on Government Opera- cesses do not evolve in an unconditioned Creation Processes in the Emergence of Markets, tions Intergovernmental Relations Subcommit- way. Former decisions have an impact Technologies and Institutions. Free University tee, House Committee on Government Op- of Berlin. Faculty of economics and Business erations, United States Congress, Government 11 Light, 1993, p.33. Administration. Berlin, Germany, p.6. Printing Office, Washington, D.C., OCLC 35

Visit www.ignet.gov 27 hostility towards ability to immediately root out fraud, government.”18 abuse, and blatant corruption of the na- the extent to ture exposed as a result of high-profile which public dis- scandals. While the importance of per- trust developed formance accountability and capacity- in the aftermath based accountability may have been fully of the aforemen- recognized, IGs likely realized that it tioned scandals – would have been exceptionally difficult exasperated by in- to measure results associated with re- creased demands lated initiatives, whereas it is exception- for government ally simple to measure results associated accountability with compliance-based accountability stemming from (e.g. number of arrests, indictments, and the dramatic in- convictions resulting from criminal in- expanded the Vietnam conflict by crease in the “size, scope, and complexity vestigations; amount of money returned bombing Cambodia and Laos, and of government operations”19 throughout to the government coffers as a result of surreptitiously approved other com- the 1970s – set the tone for debates in criminal fines and sanctions; amount of bat. Additionally, the Pentagon Pa- Congress, which eventually led to devel- money recouped through compliance pers revealed that former presidents opment of the Inspector General con- audits that reveal financial discrepancies, – to include Presidents Harry tru- cept and passage of the IG Act in 1978. etc.). the bottom line is: it is exception- man and Lyndon Johnson - misled According to Gates and Moore: ally difficult to measure the extent to the public regarding various policy Given the durability, strength, and which oversight organizations’ perfor- decisions involving Vietnam.17 salience of these concerns among mance and/or capacity-based account- 2. the burglary into Democratic Na- citizens, it is not surprising that ability efforts result in a more “efficient tional headquarters at the Water- Congress acted to combat fraud, and effective” government, whereas it gate office complex in Washington, waste, and abuse in government by is exceptionally easy to advertise results D.C., (the “Watergate scandal”) and creating a network of specialized associated with traditional compliance the subsequent cover-up by Nixon institutions. the OIGs symbolize accountability efforts. As Light puts it, and numerous cohorts. events that a public value that has widespread “raw indictment and conviction rates do followed led to Nixon’s resignation public appeal: the interest in assur- not require qualifiers and are not open to on August 9, 1974 (the only resigna- ing taxpayers that their hard-earned interpretation. A conviction is a conviction of a U.S. president), and eleven money, grudgingly given for public tion, plain and simple.”21 convictions of high-ranking govern- purposes – is well spent.20 ment employees and their associates. A Desire to Remain Apolitical Both events seriously eroded citizens’ The Importance of Visibility In addition to a desire to ensure relevance trust in government, and resulted in de- the desire to immediately establish vis- by remaining visible, new IGs had a vest- mands for enhanced accountability and ibility likely impacted IGs decision to ed interest in remaining apolitical (recall oversight. According to Margaret Jane prioritize compliance accountability. the IG Act requires IGs to be appointed Gates and Mark H. Moore, the release throughout the late 1970s and early “without regard to political affiliation”), of the Pentagon Papers, the Watergate 1980s, programmatic budget cuts were at least until such time they accumulated scandal, and other notorious activities commonplace. In order to retain ad- a semblance of credibility in the eyes of on the part of government representa- equate funding, government agencies Congress. According to Light, the IGs tives throughout the 1970s (e.g., Spiro – to include the OIGs - needed to ex- were “safest when they stuck to the most Agnew’s tax evasion plea, the perjury hibit highly-visible, readily-quantifiable traditional concepts of compliance based conviction of CIA director Richard results. this factor likely compelled monitoring, and most vulnerable when Helms, etc.) were given wide publicity, inaugural IGs to attempt to establish they branched into bigger questions of “thereby confirming the public’s general- measurable “value” by demonstrating an performance or capacity building.”22 As ized suspicions” and causing a “general 18 Gates and Moore, p.2. this is the case, inaugural IGs undoubt- 17 Sheehan, Neil. (1971). the Pentagon Papers: 19 Gates and Moore, p.2. 21 Light, 1993, p.210. as published in the New York times. 20 Gates and Moore, p.3. 22 Light, 1993, p.7.

28 Journal of Public Inquiry edly attempted to evade political skir- The Drift towards Compliance as a “Performance Inspection of the Of- mishes that could potentially result in Path dependency theorists would likely fices of Inspectors General.”25 their goal animosity on the part of Congress or ex- argue that it is small wonder why newly was to “determine the ultimate value of ecutive branch leaders. Compliance ac- appointed IGs opted to focus almost en- the IGs” by assessing “exactly how much countability efforts rarely draw negative tirely on compliance accountability ver- of the [positive] changes in government attention (it would be political suicide sus performance accountability or capac- performance [they] observed [could for a member of Congress or an execu- ity accountability given aforementioned be] directly attributed to the IGs.”26 tive branch leader to criticize an IG for factors, all of which exerted significant In conducting their study, Gates and pursuing prosecution of a government pressures upon IGs during their forma- Moore note the extent to which focus- employee who committed a criminal tive years. Given personnel and resource ing on compliance monitoring has led act, was negligent in his or her duties, or shortages, IGs were incapable of focus- to positive change in that it has resulted engaged in malfeasance), whereas perfor- ing upon all three forms of accountabil- in “increased detection of fraud, waste, mance and capacity-based accountability ity, so they likely opted to follow a path and abuse; in increased prosecutions efforts are oftentimes highly political, that would most likely please Congress, and financial recoveries from those who subjective, and controversial. executive branch leaders, and members have committed fraud; and in increased the desire to remain apolitical of the public. Focusing primarily on rates of audit resolutions and financial likely caused early IGs to avoid politi- compliance accountability allowed the recoveries from those agencies that have cal scuffles; however, it would be next to new IGs to engage in activities that gen- used government money abusively or impossible for them to completely ignore erated very visible results and appeased wastefully.”27 According to their study, the general political climate given their politicians intent upon convincing con- from 1978 through 1983: need to prioritize. During the late 1970s, stituents that government officials would • Reported allegations of fraud, waste, Congress sent a message to the new IGs be held accountable for blatant fraud and and abuse increased from 10,000 per via the extent to which they increased abuse. According to Light, “With 535 year to over 25,000 per year; their focus upon compliance-related is- members of Congress, 270 committees • Successful prosecutions increased sues. According to Light: and subcommittees, and almost 3,000 from a approximately 1,000 to ap- Congress’ growing thirst for infor- professional staff members as their cus- proximately 4,000; mation also was undeniable. [Joel] tomers, the IGs had ample incentive to • Actions against government employ- Aberbach documented the stunning favor compliance monitoring.”24 ees and contractors increased from rise in oversight starting in the mid- 700 to 2,500.28 1970s, just about the time the IG Modern Day IGs – Gates and Moore conclude that, “Al- concept was enacted. According to Reprioritize or Stay the though there is some uncertainty about Aberbach’s data, which were based Course? the accuracy of these numbers, they do on his careful subject-matter coding Path dependency theory provides one suggest heightened levels of investigative 29 of every congressional hearing that possible explanation as to why IGs con- and audit activity.” they argue that IG was held in odd-numbered, non- tinue to embrace their compliance mon- compliance efforts can be deemed suc- election years between 1961 and itoring role but has concentrating on cessful in that the organizations “seem 1983, Congress conducted 537 days compliance accountability adversely im- to be detecting more fraud, waste, and of oversight in 1977, an increase of pacted IGs’ effectiveness? Does focusing abuse and moving more aggressively to 30 268 percent over 1961. Starting upon compliance monitoring make IGs recover losses than their predecessors.” at 146 days of oversight in 1961, less capable of ensuring departments, Although more critical of IGs’ efforts, Congress became increasingly com- agencies, and individual government Light concedes that compliance efforts mitted to this task, giving 290 days employees act in responsible manners? have not been altogether ineffective. in 1973, 459 in 1975, and peaking Has the decision to prioritize compli- He states that, “From a fraud, waste, at 587 in 1981. As a percentage of ance accountability degraded IGs’ ability and abuse perspective, the IGs have… all days spent in hearings, oversight to effectively oversee government opera- 25 Gates and Moore, p.61. moved from 8 percent in 1961 to 18 tions? In an attempt to assess the effec- 23 26 Gates and Moore, p.58. percent in 1977. tiveness of the IGs, Gates and Moore 27 Gates and Moore, p.61. initiated a project which they referred to 28 Gates and Moore, p.61. 29 Gates and Moore, p.61. 23 Light, 1993, p.51. 24 Light, 1993, p.39. 30 Gates and Moore, p.69.

Visit www.ignet.gov 29 been effective, if, that is, effectiveness in reality, they believe IGs are prioritiz- all, as we have seen, the pursuit of is measured in purely statistical terms. ing consistent with Congressional guid- financial integrity by itself is not the IGs have accumulated huge savings ance. Although they recognize the fact necessarily identical to the concept over the past decade, along with increas- that the broad charters of IGs allow them of accountability, nor to increased ing amounts of that visible odium that to play diverse accountability roles, they efficiency. If the “principals” in comes from indictment and conviction conclude that: Congress, the executive branch, and of individual wrongdoers.”31 the OIGs have positioned them- the courts want products of a certain Although this is the case, Gates, selves comfortably within the broad type and are willing to spend only Moore, and Light believe efforts involv- mandate created by Congress. In- limited amounts for computers and ing performance and capacity-based evitably, the bulk of their activities administrative costs, they may ac- accountability should increase. Light remain in the traditional areas of in- cept some losses in financial integri- opines that, “the IGs would be more vestigation and audit. that is what ty without feeling that their “agent” valuable to their agencies and Congress if Congress seems to have intended. It has been unaccountable. the agent they focused less on short-term statistical is also consistent with the current may have produced exactly what the accomplishments, particularly those in- capacities of the OIGs. the OIGs principals wanted.36 volving investigations, and more on pro- have not benefited from any large Regardless of the risks associated with gram design emerging from outcome- increases in resources.”34 expanding their oversight role, IGs may oriented evaluations and inspections.”32 Although Gates and Moore are not over- want to at least consider placing increased Along those same lines, Gates and Moore ly critical of the decision to focus upon emphasis upon performance and capaci- note that: compliance accountability, they see value ty-based accountability. Many account- in focusing more on performance and ca- ability experts have noted the extent to pacity-based accountability in the future. which performance accountability is For example, they cite opportunities to currently emphasized in government cir- “contribute to government performance cles. According to Kathryn Newcomer, in terms of proposed administrative “Federal managers are currently chang- changes that would prevent fraud, waste, ing the way they do business in response and abuse.”35 However, they also under- to a variety of initiatives from both the the President’s Council on Integ- stand that focusing upon performance executive and legislative branches. Sig- rity and efficiency and Congress and capacity-building comes with signif- nals from the White House contained in are beginning to see that financial icant risks and challenges, and warn IGs the National Performance Review and returns to the government of detect- not to ignore the political environment from the Congress in the Government ing and recovering fraud, waste, and when engaging in performance and Performance and Results Act of 1993 call abuse are trivial compared with the capacity-based accountability efforts. for managers to focus on programmatic potential returns from prevention. they state that: results rather than procedural guidelines Indeed, in accounting for the “to- the OIGs seem to face two great as they steer their programs.”37 Given tal monetary impact” of the OIGs risks in influencing government op- this fact, IGs who fail to place at least (understood as savings to the federal erations. One risk is that they, their some emphasis upon performance and government resulting from OIG ac- interests in promoting financial in- capacity-based accountability may find tivity), recoveries from past instances tegrity, and their proposals will not themselves falling out of favor with two of corruption account for less than be taken seriously by program man- of their primary customers (executive five percent of the estimated im- agers. Lest one think this unlikely, branch leaders and Congress). New- pact.33 it is sufficient to point out that all comer points out the fact that the first While this statement seems to indicate of the cases we studied revealed con- National Performance Review (1993) Gates and Moore are critical of the ex- sistent failures of management to specifically referenced the IGs, and asked tent to which the IGs have focused pre- respond to OIG recommendations, them to “broaden the focus of the in- dominately upon compliance activities which consequently led to problems. 36 Gates and Moore, p.69-70. (traditional audits and investigations), A second great risk is that the OIGs 37 Newcomer, Kathryn. The Changing Nature of 31 Light, 1993, p.203. will be taken too seriously. After Accountability: The Role of the Inspector General in 32 Light, 1993, p.194. 34 Gates and Moore, p.58. Federal Agencies. Public Administration Review. 33 Gates and Moore, p.60. 35 Gates and Moore, p.69. March/April 1998 (58, 2), p. 130.

30 Journal of Public Inquiry spectors general from strict compliance persistent and resistant to change. Once James R. Ives auditing to evaluating management and set upon a certain trajectory, it is very control systems. to implement this difficult for an organization to reverse mandate, the inspectors general were ad- course, even if logic dictates that there vised to survey regularly their customers is value in exploring alternative manners in their agencies, and the line managers of conducting business. Since “the set of and to establish performance criteria for decisions one faces for any given circum- themselves to assess how well they do in stance is limited by the decisions one has improving their agencies’ management made in the past, even though past cir- control systems.”38 the review advised cumstances may no longer be relevant,”43 IGs to “measure their own performance choices to focus predominately upon in terms of how well they helped prevent compliance accountability during the [emphasis added] fraud and abuse. this formative years will likely continue to James R. Ives currently serves as assistant perspective urged the inspectors general impact the manner in which future IGs inspector general for investigative be held accountable for their proactive will perceive their role for the foreseeable operations at the Department of Defense results.”39 future unless a precipitating event leads Office of Inspector General. He oversees Like Gates and Moore, New- to path-breaking, which typically stems domestic and international criminal comer is fully aware of the numerous from a dramatic incident that forces in- investigations conducted by the Defense challenges a shift in priorities entails. stitutions to abruptly change course. Al- Criminal Investigative Service, the law She recognizes the role path dependency though it is possible that such an event enforcement arm of the DoD IG. has played in shaping the priorities of will cause priorities to shift, history has Mr. Ives has held several IGs to date in stating that, “the culture taught us that dramatic incidents im- leadership positions at DCIS, to include within both the agencies and the offices pacting the IG community oftentimes special agent-in-charge of the DCIS Mid- of inspector general must change,” and have the opposite effect. the majority Atlantic Field Office, deputy director of notes that it will be extremely challeng- of events that previously influenced IGs’ investigative operations, assistant deputy ing for the IGs to “continue their over- priorities involved momentous cases of director for national security,and criminal sight of management’s performance, but fraud, waste, and abuse that caused Con- intelligence program manager. He served through a more proactive lens.”40 to gress, members of the executive branch, as a special agent at the DCIS Boston successfully accomplish this goal, the IGs and other relevant parties to demand Resident Agency prior to relocating to will need to move towards a more “con- additional attention be paid to compli- the National Capital Region. sultative approach” whereby they view ance monitoring (e.g., recent high profile Prior to joining DCIS, Mr. their respective departments or agencies bribery and corruption cases involving Ives served with the Immigration and as partners versus adversaries.41 Compli- U.S. military efforts in Southwest Asia, Naturalization Service from 1992 cating matters further is the fact that IGs’ which have resulted in Congress and through 1994. He also served as a efforts have been impeded by “declining other parties requesting that DoD IG special agent with the Department of resources and continuing challenges to and other oversight authorities increase State’s Diplomatic Security Service from their independence [that] plague the in- compliance accountability efforts). As 1998 through 1999, and as a special spectors general as they strive to please this is the case, it is far more likely that agent (reservist) with the Coast Guard both executive and legislative masters.”42 prominent abuses – and the resulting af- Investigative Service from 1999 to 2006, termath – will cause IGs to continue to when he received an honorable discharge. Conclusion focus predominately upon compliance Mr. Ives is an adjunct professor of According to path dependence theorists, accountability unless they are provided criminal justice at University of Maryland decisions made by early IGs likely set significant additional funds earmarked University College. He holds a Master the stage for the development of future for enhancing performance and capaci- of Policy Management degree from priorities, since institutions tend to be ty-based accountability efforts. 1 Georgetown University, and is currently 38 Newcomer, p.130. working towards a Doctor of Philosophy 39 Newcomer, p.130. 43 Praeger, Dave. Our Love of Sewers: A Les- degree in Public Administration at 40 Newcomer, p.130. son in Path Dependence. Retrieved November Virginia tech. This article is a condensed 41 Newcomer, p.130. 21, 2009, from: http://poopthebook.com/ version of a research paper he drafted in 42 Newcomer, p.135. blog/2007/06/15/sewers-path-dependence/. conjunction with his PhD program.

Visit www.ignet.gov 31 United States Federal Bureau of Investigation

[SPEECH] RSA Cyber Security Conference, San Francisco, Calif. March 4, 2010 Together we can find better ways to safeguard our systems and stop those who would do us harm

By Director Robert S. Mueller, III Good afternoon. I am pleased to be back here in San Francisco. I recently read a news story about a tailor in Bogotá, Colombia—a tailor who makes bulletproof menswear. He will design the garment to your spec- ifications, and line it with Kevlar sufficient to stop a bullet fired from a .38 caliber pistol at point-blank range. Some may question whether this is necessary, or extravagant, or perhaps both. But the world has become increasingly dangerous; this man was merely combining the need to stay safe with the desire to look good at the same time. Of course, my first thought was for the brave but foolish volunteer who we are not bulletproof, nor can we make One reply did stick in my craw. wore these clothes during the testing ourselves so. But we can work together A younger employee said, with what phase. My second thought was that we to line our networks with the equivalent looked like a smirk, “I haven’t read it, sir; could use this kind of ingenuity to safe- of Kevlar. We can work together to find I was only 10 when it was published.” I guard our computer systems. and stop those who are taking shots at said, “thank you for reminding me of In the early 1990s, we marveled us, and to prevent future attacks. how old I am. I am sure you will be very at the potential of the Internet. the risks Almost 20 years ago, here in San happy in the FBI’s Yemen office.” seemed a world away, and the dangers Francisco, I read the book entitled “the Ancient though it may be, the were largely limited to teenage hackers Cuckoo’s egg,” the story of Cliff Stoll—a story of Cliff Stoll illustrates how far we and identity theft. systems manager at a Berkeley laboratory. have come, and how quickly. today, the power and pervasive- He noticed an accounting discrepancy of today, we will talk about what ness of the Internet are evident in the just 75 cents, and ultimately tracked it the FBI is doing to investigate and pre- way we communicate, conduct business, to a German espionage ring tapping into vent cyber crime. We will focus on the and learn. But the risks are no longer a our military networks. power of partnerships. And we will distant possibility. they are right here at I mentioned the story to several touch on what we must do to prevent our doorstep. And in some cases, they are FBI employees to illustrate the evolution cyber crime from becoming endemic to already inside the house. of cyber crime. And I asked if anyone our businesses, our economy, and our Unlike the Colombian tailor, had read the book. national security.

32 Journal of Public Inquiry Let us begin with cyber threats and in the Republic of Georgia in 2008. spearphish employees, sending e-mails to our national security. As you well Wave after wave of data requests shut purportedly from co-workers with con- know, a cyber attack could have the same down banks and emergency phone lines, tent often too alluring or realistic to ig- impact as a well-placed bomb. gas stations and grocery stores, even parts nore. And just one breach is all they need to date, terrorists have not used of each country’s government. the im- to open the floodgates. the Internet to launch a full-scale cyber pact of these attacks left us all aware of We have seen not only a loss of attack. But they have executed numerous our vulnerabilities. data, but also corruption of that data. denial-of-service attacks. And they have Let us turn for a moment to We are concerned with the integrity of defaced numerous websites, including counterintelligence intrusions and eco- your source code. If hackers made subtle, Congress’ website following President nomic espionage. undetected changes to your code, they Obama’s State of the Union speech. espionage once pitted spy ver- would have a permanent window into A group known as the Iranian sus spy, country against country. today, everything you do. the same is true for Cyber Army claimed responsibility for our adversaries sit on fiber optic cables those with access to hardware and soft- this attack. And while the damage may and wi-fi networks, unknown and unde- ware in the global supply chain. have been limited, such groups may at- tected. they may be nation-state actors Some in the industry have lik- tack for publicity or impact, and they are or mercenaries for hire, rogue hackers or ened this to “death by a thousand cuts.” becoming more adept at both. transnational criminal syndicates. We are bleeding data, intellectual prop- In the past 10 years, al Qaeda’s these hackers actively target erty, information, and source code, bit online presence has become as potent as our government networks. they seek by bit, and in some cases, terabyte by its physical presence. extremists are not our technology, our intelligence and our terabyte. limiting their use of the Internet to re- intellectual property, even our military the solution does not rest sole- cruitment or radicalization; they are us- weapons and strategies. In short, they ly with better ways to detect and block ing it to incite terrorism. have everything to gain, and we have a intrusion attempts. We are playing the thousands of extremist websites great deal to lose. cyber equivalent of cat and mouse, and, promote violence to a ready and a will- there has been much discus- unfortunately, the mouse seems to be ing audience. they are posting videos on sion of late about which nation-states one step ahead. how to build backpack bombs and bio- pose the greatest danger of cyber attack. We must work to find those re- weapons. they are using social network- And to a certain extent, that discussion sponsible. And we must make the cost of ing to link terrorist plotters and plans. is irrelevant. It may not matter who the doing business more than they are will- Of course, the Internet is not attacker is, or whether the motivation is ing to bear. only used to plan and execute attacks; political, ideological, or financial. the We in the FBI pursue cyber it is a target in and of itself. Usama bin information may be bought and sold by threats from start to finish. We have Laden long ago identified cyberspace as a anyone, anywhere in the world, whether cyber squads in each of our 56 field of- means to damage both our economy and friend or foe. fices around the country, with more than our psyche—and countless extremists the end result will be the same: 1,000 specially trained agents, analysts, have taken this to heart. we will lose our data. We may lose access and digital forensic examiners. We in the FBI, with our part- to our own information. And we may together, they run complex un- ners in the intelligence community, be- well lose our security. dercover operations and examine digital lieve the cyber terrorism threat is real, In recent years, we have wit- evidence. they share information with and it is rapidly expanding. terrorists nessed a new trend: the collection of our law enforcement and intelligence have shown a clear interest in pursuing seemingly innocuous information about partners, including the Secret Service, hacking skills. And they will either train a company and its employees—from e- which also has strong capabilities in their own recruits or hire outsiders, with mail addresses to power point presenta- this area. And they teach their counter- an eye toward combining physical at- tions to notes from meetings. this data parts—both at home and abroad—how tacks with cyber attacks. not only provides inside knowledge of best to investigate cyber threats. Apart from the terrorist threat, research and development, business But the FBI cannot do it alone. nation-states may use the Internet as a plans, or client negotiations. It can pro- the National Cyber Investigative Joint means of attack for political ends. Con- vide entrée to a company’s network. task Force includes 17 law enforce- sider what took place in estonia in 2007 Hackers are using this data to ment and intelligence agencies, working

Visit www.ignet.gov 33 side by side to identify key players and rampant hacking originating from that code. these teams travel the world on a schemes. the goal is to predict and pre- country. And yet today, Romania is one moment’s notice to respond to fast-mov- vent what is on the horizon, and to pur- of our strongest partners. ing cyber threats such as this one. sue the enterprises behind these attacks. these cases present unique hur- We worked closely with our the task force operates through dles in terms of jurisdiction and prosecu- counterparts here at home and overseas threat Focus Cells—smaller groups of tion. We see borders as obstacles; crimi- to investigate this attack. And we alerted agents, officers, and analysts from dif- nals see them as ferent agencies focused on particular opportunities. threats. together, For example, the Botnet Focus we must continue Cell investigates high-priority botnets. to work toward We are reverse-engineering those botnets an international with an eye toward disrupting them. And standard for cyber we are following the money wherever it crime. And we must leads, to find and stop the botmasters. continue to press this week’s takedown of the forward, country by Mariposa botnet is one example of that country, and com- collaboration. As you may know, Mari- pany by company. posa was an information-stealing bot- In recent net—one that infected millions of com- years, we have in- puters, from Fortune 1000 companies to vestigated a number major banks. And this case, like so many of cases where fi- others, emphasized the need for global nancial institutions cooperation. have been breached, We have more than 60 FBI legal with losses in the attaché offices around the world, shar- tens of millions. ing information and coordinating joint You have investigations with our host countries. likely heard about And we have special agents embedded a recent global bank with police forces in Romania, estonia, heist, where the hackers broke through our private sector partners to the poten- and the Netherlands, to name just a few. an encrypted system to steal account tial danger so they could make the neces- together, we are making prog- numbers and PIN codes. they created sary patches. ress. Last October, we worked with more than 400 hundred fake AtM cards today, the top three hackers be- egyptian authorities to dismantle a com- and recruited hundreds of mules around hind this attack are in custody in east- puter intrusion and money laundering the world. In just 24 hours, in roughly ern europe. But the simple truth is, if scheme operating in the United States 280 cities, they stole nearly $10 million this company had not come forward, we and egypt. dollars. the loss was limited only by the would not have been able to stop these With our partners in the Unit- number of mules and the cash in the individuals from hitting the next victim. ed Kingdom, Germany, and turkey, AtMs. this is where we can be of val- we dismantled Darkmarket, one of the this was a revolutionary attack, ue—not just in finding these criminals, most sophisticated online criminal syn- in terms of its sophistication and its suc- but in making certain they cannot get to dicates—and one of the forerunners in cess. But our approach to finding those you in the first place. If we cannot pre- using the Internet to buy and sell stolen responsible was revolutionary as well. vent every attack, we must stop them financial data. First and foremost, the compa- from striking again and again. to do And we have worked with the ny came forward quickly, which was of that, we need your help. Romanian National Police to arrest more great help to us. than 100 Romanian nationals in the We deployed a mobile FBI Importance of Private past 18 months. Four years ago, several Cyber Action team—a highly-trained Sector Partnerships American companies threatened to cut group of agents, analysts, and experts in Let me again emphasize the importance cyber ties with Romania because of the both computer forensics and malicious of private sector partnerships.

3434 JJournalournal ofof PPublicublic IInquirnquiryy Historically, there has been a into a grizzly bear. Robert S. Mueller dichotomy between network security on the first hiker says to the other, the one hand, and the investigative pro- “We just need to outrun him.” And the cess on the other. It has been the great second replies, “I don’t need to outrun divide between us. But it needn’t be. him. I just need to outrun you.” We in the FBI understand that You may well outrun one attack, you have practical concerns about report- but you aren’t likely to avoid the second, ing breaches of security. You may believe or the third. Our safety lies in protecting that notifying the authorities will harm not just our own interests, but our criti- your competitive position. You may have cal infrastructure as a whole. privacy concerns. Or you may think that Following World War I, France the information flows just one way—to built a line of concrete fortifications and Robert S. Mueller was nominated us. machine gun nests along its borders. It by President George W. Bush and We do not want you to feel vic- was designed to give the French army became the sixth director of the timized a second time by an investiga- time to mobilize in the event of an attack Federal Bureau of Investigation on tion. And we know that putting on raid by Germany. the secondary motivation September 4, 2001. jackets, courting the media, and shutting was to entice Germany to attack Belgium Mr. Mueller graduated down your systems is not the best way to as the easier target. from Princeton University in 1966 get the job done. As we all know, the Maginot and later earned a master’s degree We will minimize the disruption Line held strong for a brief time. How- in International Relations at New to your business. We will safeguard your ever, in the long run, it did little good. York University. After college, Mr. privacy and your data. Where necessary, the Germans invaded Belgium, flanked Mueller joined the U.S. Marine we will seek protective orders to preserve the line, and stormed France. Corps where he served as an offi- trade secrets and business confidentiality. In the end, neither fortresses nor cer for three years, leading the rifle And we will share with you what we can, fortifications stopped Nazi Germany. platoon of the Third Marine Divi- as quickly as we can, about the means Our success in defeating Germany was sion in Vietnam. He is the recipi- and methods of attack. built on a united front. We stopped play- ent of the Bronze Star, two Navy For example, we recently worked ing defense, and we pushed back, day Commendation Medals, the Purple with our partners in the financial sector by day. No one country, standing alone, Heart, and the Vietnamese Cross of to draft an intelligence report on threat could have ended that war. Gallantry. patterns in certain banking transactions. the same is true today, in this Following his military ser- We shared that report with more than new context. No one country, company, vice, Mr. Mueller earned a law de- 4,000 partners. together, we worked to or agency can stop cyber crime. A “bar gree from the University of Virginia limit the breadth and scope of this po- the windows and bolt the doors” mental- Law School in 1973. Mr. Mueller tential threat, and we closed the door to ity will not ensure our collective safety. worked as a litigator in San Fran- countless hackers. Fortresses will not hold forever; walls will cisco until 1976. He then served Remember that for every inves- one day fall down. We must start at the for 12 years in U.S. Attorney’s Of- tigation in the news, there are hundreds source; we must find those responsible. fices. In 1982, he became an as- that will never make the headlines. We the only way to do that is by sistant U.S. attorney. In 1989 he are behind the scenes, working to find standing together. together we can find served as an assistant to Attorney those responsible. Disclosure is the ex- better ways to safeguard our systems and General Richard L. Thornburgh. In ception, not the rule. stop those who would do us harm. For 1993, Mr. Mueller became a part- that said, we cannot act if we ultimately, we face the same threat. We ner at Boston’s Hale and Dorr. He are not aware of the problem. both serve the American people. And we returned to public service in 1995 Maintaining a code of silence must continue to do everything we can, as senior litigator in the Homicide will not benefit you or your clients in the together, to minimize these attacks. Section of the D.C. United States long run. It calls to mind the old joke thank you and God bless. 1 Attorney’s Office. In 1998, Mr. about two hikers in the forest who run Mueller was named U.S. Attorney in San Francisco and held that position until 2001.

Visit www.ignet.gov 35 United States Department of Health & Human Services Office of Inspector General

[SPEECH] American Health Lawyers Association Washington D.C. January 21, 2010 Individuals and health care companies that violate the fraud & abuse laws can be excluded from participation in health care programs

By Inspector General Daniel R. Levinson this conference, “Legal Issues Affecting Academic Medical Centers and Other Related Institutions,” is timely in that it focuses on a wide range of important issues currently undergoing debate that impacts researchers, teaching hospitals, academic medical centers, and the federal government. I appreciate the opportunity to speak with you today about the work of the Office of Inspector General regarding conflicts of interest. My remarks today will focus on OIG work regarding COIs and the challenging aspect of managing, reduc- and other types of health care workers. residency and continuing medical edu- ing, and eliminating conflicts under the Second, AMCs serve their communication (CMe) programs. COIs can be current regulatory framework and sys- ties by providing uncompensated care to subtle and often hard to detect. For in- tem where reliance is placed primarily uninsured populations. third, AMCs stance, what may appear to be an appro- on individuals, researchers, and institu- advance clinical care for the sickest pa- priate arrangement between a researcher tions. the nature and amount of infor- tients. Fourth, AMCs advance basic and a drug manufacturer may actually mation that should be reported and dis- science in pre-clinical research and par- raise potential COI issues that could closed, and where responsibility should ticipate in clinical trials to develop new taint the results of a clinical trial. be placed for reviewing and verifying the technology. Additionally, and of great the crux of the debate regard- information, remains a constant subject importance, AMCs are considered to be ing systems for detecting and reporting of debate within the life-sciences com- leaders in the sense that community hos- potential COIs has centered on whether munity and the federal government. pitals follow the lead of AMCs. physicians, researchers, and institutions these important roles and re- should be primarily responsible for re- Background on Conflicts sponsibilities bring challenges to institu- porting and managing COIs and the of Interest tions and researchers regarding potential extent to which government regulation First, I want to acknowledge that the vast COIs. Conflicts can arise in a variety should place oversight and verification majority of physicians and scientists are of contexts: profit incentives to com- responsibility on federal agencies. ethical and honest and committed to the mercialize products that had successful If COIs are undetected or are welfare of their patients. AMCs play a clinical trials; questionable clinical trial disclosed and not appropriately dealt special role in health care that is very dif- results; corrupt data; purchase of drugs with, the result can be serious enough to ferent than other providers. First, AMCs and devices based on commercial influ- damage reputations and raise public con- are responsible for educating and training ence; and industry support for school, cern about the integrity of research and the next generation of physicians, nurses,

36 Journal of Public Inquiry patient care. If undetected, the public might be criminal or improper, which managing COIs. A common theme may suffer numerous potential harms: resulted in NIH adding new guidance to among all of the players in this debate people who volunteer in trials may be the NIH policy manual. is what information should be disclosed subjected to unnecessary risk or deprived More recently, Congress has fo- and who—individual, government or in- of beneficial therapies, unsafe or ineffec- cused increased attention on extramural stitution—should bear the responsibility tive drugs or devices may enter the U.S. COIs. For example, Senators Grassley for monitoring and managing potential market, patients may receive inferior and Kohl have conducted oversight hear- COIs. therapies when safer or more effective ings and promoted legislation on COI In April 2009, the Institute of therapies are available, and the public topics. COI hearings before the Sen- Medicine published a comprehensive re- may waste limited Medicare and Medic- ate Special Committee on Aging have port on COIs with the goal to examine aid dollars to pay for this inappropriate focused on the relationships between COIs in medicine and provide recom- treatment. As a result, it is important physicians and pharmaceutical and de- mendations for policy and best practices. that systems be in place to ensure that vice manufacturers. Last year, Senators the committee that drafted the report the independence and integrity of health Grassley, Kohl, and Klobuchar intro- came up with a number of conclusions care providers and medical researchers duced S-301, the Physician Payments that are relevant in thinking about roles are maintained. Sunshine Act of 2009. the bill provides and responsibilities with respect to COIs. for transparency in the relationship be- these conclusions include that the goals Players in the Debate Over tween physicians and manufacturers of COI policies in medicine are primar- Management of Conflicts of drugs, devices, biologicals, or medi- ily to protect the integrity of professional of Interest cal supplies for which payment is made judgment and to preserve public trust under Medicare, Medicaid, or CHIP. A rather than to try to remediate bias or Congress / Media similar bill was introduced in the House mistrust after they occur. Over the past decade the oversight of of Representatives in July 2009. More- the disclosure of individual COIs has received increasing attention over, the 2010 Omnibus Appropriations and institutional financial relationships in Congress, the media, and oversight Act requires that the Secretary of HHS is a critical but limited first step in the entities including my office. In the amend federal regulations to strengthen process of identifying and responding to early 2000s, congressional committees government and institutional oversight COIs. COI policies and procedures can (the House Committee on energy and of financial conflicts of interest by May be strengthened by engaging physicians, Commerce especially) held a series of 1, 2010. researchers, and medical institutions hearings dealing with COIs. Most of OIG’s body of work focused on in developing conflict of interest poli- this attention focused on NIH intra- COI issues is also receiving media atten- cies and consensus standards. A range mural researchers and, to a lesser degree, tion. For example, Representative Rosa of supporting organizations—public extramural researchers. In response to DeLauro, Member of the House Appro- and private—can promote the adoption the increased attention, the NIH Direc- priations subcommittee that funds CDC and implementation of COI policies tor established a Blue Ribbon Panel on and NIH, reviewed a recent OIG report and help create a culture of account- COI policies to look at whether or not identifying limitations in CDC’s over- ability that sustains professional norms the COI policies for intramural research sight of the financial interests of Special and public confidence in professional were sufficient to uphold agency stan- Government employees, and she stated judgments. Research on COIs and COI dards and maintain public trust in NIH that “the work of the CDC is too impor- policies can provide a stronger evidence and its activities, among other things. tant to be tainted in any way.” Over 300 base for policy design and implementa- the panel found an extremely complex news outlets reported on the report when tion—extremely relevant to our discus- set of rules governing COIs at NIH. the it was issued. sion today. If medical institutions do not panel made 18 recommendations with act voluntarily to strengthen their COI its guiding principle being that NIH em- External Organizations policies and procedures, the pressure for ployees must avoid COIs. OIG, as well, Respected organizations in the academic external regulations is likely to increase. has devoted attention to COIs and ethics community are also continuing to debate the January 2010 AHLA Con- matters within HHS. For example, OIG the appropriate roles and responsibilities nections article, Be Careful What You Ask issued a report on how NIH handles al- of institutions and the federal govern- for: NIH Request for Comments on Con- legations about employee activities that ment when it comes to monitoring and flicts of Interest in Research, also discusses

Visit www.ignet.gov 37 the appropriate role for government and of Proposed Rulemaking to gather input place significant reliance on grantees institutions in managing COIs. the from interested stakeholders regarding to self-disclose and self-verify that their article concludes that “It is critical for revisions to the federal financial COI actions comply with federal laws. Cur- AMCs to recognize that institutional rules issued in 1995 (42 CFR Part 50, rent federal regulations require grantees conflicts of interest exist, to establish 45 CFR Part 94, “Responsibility of Ap- to report the existence of a conflicting an environment of vigilance against the plicants for Promoting Objectivity in interest—but not the details—and to appearance of institutional conflicts of Research for Which Public Health Ser- assure that the interest has been man- interest, to identify such conflicts in a vice Funding Is Sought and Responsible aged. However, the same regulations timely manner and to manage such con- Prospective Contractors”). require grantees to make information flicts to ensure the impartiality of the re- the announcement recognized about all indentified conflicts available search.” that relationships between the private to NIH, or HHS, upon request. this Some institutions have taken a sector and investigators have become is why we have recommended that NIH proactive approach with respect to COI more complex and that the collabora- use its current authority to request fur- policies and procedures in an effort to tions “may generate an increased poten- ther information about reported COIs manage potential COIs and avoid or tial of investigators to hold financial in- where basic information about the COI minimize additional government regula- terests in multiple sources which, if not is missing and, at the same time, revise tion. For instance, the owner of two re- reported and appropriately managed, the current regulation to require grantees search hospitals affiliated with the Har- reduced, or eliminated, could introduce to report certain details to NIH about vard Medical School imposed restrictions bias into the conduct of their research.” their reported COIs. on outside pay for two dozen senior of- NIH specifically requested comments For example, we conducted two ficials who also sit on the board of phar- regarding expansion of the scope of the reviews of oversight and compliance with maceutical or biotechnology companies. regulation and disclosure of interests; the COI regulation in 42 CFR Part 50, And Stanford University announced definition of “significant financial inter- Subpart F, governing extramural research plans to develop new CMe programs for est;” identification and management of at NIH. In both reports, we found that doctors that will be devoid of the drug COI by institutions; assurance of insti- COI reports received from grantees did industry influence that has often perme- tutional compliance; provision of addi- not provide specific details about the ated such courses. Stanford received a $3 tional information to federal officials by nature or amount of the financial COIs. million grant from Pfizer, and, according research institutions; and broadening of In our first report, we reviewed NIH’s to the plan, Pfizer will have no say in the regulations to address institutional monitoring of COI reports submitted by how the grant dollars will be spent. the COIs. grantees. We found that 89 percent of goal of this new policy of transparency is the American Association the reports provided to NIH lacked in- to avoid activities such as pharmaceutical of Medical Colleges responded to the formation about the nature of the COI companies rewarding high-prescribing APRM, noting, among other recommen- and how it was addressed. Based on our physicians by directing a CMe provider dations, that covered investigators should findings, we conducted a second study to pay them as CMe faculty, consultant, be required to report to institutions all of that examined the extent to which the or members of a CMe speakers bureau. their external financial interests directly grantees themselves handled COIs. or indirectly related to their research re- For the second study, we found Department of Health & sponsibilities, regardless of amount, and that 90 percent of the grantee institu- Human Services institutions should be required to submit tions we reviewed relied solely on the re- Monitoring COIs continues to garner information on managed COIs that goes searchers’ discretion to determine which significant attention by HHS. In the beyond current regulatory requirements; of their significant financial interests are 2009 HHS Agency Financial Report, my but it opposes routine disclosure to NIH related to their research and are therefore office continued to list ethics program of full management plans themselves, required to be reported. When research- oversight and enforcement, including unless requested by NIH. ers submitted information regarding their COI issues, as a top management chal- financial interests, we found that grantee lenge. In response to all of the attention OIG Reviews institutions did not routinely verify it. from Congress, the media, external or- Based on the work we have done, we Additionally, because nearly half of the ganizations, and OIG work, on May 8, believe that federal rules pertaining to grantee institutions we reviewed do not 2009, HHS issued an Announcement COI reporting by grantee institutions require researchers to provide specific

3838 JJournalournal ofof PPublicublic IInquirnquiryy amounts of equity or compensation on reported that clinical investigators could listed a CDC-funded grant related to their financial disclosure forms, the ex- not be located or failed to return the fi- committee work on his curriculum vitae, tent of financial interests of NIH-funded nancial form. which was provided to CDC for review. researchers is rarely known. the examples I have just men- Yet, CDC did not notify the SGe that In both of these reports, we rec- tioned highlight that although grantees he was prohibited from participating in ommended that NIH request grantee and clinical trial sponsors might tech- particular matters regarding his specific institutions to provide it with details nically meet federal mandates, there is employer and/or grant. these findings regarding the nature of all reported fi- evidence to suggest that not all COIs are raise concerns regarding how COIs are nancial COIs. NIH did not agree with managed and resolved properly. Addi- handled in HHS. this recommendation. In response to tionally, we have found that HHS also our second report, NIH stated that this faces challenges in managing, reducing, Enforcement Work recommendation was not within the cur- and eliminating COIs. In our review of Next I want to turn to our enforcement rent scope of federal regulation but this CDC’s ethics program for Special Gov- capabilities. While we would always issue was raised by NIH as a specific area ernment employees we found a systemic prefer that no violation occur in the first for comment in the Advanced Notice of lack of effective oversight of COI issues. place, by working in conjunction with Proposed Rulemaking. SGes on federal advisory com- our law enforcement partners at the De- Like at NIH, vulnerabilities that mittees provide expert advice to the fed- partment of Justice and the Federal Bu- we have identified in FDA’s oversight eral government. At CDC, SGes address reau of Investigation, we have developed of COIs provides further evidence that important public health topics, such as extensive expertise in identifying fraud, COIs might not be properly addressed. breast and cervical cancer, immuniza- waste, and abuse and taking swift en- For instance, COI information submit- tion, smoking, tuberculosis, and clinical forcement action against transgressors. ted to FDA by clinical trial sponsors laboratory improvement. For example, First, a few examples of recent lacked specific details necessary to con- in 2009, SGes on one CDC committee enforcement actions related to COIs in firm that COIs were properly reported made recommendations that led to the medical education that are of special in- and addressed by clinical trial sponsors establishment of H1N1 influenza vac- terest to AMCs. Although these cases pursuant to various parts of 21 CFR. cination priority groups in the United did not involve AMCs, AMCs can learn Currently, sponsors are required to sub- States. important lessons from these examples mit financial information on clinical in- SGes are temporary federal in terms of ensuring the integrity of edu- vestigators to FDA when an application employees who are typically involved in cational sessions they host, responsible for drug approval is filed, often years work outside of the government in the partnerships with co-hosts or industry after the research began. In our report same areas as their committees’ work. funding sources, and appropriate behav- on FDA’s oversight of clinical investiga- Similar to regular government employ- iors and industry relationships for medi- tors’ financial interests, we found that 42 ees, SGes are subject to financial disclo- cal staff serving as faculty or filling the percent of marketing applications were sure and COI regulations issued by the audience for educational events. missing financial information. Some of Office of Government ethics. However, In 2004, Pfizer paid $430 mil- these applications were missing financial despite this fact, we found that CDC did lion to resolve charges relating to the information because sponsors used the not require SGes to disclose their inter- off-label promotion of neurontin. Neu- due diligence exemption to indicate that ests completely before participating in rontin had FDA approval for use pre- they were unable to provide financial in- meetings, nor did it identify or resolve venting seizures in epilepsy patients, but formation. all SGe potential COIs, even when ad- Pfizer enjoyed extensive revenue from If sponsors use this exemption, equate information identifying a COI neurontin sales for various unapproved regulations require them to explain why was provided. uses, including headaches and other pain they were unable to obtain the infor- In 2007, 64 percent of SGes treatment. the government alleged that mation. However, we found that often had potential COIs that CDC did not the company engaged in an illegal pro- sponsors did not explain why they were identify and/or resolve prior to certifying motion scheme that corrupted the phy- unable to obtain financial information their OGe confidential financial disclo- sician education process by fraudulently from all clinical investigators, as re- sure forms. For example, one SGe was sponsoring medical education events on quired. Moreover, when sponsors did a member of a committee that reviewed off-label neurontin uses. these educa- include an explanation, they most often CDC grant applications. the SGe tional events were purportedly indepen-

Visit www.ignet.gov 39 dent, but in reality they were developed Industry-sponsored CMe can Daniel R. Levinson and produced with extensive input from also implicate the criminal anti-kickback Pfizer regarding topics, speakers, con- statute when it is used to channel remu- tent, and participants, with the ultimate neration to physicians. OIG has pursued goal of promoting off-label sales. several cases where companies provided For another example, in 2007, funding purportedly for “educational Jazz Pharmaceuticals’ subsidiary, Or- support,” but that in reality constituted phan Medical Inc. (Orphan), agreed to payment of kickbacks. For example, in pay $20 million to settle charges that it 2006, Medtronic paid $40 million to had illegally marketed Xyrem, a prescrip- the government and entered into a CIA tion drug approved for use in narcolepsy, to settle a range of allegations that it il- for off-label uses. Xyrem, also known legally paid spine surgeons to promote Daniel R. Levinson has served as as “GHB,” has been subject to abuse as and use its spinal implant devices. the the inspector general for the U.S. a recreational drug and is classified by improper payments allegedly included Department of Health and Human the federal government as a “date rape” free travel, lodging, and entertainment Services since September 8, 2004. drug. the government alleged that the for physicians and their guests at lavish Mr. Levinson is the senior official company engaged in a scheme to expand locations, such as Hawaii, Cancun, and responsible for audits, evaluations, the market for Xyrem by promoting the Malaysia. the physicians participated in investigations, and law enforce- drug to physicians for off-label indica- meetings the company called “discussion ment efforts, relating to HHS pro- tions, including weight loss and chronic groups,” but the sessions were actually grams and operations. He man- pain. As part of the scheme, the govern- of no or limited substance. the govern- ages an independent and objective ment alleged that the company paid a ment alleged that the company’s true nationwide organization of over psychiatrist tens of thousands of dollars purpose was simply to induce the sur- 1500 professional staff members for speaking engagements that promot- geons to use Medtronic’s spinal implants dedicated to promoting economy, ed a wide range of off-label indications. instead of devices sold by competitors. efficiency, and effectiveness in HHS Some of these speaking engagements programs, and addressing fraud, were characterized as independent CMe Conclusion waste, and abuse. programs, when in fact they were pro- today, I have noted examples from our Mr. Levinson has devoted motional events approved by Orphan’s work that highlight the need for en- a majority of his career to govern- marketing department. hanced safeguards to reduce or possibly ment service. Prior to his appoint- Individuals and health care eliminate COI vulnerabilities. My of- ment at HHS, he served as inspec- companies that violate the fraud and fice will continue to conduct work in tor general of the U. S. General abuse laws can be excluded from partici- this area. It is our hope that OIG work Services Administration where he pation in federal health care programs. will continue to inform decision makers oversaw the integrity of the federal this means that they cannot provide regarding specific changes that can im- civilian procurement process. any items or services for reimbursement prove the management of COI issues. Mr. Levinson is a Phi Beta by the Medicare or Medicaid programs. Without a systematic infrastructure in Kappa graduate of the University In both of these cases, the companies place and clear roles for each stakeholder, of Southern California, and earned entered into corporate integrity agree- the process for identifying and eliminat- a J.D. from Georgetown Univer- ments, or CIAs, with OIG as a condition ing COIs will not be effective. Recom- sity where he served as notes and of avoiding exclusion and allowing their mendations from OIG reports, the IOM comments editor of The American continued participation in federal health report and journal articles, and your own Criminal Law Review. He is a cer- care programs. the CIAs require, among professional organizations highlight the tified fraud examiner and a member other provisions, that the companies im- need for engaging stakeholders in a dis- of the California, New York, and plement written policies and procedures cussion about best practices for strength- District of Columbia bars. designed to ensure that the funding of ening COI policies and procedures. 1 medical educational activities, including CMe, conform to federal requirements.

40 Journal of Public Inquiry United States General Services Administration Office of Inspector General

[SPEECH] Federal Law Enforcement Training Center, Glynco, Ga. October 29, 2009 I am proud of the quality of Special Agents we have, here, joining the inspector general and law enforcement community.

By Inspector General Brian D. Miller thank you for that kind introduction. And, thank you for the fine job that you’ve done overseeing the completion of this class. I would also like to recognize and thank Angela Hrdlicka and the rest of the FLetC staff for their dedi- cation, their commitment, and the hard work that they put into this course. I would also like to recognize the investigators and training staff, here, who work so hard to run this excellent program. You do a fine job, and we all owe you a debt of gratitude. Let me also say thank you to the family members of these graduates. thank you for your support, your sac- rifice, and the crucial roles you play in these agents’ lives – and will play in their the responsibility to make our country a agent, that person will ever meet. that careers in law enforcement. safer place to live. person’s image of federal law enforce- to you graduates, Congratula- I would like especially to con- ment will hinge on the impression you tions! this is quite an accomplishment. gratulate those of you who received make. Make no mistake about it, you It’s not easy. You have all accomplished awards. I am proud of the quality of will be scrutinized. Your conduct -- both something remarkable, something you Special Agents we have, here, joining the on and off duty -- will be scrutinized by and your families should be proud of. inspector general and law enforcement the public and others. And they will ex- Without doubt, the work you will be community. I am doubly proud that pect a lot. All of us who serve the public doing as a special agent can involve risk. Steve Lobaugh from our office, the Of- are held to a higher standard of conduct. It can sometimes be dangerous, and it is fice of Inspector General for GSA, won the bar is set very high for all of us in not for everyone. this profession which an academic prize. Congratulations, you public service, as it should be. you have chosen requires a special com- are quite a talented group. that doesn’t mean, though, that bination of courage, common sense, and I am sure that you will be a cred- you will never make mistakes. We all sound judgment. Your instructors believe it to our federal law enforcement com- do that. But I keep in mind something you possess all of these qualities, or you munity. As a special agent, you represent that a former United States attorney told wouldn’t be sitting here today. each one the entire federal law enforcement com- the office when she was sworn in. She of you has what it takes to succeed in this munity. You might be the first special said, “there is no problem that cannot special line of work. And you are now agent that many people will ever meet. be fixed.” We all make mistakes. It’s im- armed with the skills and charged with Sometimes you will be the only special portant to know what to do about them.

Visit www.ignet.gov 41 Just let your supervisors know and we you. No further, but no less! But you Brian D. Miller can fix it. She also said that the sooner should never hesitate to go where the you let her know, the easier it is to fix. facts lead. You must aggressively pursue As a new AUSA, I thought that was very the bad guys. And you should never ever good advice and more than a little com- go beyond the facts. You may know that forting. And that advice has helped me. I someone is dirty, but unless you have the try to be quick to admit my mistakes, so facts to prove it, you have to let him or we can fix them. her go. You’ll get them next time. And And I have seen this principle believe me, there will be a next time, at work. I had a case . . . . You didn’t especially if they think they are getting think you would escape a war story from away with it. It’s just not worth the insult a former prosecutor, did you? the USA’s to your integrity or to the justice system Brian D. Miller has served as the office in West Virginia had just put away to go further than the facts. the system inspector general of the U.S. Gen- the biggest drug kingpin in its history. will work and you will get them eventu- eral Services Administration since But soon after the kingpin began serv- ally. Remember, you always have to do July 22, 2005. Mr. Miller directs ing his life sentence, he found out that the right thing. nationwide audits and investiga- the lead agent for the task force had Congratulations, now, you have tions of federal procurement in- been having a sexual relationship with made it. You will have the best job in the volving GSA. Mr. Miller is also his wife all throughout the investigation world. Not only will you have the op- a member of the Council of the and trial. the kingpin then filed motions portunity to analyze documents, which Inspectors General on Integrity to set aside the verdict and to throw out I like, but you will get to break down and efficiency, and participated the case based on the misconduct of doors and arrest people --- and put in the U.S. Department of Justice the government. the judge recused the your lives on the line for the rest of us! Hurricane Katrina task Force. On USA’s office, and DOJ asked me to lead You will have incredible careers. Special October 10, 2006, Mr. Miller was a team of AUSAs from another district to agents have all the fun! named vice-chair of the National “fix it.” this was really bad misconduct, And there is no better time to be Procurement Fraud task Force. and there was more that I can tell you a special agent. With the Recovery Act, afterwards. But we empanelled a special more federal money is going out faster In 2007, Mr. Miller was grand jury, and through the incredibly than ever before in our history. When- recognized by ethisphere magazine hard work of Special Agent Jim Balcom ever Federal money goes out fast, there is as the 12th “most influential person from the DeA, we not only preserved fraud. You can count on it. One senator in business ethics” by a worldwide the life sentences for the kingpin and his remarked, “. . . we are opening up the panel of experts. In July 2008, Mr. crew, but we also added charges and con- floodgates to fraud.” Unscrupulous in- Miller was named among “Those victions. And I tell that war story because dividuals and companies will try to take Who Dared: 30 Officials Who it shows that no matter how bad the mis- advantage of the stimulus money. And Stood Up for Our Country,” a spe- take is, it can always be fixed. If those we will need you as special agents to stop cial report of Citizens for Respon- mistakes could be fixed, then surely our them, to investigate them, and bring sibility and ethics in Washington, mistakes can also be fixed. I know I take those criminals to justice. the Ameri- D.C., a national advocacy organiza- comfort in that and you should too. can public is counting on you as special tion. In October 2008, Mr. Miller At DOJ, we had a saying, “the agents. We are counting on you to find received the Attorney General’s United States wins when justice pre- fraud and prosecute those unscrupulous Distinguished Service Award. vails.” It’s good to keep that in mind. individuals. Mr. Miller earned his law Not everyone is a bad guy, though there this is your time. enjoy it. Live degree from the University of texas. are many of them out there. It is just as up to the high standards that come with important to exonerate the innocent as it. And serve the public well. Congratu- it is to make the case against the guilty. lations and good luck! 1 You should go only as far as the facts take

42 Journal of Public Inquiry United States National Aeronautics and Space Administration Office of Inspector General

[TESTIMONY] Key Issues and Challenges Facing NASA: Views of Agency’s Watchdogs Congressional testimony before the U.S. House of Representatives, Committee on Science and Technology, Subcommittee on Space & Aeronautics (February 3, 2010)

By Inspector General Paul K. Martin Chairwoman Giffords, Ranking Mem- ber Olson, and Members of the Subcom- mittee: thank you for the opportunity to discuss the key issues and challenges facing NASA. As requested, this statement describes the Office of Inspector General’s observations based on findings and recommendations from our recent oversight work, particularly our report on “NASA’s Most Serious Management and Performance Challenges,” which we provided to the Administrator and Con- gress in November 2009. Our report, which was included in the Agency’s Per- formance and Accountability Report for fiscal year 2009, is available to the public on the OIG’s Web site. whether the underlying problems are systems, reduce vulnerabilities in infor- Based on our audit and investi- systemic; and the agency’s progress in mation technology security, and improve gative work, we identified five areas that addressing the issue. Some of the chal- acquisition and contracting practices. we believe constitute the most serious lenges, such as financial management, However, NASA needs to do more to ad- management and performance challeng- acquisition and contracting processes, dress these and other critical challenges. es facing NASA. they are: and information technology security, the remainder of this statement • transitioning from the Space Shut- have confronted agency leadership for provides more detail on NASA’s five ma- tle to the Next Generation of Space most of the past decade. jor management and performance chal- Vehicles through various initiatives, in- lenges identified by the OIG. • Managing Risk to People, equip- cluding implementing recommendations ment, and Mission made by the OIG and other oversight Transitioning from the • Financial Management bodies such as the Government Account- Space Shuttle to the • Acquisition and Contracting Pro- ability Office and the Aerospace Safety Next Generation of Space cesses Advisory Panel, NASA is working to ad- Vehicles • Information technology Security dress these and other challenges and to A key challenge for NASA is maintaining In determining whether to identify an improve agency operations. For example, the critical skills and capabilities required issue as a “top management and perfor- NASA has implemented a variety of cor- to fly the space shuttle safely until its re- mance challenge,” we consider its signifi- rective actions over the last several years tirement while transitioning to the next cance in relation to NASA’s mission; its to address long-standing weaknesses in generation of space vehicles. In 2004, the susceptibility to fraud, waste, and abuse; its financial management processes and President’s Vision for U.S. Space explo-

VVisitisit wwwwww.ignet.go.ignet.govv 4343 ration caused a substantive reorganiza- far beyond scheduling, given that NASA Investigation Board recommended that tion of NASA’s strategic priorities, estab- spends approximately $200 million a NASA complete a recertification at the lished a timeline for the retirement of the month to sustain the Shuttle Program. material, component, system, and sub- space shuttle, established the completion At the request of Congress and system levels before operating the shuttle date for the International Space Station, the Administration, NASA has developed beyond 2010. In its recently released and set the human spaceflight goals of options for extending Shuttle operations annual report, the ASAP stated that it returning to the Moon and reaching and closing the gap between its planned does not support extending the shuttle Mars. However, since that time fiscal retirement in 2010 and the planned first program significantly beyond its current constraints and technical challenges have piloted space flight of the Constellation manifest. I will leave to ASAP Chairman hampered NASA’s efforts to implement Program’s Orion crew exploration vehicle Joseph Dyer any additional comments the vision effectively. in 2015. While technically feasible, each he cares to offer on the potential safety NASA continues to fund and option involves additional shuttle flights implications of extending the shuttle plan for completion of the five remain- and results in a higher cumulative safety program beyond its currently scheduled ing Space Shuttle flights by September risk associated with increased exposure manifest. 30, 2010. However, we have doubts to debris and potential vehicle failures. the President’s FY 2011 bud- that NASA will be able to keep to this Moreover, NASA would need additional get, released on Monday, set out the ad- aggressive and ambitious flight sched- funding to avoid “borrowing” from the ministration’s blueprint for NASA’s fu- ule. Based on calculations by the OIG, development of the next generation of ture. Of course, this subcommittee and historical flight rates, the presidentially space vehicles and other NASA programs other committees of Congress will weigh directed Review of U.S. Human Space to pay for more shuttle missions. in and help shape NASA’s future direc- Flight Plans Committee (the Augustine If the shuttle’s flight schedule is tion. Amid much uncertainty, one thing Committee), and internal NASA evalua- extended beyond the five missions cur- is clear: NASA will need a sustained level tions, NASA is not likely to meet its Sep- rently planned, NASA will need to re- of funding to enable successful execution tember 2010 timetable, and it will most evaluate not only funding issues, but also of whatever future plan is ultimately ad- likely take until the second quarter of FY the sustainability of the shuttle’s work- opted. 2011 to complete the last of the planned force and infrastructure, much of which space shuttle flights. Importantly, any has been in wind-down mode since Managing Risk to People, delay in this timetable has ramifications 2009. In 2003, the Columbia Accident Equipment, and Mission NASA program and project managers face a variety of challenges associated with risks introduced by fiscal constraints, schedule demands, and changing priorities. to meet these challenges, NASA program and project managers must ad- here to the fundamentals of program and project management, fully implement acquisition strategies that share risks and rewards with contractors, and effectively use earned value management systems to help agency managers identify and mitigate risks. In the past year, the OIG dedicated considerable resources to reviewing the agency’s risk management efforts at program and project levels. For example, we identified opportunities to improve the risk management processes in the Landsat Program and Orion Project. Specifically, we found that the Landsat

44 Journal of Public Inquiry Data Continuity Mission was facing a ed a variety of corrective actions over the success of NASA’s efforts, I am hopeful cost increase and possible launch sched- years to address long-standing weakness- that through effective implementation ule delays because baseline requirements es, several challenges remain. of e&Y’s most recent recommendations were not finalized prior to contract For example, in its most recent and a continued focus on its ongoing award. report the independent public account- monitoring and remediation efforts, the In reviewing the Orion Project, ing firm ernst & Young disclaimed an agency can correct existing weaknesses in we found that the Project Office con- opinion on NASA’s financial statements financial management during FY 2010 ducted a premature life-cycle review. for FY 2009, noting that it was unable to the point that e&Y can render an Instead of delaying the life-cycle review to obtain sufficient evidentiary support opinion. We will continue to work close- until the revised vehicle configuration for the amounts presented in the Agen- ly with NASA managers throughout the was developed, the Orion project office cy’s financial statements. this disclaimer fiscal year in an attempt to achieve that proceeded with the review of a vehicle resulted primarily because of continued goal. configuration that was under revision. weaknesses in NASA’s internal controls technical issues continue to add over accounting for legacy assets – spe- Acquisition and risk to NASA projects and challenge mis- cifically, the Space Shuttle and Interna- Contracting Processes sion success. For example: tional Space Station. Systemic weaknesses in NASA’s acquisi- • the Stratospheric Observatory for As we discussed in detail at tion and contracting processes represent Infrared Astronomy Program recent- the December hearing, e&Y identified another longstanding management chal- ly resolved technological challenges three significant deficiencies in internal lenge for the agency. In our November with the aircraft’s movable door that controls with one considered a material report addressing NASA’s key challenges, covers the opening to the telescope, weakness. Specifically, e&Y reported a we specifically note acquisition and con- challenges that had caused delays in material weakness in NASA’s controls tracting challenges in relation to cost es- flight testing. for assuring that the financial statements timating, acquisition processes, contract • the Mars Science Lab suffered fairly state the value of legacy property, management, and ethical standards. a major setback due to technical plant, and equipment and materials. In recent reviews of several challenges that resulted in a missed e&Y’s identification of internal controls NASA programs, the OIG found that launch opportunity in 2009, a $400 over legacy assets as a material weakness NASA still lacks the disciplined cost-es- million cost increase, and a 2-year means there was a reasonable possibility timating processes and financial and per- schedule delay. that the controls were not sufficient to formance management systems needed • the Orbiting Carbon Observatory, prevent a material misstatement in the to effectively establish priorities, quan- a satellite important to monitor- financial statements. the other two in- tify risks, and manage program costs. ing and understanding the earth’s ternal control deficiencies cited by e&Y For example, in our review of the SOFIA changing climate, suffered an un- involved NASA’s processes for estimating Program, which is now 10 years behind determined technical failure on environmental liabilities and its compli- schedule with costs more than 200 per- launch, resulting in the loss of the ance with the Federal Financial Manage- cent over initial estimates, we found that $209 million satellite and leaving ment Improvement Act of 1996. the program had not developed an inde- a gap in NASA’s ability to measure e&Y’s report contained spe- pendent cost estimate or implemented carbon dioxide in the atmosphere cific recommendations intended to assist an earned value management plan to and its role in global warming. NASA in remediating these weaknesses monitor and control program costs. during FY 2010, to include implement- Given that NASA programs and projects Financial Management ing guidance allowing the use of esti- have historically experienced cost over- For most of the past decade, the OIG mates in establishing the value of legacy runs, improvements in cost estimating has identified the need to improve finan- assets. Since the December hearing, using detailed, empirical data to explain cial management at NASA as one of the OIG and e&Y staff have met with staff program decisions could help minimize Agency’s most serious management and in NASA’s Office of the Chief Financial the risk of cost overruns. performance challenges. In early Decem- Officer to discuss the Agency’s efforts to GAO – which has done a lot of ber 2009, when I testified on this issue address indentified weaknesses in inter- oversight work in this area – first iden- before this Subcommittee, I noted that nal controls. tified NASA’s contract management as while NASA has successfully implement- While we cannot predict the a high-risk area in 1990, citing NASA’s

Visit www.ignet.gov 45 undisciplined cost-estimating processes, requirements even though they met the Information Technology a lack of information needed to assess definition of a FACA committee. As a Security contract progress, and persistent cost result, NASA did not use the more strin- NASA continues to face significant growth and schedule slippage in many gent ethics review process associated with challenges in developing, document- of its major projects. In its most recent the establishment of FACA committees. ing, and implementing an agency-wide high-risk update, GAO reported im- Instead, NASA used a process that was program to secure its information and provements in NASA’s processes, includ- lacking in both rigor and accuracy for information technology systems. Recent ing its plan for addressing systemic weak- determining the independence of SRB breaches of NASA computer systems nesses. I will leave it to Cristina Chaplain members. During our review, NASA sus- have resulted in the theft of sensitive from GAO to provide further details on pended the activities of its Constellation data related to agency programs, which their work. Program SRBs while it addressed the adversely affected NASA’s mission and During 2009, the OIG also not- FACA and conflict of interest compli- resulted in millions of dollars in losses. ed NASA’s plan for addressing systemic ance issues we disclosed. Over the last several years, NASA imple- weaknesses and improving its acquisition Given the large amount of mon- mented a series of technical solutions and contract management processes. ey at stake in NASA projects, the OIG’s that have incrementally improved the However, our audits and investigations Office of Investigations has made pro- agency’s overarching It infrastructure continue to identify weaknesses such curement fraud and ethics a high prior- and management practices. However, as those we found in contracts under ity. Within the past year, several OIG in- It security remains a key management NASA’s Small Business Innovation Re- vestigations led to criminal indictments challenge. During FYs 2008 and 2009, search Program that bring into question and convictions. For example: the agency reported making progress on the effectiveness of the program’s internal • A former NASA Chief of Staff was two key management initiatives related controls. Given that NASA spends ap- convicted on conflict of interest and to It security. First, NASA implemented proximately 90 percent of its $19 billion false statement charges stemming the Cyber threat Analysis Program to budget on contracts and grants, it is im- from his steering of earmarked funds proactively detect and handle intrusions perative that NASA employees comply to a client of his private consulting into NASA’s cyber assets. the program with applicable ethics laws and regula- company. includes threat analysis, identification, tions. the scope of this ongoing chal- • A NASA SBIR contractor submitted and reporting as well as advanced data lenge is underscored by the large amount false financial reports and improp- forensics. Second, NASA initiated the of interaction between NASA employ- erly claimed family members on the Security Operations Center project to ees and individuals in the private sector, company payroll. consolidate agency security operations both in industry and academia. • An individual working on Intergov- and incident response capabilities. the As an illustration of the chal- ernmental Personnel Act agreements SOC, scheduled to be fully operational lenge, NASA directives require that pled guilty to conspiracy to defraud in late FY 2010, will provide the agency Standing Review Board members be in- and tax evasion for payments he re- with the capability to perform real-time dependent to ensure that the boards can ceived from NASA and other federal monitoring of its computer networks provide an impartial opinion of a proj- agencies. and systems. ect’s potential success. Our 2009 review • A senior NASA scientist steered con- Similarly, NASA has shown of membership for all Constellation Pro- tracts to a company operated by his progress in improving It security as gram SRBs found that 21 of the 66 non- spouse. judged by our annual Federal Informa- Federal board members were employees these cases illustrate the types of crimi- tion Security Management Act audits. or consultants of a NASA contractor nal offenses the OIG pursues to help For example, in our FY 2009 FISMA with an interest in or contract with either guard against waste, fraud, abuse, and audit we found that 89 percent of the 29 the Constellation Program or one of its misconduct. Moving forward, the OIG NASA It systems we reviewed were cer- constituent projects. will continue to work with NASA eth- tified and accredited as required. How- Our review concluded that ics officials and the agency’s Acquisition ever, only 50 percent of the systems met NASA’s procedures for determining the Integrity Program to address these is- FISMA requirements for annual contin- independence of SRB members were sues proactively through comprehensive gency plan testing and only 25 percent inadequate. Specifically, NASA did not training while at the same time conduct- had their security controls tested within organize the SRBs in accordance with ing vigorous investigations and enforce- the last year as required. the Federal Advisory Committee Act ment.

46 Journal of Public Inquiry NASA is a prime target for so- Conclusion Paul K. Martin phisticated cyber attacks as new phishing We have a number of ongoing or planned techniques and malware programs be- reviews that address the key challenges come more advanced and destructive. In facing NASA. For example, we are as- a recent incident, for example, intruders sessing critical components of NASA’s ef- were able to steal large amounts of NASA forts to transition from the space shuttle research data, including information to the next generation of space vehicles. protected under the International traf- Specific areas of focus include NASA’s fic in Arms Regulations. the foreign- plans for completing the remaining based intruders initially compromised a shuttle flights, disposing of shuttle pro- single user’s account but gained access gram equipment, and estimating costs to a great deal of data across a number for transition and retirement activities. Paul K. Martin was confirmed by of NASA programs because of poorly In addition, we are nearing the the U.S. Senate as NASA inspec- implemented access controls. this inci- completion of fieldwork for our reviews tor general on November 20, 2009. dent remains under investigation by our of the James Webb Space telescope and Prior to coming to NASA, Mr. Computer Crimes Division, a group of the tracking and Data Relay Satellite Martin served as the deputy inspec- highly skilled special agents and forensic System. We are also conducting a review tor general at the Department of technicians with advanced training in of NASA’s acquisition strategy for ob- Justice for six years. cybercrime investigations. taining launch services when the current From 2001 to 2003, he Our cybercrime investigations contract expires in June 2010. served as counselor to the inspec- have resulted in criminal convictions or We continue to work with tor general, and previously as spe- disruptions in the operations of interna- NASA to improve its financial manage- cial counsel to the inspector general tionally based cyber-intruders who are ment through both the annual audit of from 1998 to 2001. Prior to joining highly adaptive in avoiding detection. the agency’s financial statements and our DOJ’s Office of the Inspector Gen- For example, a group of Romanian hack- monitoring NASA’s use of the $1 billion eral, Mr. Martin spent 13 years at ers, the so-called “White Hat Gang,” received under the American Recovery the U.S. Sentencing Commission, penetrated and damaged a number of and Reinvestment Act of 2009. originally as a special assistant to NASA systems integral to the Global In the area of acquisition and the staff director when the Com- earth Observation System. Our agents contracting, our investigative work con- mission was formed in 1985, and and technicians eventually tracked one tinues to identify fraud, waste, and abuse later served as the agency’s deputy perpetrator to Arad, Romania, where lo- by participants in NASA’s SBIR Pro- staff director. cal officials held him accountable in the gram. Consequently, we opened a com- Mr. Martin began his ca- Romanian Judicial System. Similarly, we prehensive audit of NASA’s management reer as a reporter with the Green- have had investigative success against of the SBIR Program that will examine ville News in Greenville, S.C. He cyber-criminals from Nigeria, Portugal, the sufficiency and implementation of holds a bachelor’s degree in journal- Slovenia, Italy, Venezuela, and Sweden. the program’s internal controls. ism from Pennsylvania State Uni- Finally, recommendations from Finally, we are continuing to as- versity and a Juris Doctorate from our cybercrime investigations have also sess NASA’s It security and the agency’s Georgetown University Law Cen- identified opportunities to enhance efforts to ensure the availability, confi- ter. NASA’s incident response training, inter- dentiality, and integrity of mission and nal coordination, and centralized commission support networks and systems. mand and control, leading to systemic We look forward to continuing improvements in NASA It security. Sig- our work with NASA leadership, this nificantly, NASA’s decision to establish a subcommittee, and other congressional Security Operations Center for central- committees as we seek to help the agency ized management of intrusion detection, address its top management and perfor- response, reporting, and damage assess- mance challenges. 1 ment was partially based on OIG recommendations supported by over four years of investigative and audit analyses.

Visit www.ignet.gov 47 United States Office of the Special Inspector General For Afghanistan Reconstruction

[TESTIMONY] Afghanistan Reconstruction

Congressional testimony before Commission on Wartime Contracting (February 22, 2010)

By Inspector General Arnold Fields Chairman thibault, Chairman Shays, and members of the Commission: thank you for inviting me this morning to discuss SIGAR’s work and the issues we believe must be addressed to improve the effectiveness of the expanding reconstruction effort in Afghan- istan. Since 2002, Congress has appropriated more than $51 billion to rebuild Afghanistan. this figure will grow in FY 2011 and, in all likelihood, surpass the $53 billion that has been provided for Iraq’s reconstruction. While this amount may appear small compared with the tril- lion dollars the United States has spent sight to reconstruction activities that are we talk about accountability? Obvious- on the military campaigns in both Iraq funded through and implemented by ly, the first thing is knowing where the and Afghanistan, it is by any other mea- multiple agencies. We not only look at money is going. However, my auditors sure a lot of money. And, the success of individual projects and contracts, but at are looking at much more than whether the U.S. strategy in Afghanistan depends how these projects and contracts fit into agencies and their implementing part- to a large degree on the effective use of larger programs and work together to ners are keeping good records of expen- these funds to build the Afghan secu- support U.S. strategic goals in a country ditures. We want to know if they have rity forces, improve governance, and lay deemed critical to U.S. national security. the controls in place to mitigate against the foundation for sustained economic We look at how U.S. agencies coordi- fraud. Is the money going for activities development. Ultimately, the future of nate with each other and at how these to achieve objectives that support the Afghanistan will be determined by the agencies have integrated U.S.-funded larger U.S. goals? Are there metrics in people of Afghanistan and their confi- programs with those of the international place to measure progress? Are projects dence in their government. donor community to realize reconstruc- and activities coordinated with others I am often asked why we need tion objectives. At the end of every quar- to prevent duplication of effort? Is our a Special Inspector General for Af- ter, we provide a report to Congress that money being used for activities that will ghanistan Reconstruction. After all, summarizes current and historical data have a lasting effect? Does the Afghan each implementing agency has its own on reconstruction activities: no other government have the ability to operate inspector general and we also have the agency has this broad legal mandate. and maintain infrastructure? What are Government Accountability Office that SIGAR—through its audits and we doing to help the Afghan govern- reports to Congress. What does a special investigations—seeks to improve the ef- ment build capacity to sustain educa- inspector general bring to an oversight fectiveness of U.S. programs and deter tion, health, and rule of law programs so table that some might consider already fraud, waste, and abuse by fostering a that our money is not wasted? crowded? culture of accountability that permeates We believe that everyone in- My answer is this: In Afghani- every aspect of the reconstruction effort volved in reconstruction—from the U.S. stan, SIGAR is bringing focused over- in Afghanistan. What do we mean when government agencies and contractors to

48 Journal of Public Inquiry the Afghan government, which is the government. this directive targets high of audits to assess 1) the ability of in- beneficiary of our assistance—has a re- dollar federal programs and requires dividual agencies to manage and over- sponsibility to provide good stewardship federal agencies to develop methodolo- see their programs, and 2) the degree of public funds. SIGAR’s work to date gies to identify and measure improper to which agencies coordinate programs has shown that all these groups need to payments associated with these priority with each other and with the interna- do much more to be accountable for the programs. this is a good step toward tional community. eight months ago reconstruction money the United States making agencies more accountable, but SIGAR issued an audit that found that is spending in Afghanistan. it does not address reconstruction fund- the Combined Security transition Com- ing. mand-Afghanistan, which is responsible Implementing Agencies SIGAR has begun a forensic for training the Afghan National Secu- the primary obligation for oversight analysis, which will use data mining and rity Forces, did not have the contracting must, in my view, rest with the agencies anomaly detection techniques to identify officials it needed to properly monitor a administering funds. the Department of potential fraud and waste in the billions $400 million contract. U.S. command- Defense, the Department of State, and of dollars spent for Afghanistan recon- ers in Afghanistan welcomed this audit USAID have been allocated the majority struction. this analysis is intended to and used it to make their case for recruit- of reconstruction funds for Afghanistan, identify targets for focused audits and ing more contracting officers. Neverthe- but the Departments of the treasury, criminal investigations. However, SI- less, during my visit to Afghanistan last Justice, Homeland Security, and Agricul- GAR believes that each implementing month U.S. commanders told me that ture also have significant roles in helping agency should have the financial man- they still do not have the contracting of- to rebuild that country. each of these agement systems in place to analyze its ficers needed to oversee the large training agencies is responsible for spending tax- own data and identify payment anoma- contracts. the Defense Department has payer dollars carefully and wisely. lies on a regular basis to detect fraud and not provided CStC-A with the full mea- these agencies fund a number of waste. this is not the case today, but it sure it needs to implement and oversee activities not only through contracts with should be an integral part of each agen- our most critical programs. the private sector, but also through coop- cy’s oversight of its own programs. experience in Iraq and else- erative agreements and grants with enti- In Afghanistan, several agen- where has shown that taxpayer dollars ties such as non-profit organizations and cies are often involved in designing and may be wasted because projects are mea- offices of the United Nations. It might implementing projects that are part of sured by outputs rather than outcomes. surprise some observers to learn that less larger programs. In Afghanistan, un- this is because it is easier to establish than half (2.5 billion) of the $5.4 billion like Iraq, the international community output metrics than outcome metrics. obligated by USAID for reconstruction is also making significant contributions For example, let us say we have a training in Afghanistan between FY 2002 and FY to some programs. this is true for the program for 20 judges or prosecutors or 2009 went to private sector contractors. nearly $27 billion the United States has teachers. the question we must ask our- USAID spent nearly $3 billion through allocated to develop the Afghan National selves is not how many judges, prosecu- cooperative agreements ($1.67 billion) Security Forces. the Departments of tors and teachers we have trained, but and grants ($1.29 billion). Contracting Defense and State as well as the interna- rather what is the consequence of this is important, but in the context of recon- tional community, through our NAtO training. What do these judges, pros- struction in Afghanistan, it is also essen- partners, have contributed human and fi- ecutors, and teachers do as a result of the tial to assess other mechanisms, such as nancial resources to this effort. Multiple training? Implementing agencies need these cooperative agreements and grants, U.S. agencies and international partners to be more focused on outcomes. that are being used to fund reconstruc- are also involved in many other activi- the United States has commit- tion activities. ties, including our justice and counter- ted more than half of all U.S. reconstruc- the ability of an agency to over- narcotics programs and for the recently tion dollars in Afghanistan to developing see its programs depends to an extent announced initiative to strengthen the the Afghan National Security Forces. on its financial management system. At agricultural sector in Afghanistan. Suc- the current goal of the United States, the end of November last year, President cessful reconstruction in Afghanistan the international community, and the Obama issued an executive order to in- requires significant inter-agency coop- Afghan government is to increase the Af- tensify efforts to eliminate payment er- eration and coordination with the inter- ghan National Army to 134,000 and the ror, waste, fraud, and abuse in the major national community. Afghan National Police to 109,000 by programs administered by the federal SIGAR is conducting a variety September this year. A rating system is

Visit www.ignet.gov 49 used to measure the capabilities of these their changing role as the U.S. begins to governments. At the latest international forces. We are conducting an audit to implement its new development strategy conference on Afghanistan, which was evaluate the reliability of this rating sys- in the country. held in London last month, the United tem as a true measure of the capabilities the United States depends on States and other donors pledged to in- of the security forces. Numbers may be private sector contractors to perform a crease the proportion of development aid important. the real question is not how wide variety of reconstruction activities. delivered through the Afghan govern- many troops we have trained, but rather these include everything from billion- ment to 50 percent in the next two years. whether our programs are developing dollar infrastructure contracts to multi- this support depends on the Afghan national security forces capable of pro- million dollar contracts to train the government making progress in several tecting the Afghan people and defending Afghan National Army and the Afghan areas, including strengthening its public the Afghan state so that U.S. forces can National Police. Implementing agencies financial management systems, improv- withdraw. have contracted with the private sector to ing budget execution, and reducing cor- We believe that it is necessary build everything from power plants and ruption. to conduct a broad spectrum of audits. roads to schools, clinics, courthouses, Our auditors are therefore conducting and prisons. Contractors are developing Afghan Government reviews of individual contracts, agency alternative agriculture projects, running Capacity oversight, and programs to assess wheth- a wide variety of training and capacity- We believe that the Afghan government er the reconstruction program is help- building programs, and providing secu- should be much more involved in every ing the U.S. achieve its strategic goals rity for reconstruction activities. aspect of reconstruction. However, Af- in Afghanistan. Last month, SIGAR is- these contractors must be held ghan institutions must have the capacity sued two audits in the energy sector that accountable. they need to have sys- and desire to manage the funds and pro- demonstrate our approach to oversight. tems in place to ensure that they com- tect them from waste, fraud, and abuse, One assessed a single USAID project— plete projects in compliance with their and other forms of corruption. the $300 million Kabul Power Plant— statements of work on time and within everyone—the donors, interna- which has experienced serious delays and budgets. the contractors, no less than tional organizations, and the Afghan gov- cost overruns. the other audit reviewed implementing agencies, must properly ernment—is justifiably concerned about U.S. and international projects across track expenditures and provide quality widespread corruption in Afghanistan. the energy sector. taken together, these assurance. the onus is on the prime No one is more upset than the Afghan two audits identified systemic problems contractors to monitor subcontractors to people themselves. A recent survey of at both the project and program level ensure they deliver a quality product. 12 provinces by the United Nations Of- that need to be addressed if the United SIGAR is conducting a number fice on Drugs and Crime found that the States, its international partners, and the of focused contract audits. We have on- average Afghan is more concerned about Afghan government are going to achieve going reviews of construction contracts corruption (59 percent) than insecurity their objective of expanding Afghan citi- to build army and police facilities in three (54 percent) or unemployment (52 per- zens’ access to electricity. Our reports different provinces. We are also assess- cent). Half of the Afghans surveyed said highlighted the absence of an updated ing the U.S. Army Corps of engineers’ they had to pay at least one kickback to national energy plan for Afghanistan, contract with a private security firm to a public official during the preceding the lack of common electrical standards determine if the Corps is receiving the 12 months. the average amount was for projects, inadequate coordination be- services it requires at a reasonable cost. $160—this in a country where the per tween the international community and this focused contract audit is related to a capita GDP is only $425 per year. the Afghan government, poor contract review we are conducting to identify the the UN estimates that Afghans management, and questions about sus- number and volume of contracts in place paid $2.5 billion in bribes to their gov- tainability. to provide security services in Afghani- ernment officials and members of the stan. police force in 2009. that is about 25 Contracts and While U.S. agencies will con- percent of Afghanistan’s GDP and al- Contractors tinue to rely on private contractors to most as much as is generated by the illicit Since I am here with the Wartime Con- implement many of their reconstruction drug trade. As the UN pointed out, the tracting Commission, let me spend a programs in Afghanistan, the new U.S. shocking reality is that drugs and bribes couple of minutes talking specifically strategy in Afghanistan and elsewhere is are the largest income generators in Af- about contractors in Afghanistan and to work in greater partnership with host ghanistan, amounting to about half the

5050 JJournalournal ofof PPublicublic IInquirnquiryy country’s recorded GDP. the first is reviewing U.S. and other do- Arnold Fields Bribery robs the poor, causes nor efforts to strengthen the capabilities misallocation of resources, and destroys of Afghanistan’s Control and Audit Of- trust in the government. It is under- fice. the second is assessing the Afghan standably hard for people who earn less government’s ability to account for U.S. than $2 a day, but must bribe officials to government payments of salaries to Af- obtain basic services, to have confidence ghan government officials and advisors. in their government. Because corruption Our anti-corruption initiative will help corrodes the government’s legitimacy identify institutions we can work with as and undermines international develop- partners; it will also help identify areas ment efforts, strengthening the Afghan where we can use our reconstruction dol- government’s capability to fight corrup- lars to improve accountability. We are Arnold Fields (Major General tion must be an integral part of the U.S. expanding this program and plan to have Ret.) is the inspector general of reconstruction effort. more than 20 auditors working at the na- the Special Inspector General for It is my firm belief that Afghan tional and provincial levels by the end of Afghanistan Reconstruction, a po- government institutions, no less than the year. sition to which he was appointed by U.S. agencies and contractors, must be When you talk to U.S. and in- the president of the United States held accountable for all monies at their ternational officials about Afghanistan, on June 12, 2008. General Fields disposal. It is for this reason that SIGAR they say that the future depends on one was sworn into office on July 22, launched an anti-corruption initiative thing: improved governance. And that 2008 by the Deputy Secretary of last year to 1) assess what the United in turn depends on reducing corruption. Defense and reports directly to the States and other donor countries are do- Neither our military might nor all the Secretary of State and the Secretary ing to build the capacity of Afghan insti- reconstruction dollars in the world—no of Defense. General Field’s man- tutions to deter corruption and strength- matter how well projects are designed date requires that he report directly en the rule of law and 2) determine the and executed—can produce a secure and to Congress on audit investiga- extent to which various national and lo- stable Afghanistan if the people of that tions and other matters relating to cal institutions have systems in place to country do not believe in their govern- amounts appropriated or otherwise account properly for donor funds. ment. this is why we must strive to work made available for the reconstruc- In December SIGAR issued an with our Afghan partners to transform a tion of Afghanistan. Previously, audit on the High Office of Oversight, culture of corruption into a culture of ac- General Fields served as the deputy Afghanistan’s principal organization re- countability. this must be at the very director of the Africa Center for sponsible for overseeing and combating heart of our reconstruction effort and if Strategic Studies, Department of corruption. We found that this key of- we fail, we will have surely wasted scores Defense. Prior to that position, he fice needs significantly more authority, of billions of our taxpayers’ dollars. served as a member of the U.S. De- independence, and donor support to be- My personal goal and the goal of my partment of State assigned to the come an effective anti-corruption insti- entire staff is to see our implementing U.S. embassy in Iraq where he per- tution. President Karzai, who has vowed agencies and the governing institutions formed duties as the chief of staff of to tackle corruption across his govern- in Afghanistan improve their capacity to the Iraq Reconstruction and Man- ment, told the international conference conduct the oversight needed to be ac- agement Office. in London last month that he would, countable to U.S. and Afghan citizens. General Fields retired from through a presidential decree, empower Accountability is at the core of good gov- the U.S. Marine Corps in January the High Office of Oversight to inves- ernance. 2004, after over 34 years of active tigate and sanction corrupt officials, I appreciate the opportunity to military service. He holds a Bach- and lead the fight against corruption. If share with you our observations on the elor of Science degree in agriculture President Karzai does as he has promised, reconstruction effort in Afghanistan and from South Carolina State Univer- he will be implementing one of SIGAR’s look forward to continuing to work with sity and a Master of Arts degree key recommendations. this commission as you pursue your im- in human resources management SIGAR has two ongoing audits portant mission. 1 from Pepperdine University. as part of our anti-corruption initiative.

Visit www.ignet.gov 51 United States Department of Defense Office of Inspector General

[TESTIMONY] Challenges with Afghan National Security Forces Training Contracts Congressional testimony before Commission on Wartime Contracting (December 18, 2009)

By Kenneth P. Moorefield Chairman thibault, Chairman Shays and distinguished members of the Com- mission. Good morning and thank you for the opportunity to appear before you on behalf of the Department of Defense Office of Inspector General. today, in response to your invitation, I would like to share with you our experiences and views regarding the challenges and risks associated with contingency contracting in support of the U.S. commitment to train and mentor the Afghan National Security Forces.

Background the assistance provided by contractors in support of the development of the ANSF has proven to be indispensable, as it did in the growth of the security forces have been in Afghanistan far longer than frastructure to support widely disbursed of Iraq. Contract personnel have played their military or civilian counterparts. ANA and ANP operations. Buildings, if many key roles augmenting DoD, and their continued presence has provided they exist at all, are often little more than specifically the Combined Security tran- a significant degree of continuity and mud-huts. the transportation system is sition Command-Afghanistan, in the stability to progress made in establish- marginal, and severe weather conditions capacity building of the Ministry of De- ing Afghan National Army and Afghan make remote mountain bases virtually fense and Ministry of Interior, especially National Police capability to operate in- inaccessible part of the year. Roads still in the area of systems development. dependently and assume security respon- have to be built to be able to supply many embedded in the ANSF, U.S. sibility. new military or police bases or outposts, contractors work as mentors and subject and much of the construction material, Contracting Issues and matter experts at the corps level and be- to include cement, must be transported Challenges low. they manage police basic training overland into the country. centers, and serve as part of police men- Illiteracy in excess of 70 percent, Construction toring teams embedded with provincial extensive poverty and related endemic and district national police. the train, mentor, and equip mission corruption are an everyday reality. Any Contracted companies are also to develop an effective ANSF poses the piece of land suitable for construction of building training and basing facilities same uniquely complex problems to our an ANSF facility first has to be de-mined across the country essential to ANSF contractors as it does to U.S. govern- and conflicting claims of ownership re- growth. ment personnel. Outside of Kabul, Kan- solved among sometimes numerous com- In addition to contributing spe- dahar, Herat, and Masar-e-Sharif, for peting individuals and families claiming cialized skills, many contract personnel example, there is still relatively little in- legitimate title. Addressing these claims

52 Journal of Public Inquiry can sometimes delay projects for over a number of contracts. Our OIG report response to concerns expressed in the year. issued this September on “U.S. and Co- September DoD IG report on the ANSF Moreover, in recent years, in- alition Plans to train, equip, and Field train and equip Mission, the Defense creasing numbers of improvised explo- the Afghan National Security Forces” Contract Management Agency reported sive device attacks by taliban insurgents validated this concern, finding that the that they had realigned resources in-the- on the main roads have disrupted con- lack of appropriate oversight support for ater, significantly increasing personnel struction convoys, and taliban use of CStC-A contracts had resulted in an assigned to the country. the Afghan en- extortion, kidnapping, and murder at ongoing failure to ensure that contrac- gineering District also has reported that construction sites has discouraged con- tors selected had the required expertise the U.S. Army Corps of engineers is ad- tractors from operating in any area not to meet contract performance standards. dressing its personnel resource deficien- sustainably secured. DoD contracting challenges and cies identified, increasing the number of efforts via the “Afghan First” issues in Afghanistan have been exacer- staff authorized and assigned to Afghani- program to hire Afghan companies and bated by a chronic shortage of qualified stan to provide additional quality assur- Afghan personnel to construct needed personnel. Besides not having sufficient ance oversight of their construction proj- roads and facilities remain a priority con- contracting officers and contracting of- ect responsibilities. We are advised the tracting commitment, but implementa- ficer representatives, their rapid turnover drawdown in Iraq will free up additional tion has proven problematic. Realistical- caused by short three to six-month tours contract oversight personnel, . ly, there are few Afghan companies with contributed to a deficiency in contract- the requisite experience to effectively ing oversight continuity and perfor- Transfer of Afghan Police bid on and undertake projects. In some mance. Additionally, the Joint Con- Training From State to the instances, those Afghan companies that tracting Command – Iraq/Afghanistan Department of Defense were hired proved unable to meet con- expressed concerns to our assessment One issue in which the commission has tractual timing and quality requirements. team last spring over the adequacy of expressed specific interest is that of the As a consequence, the Combined Secu- basic contracting officer’s representative pending transfer of responsibility for the rity transition Command-Afghanistan training, as well as the limited experience primary police training program in Iraq. and the U.S. Army Corps of engineers’ of those being assigned. Since 2005, the State Department has Afghan engineer District have often had Some progress has been made managed ANP basic training through to rely on U.S. or third-country contrac- in strengthening DoD contracting per- its contract with DynCorp. Funding for tors in order to move forward with the sonnel capability in Afghanistan. In that contract was provided to the State construction necessary to support development of the ANSF. As a result, necessary construction projects to support ANSF expansion often has been delayed and, in some cases, stopped altogether in areas found to be insufficiently secure.

Contract Oversight Issues DoD IG has reported in previous congressional testimony this year that the size and skill of the DoD acquisition workforce did not keep pace with the growth of its contract oversight responsibilities in the Southwest Asia contingency operations. A relatively small number of inexperienced civilian and military contract administrators and support personnel were assigned far-reaching responsibilities for an unreasonably large

Visit www.ignet.gov 53 Department by DoD. earlier this year, resource management and logistics, and Kenneth P. Moorefield the Senate Appropriations Committee future contracting. requested an audit of the administration As with all contracts under- and expenditure of DoD-appropriated taken to train and develop the ANSF, funding supporting the contract. the it will be incumbent upon DoD to en- DoD-DOS team formed for this pur- sure that Combined Security transition pose anticipates issuing its final report by Command-Afghanistan has a cadre of the first of the coming year.1 contracting officer representatives and the DOS has already agreed to contracting officer technical representa- transfer responsibility for the DynCorp tives in place able to provide appropri- police training contract to DoD when it ate oversight of the next police training expires in January 2010. We understand contract’s execution, particularly given Kenneth P. Moorefield is the dep- that this decision was based on a mutual its important role in any future ANP ex- uty inspector general for Special recognition by the two departments that pansion. Plans and Operations, Department the lack of a single, unified chain of com- I thank the Committee for this of Defense Office of Inspector Gen- mand for police training had hindered opportunity to present a DoD IG per- eral. He leads an office dedicated to flexible execution of the training prospective on contracting roles and chal- facilitating informed decision-mak- 2 gram. lenges in Afghanistan as they impact ing by senior leaders of the DoD to facilitate contract respon- the capacity development of ANSF. and Congress by providing assess- sibility transfer from DOS to DoD, at the importance of successfully accom- ments of priority national security the recommendation of the joint audit plishing that mission was underscored challenges. team, a transfer oversight working group in the president’s recent policy strategy Prior to joining the Office was formed in August to manage such determination on the way ahead in Af- of Inspector General, Ambassador transition issues as government property, ghanistan. And, we at DoD IG are very Moorefield served as a senior State 1 Report was issued on February 9, 2010 (D- mindful of the contingency contracting Department representative on the 2010-042) oversight responsibilities this will entail. Iraq/Afghanistan transition Plan- 2 the transfer of the DynCorp contract from I would welcome any questions ning Group. DOS to DoD has been delayed due to the prob- you may have. 1 lems in the contracting process. Having attained the For- eign Service rank of Career Minis- ter, he was sworn in as Ambassador to the Republic of Gabon and the Democratic Republic of Sao tome and Principe on April 2, 2002. Prior to this appointment, Ambas- sador Moorefield had over 30 years of experience in the U.S. military, foreign, and civil services. As an Army infantry officer, he served two tours in Viet- nam. Among his military and civilian awards, and decorations are the Silver Star, Purple Heart, the Vietnamese Cross of Gallantry, and Superior and Presidential Honor Awards. Ambassador Moorefield graduated from the U.S. Military Academy at West Point and took advanced international studies at Georgetown University School of Foreign Service.

5454 JJournalournal ofof PPublicublic IInquirnquiryy Council of Inspectors General Invitation to Contribute Articles on Integrity and Efficiency to the Journal of Public Inquiry

Members of the Council