I am here today to discuss a very serious matter that goes right to the heart of one of my most important constitutional responsibilities.
I am talking about the role of oversight of the Federal government.
American taxpayers expect Congress to exercise oversight to ensure that their hard earned money is not wasted.
To conduct more effective oversight, Congress adopted the IG Act in 1978, creating a system of Inspectors General or IGs throughout the government.
The IGs are supposed to be watch-dogs, or as I like to say, junk yard dogs.
They are our first-line of defense against fraud, waste and abuse.
When it happens, the IGs are supposed to report it to the agency head and to Congress and to recommend appropriate corrective action. IGs are top cops inside each agency. They police the Federal workforce.
If rules are broken, then they have to investigate allegations of misconduct and refer their findings to the proper authorities.
To be credible, IGs must be beyond reproach. Above all, they must live by the rules they enforce. They must set an example of excellence in their personal conduct - always.
Otherwise they lack credibility.
So I watch the watchdogs.
Over the years, in doing oversight work, I have found IGs who did not seem to meet these standards.
Mr. President, I am disappointed to have to report to you today about a new IG trouble spot. There are allegations of misconduct in the upper echelons of the Treasury IG’s office.
A tip from a whistleblower earlier this year first alerted me to the problem.
On February 12, 2008, I wrote a letter to Acting Treasury IG Schindel, asking for a copy of the investigative report and all pertinent materials bearing on this matter.
I also asked Mr. Schindel to tell me how and when he intended to address and resolve the issues raised in the report. Mr. Schindel responded promptly, providing a redacted copy of the report on February 15th.
On February 29th, he assured me that senior-level officials involved had been placed on paid administrative leave.
They would remain in that status, he said, “until all investigative matters have been adjudicated.” One of them “was reassigned” to what appears to be a questionable post.
The Report of Investigation on this matter was prepared by the Department of Labor IG. It is dated January 14, 2008.
Since the Treasury IG lacks an internal affairs unit, IG Schindel referred the case to the Department of Labor IG for investigation. This was to ensure maximum independence.
Acting IG Schindel made the referral on June 18, 2007. He was briefed on the findings in the final report on September 26, 2007.
The Department of Labor Report of Investigation substantiates wrongdoing on the part of senior Treasury IG officials.
The allegations are very serious, indeed.
My staff has carefully reviewed all the materials provided by Mr. Schindel and interviewed a number of witnesses with knowledge of the issues.
Based on the oversight investigation conducted by my staff, I wrote to Treasury Secretary Paulson on February 28, 2008. In that letter, I expressed grave concern to Secretary Paulson about the way Acting IG Schindel appeared to be responding to the allegations substantiated in the Labor Department IG report.
This is what I said to my friend Mr. Paulson: “Mr. Schindel stated that the report showed no corruption, criminal activity, or serious wrongdoing on the part of the…..senior officials. I am stunned that anyone with management responsibility could make this statement after reading the Labor IG report.”
The Labor IG presented a compelling case of high-level IG misconduct backed up with rock-solid evidence. Mr. Schindel seems unable to see what the Labor IG sees. Is he just turning a blind eye to the problem?
Secretary Paulson responded to my letter on March 10th. He informed me that he had been briefed on the Labor IG’s report “and communicated to Acting IG Schindel” his “views” on the matter.
The Labor IG report seems to leave little or no wiggle room.
Based on a continuous stream of information being provided to my staff, there is growing concern about Acting IG Schindel’s commitment to solving these problems.
Acting IG Schindel has known about the findings in this report for nine months now.
To help bring the issues into sharper focus, I would like to take a moment to review the Labor IG’s findings.
This is what the Labor IG report found, and I quote: “our investigation corroborated the allegation that” senior Treasury IG officials “violated the Public Transit Subsidy program.”
This program provides money, in the form of fare cards, to government employees to help cover the high cost of using public transportation to get to work. There is an added benefit to Public Transit Subsidy program. The value of fare cards received in this program is not taxable.
The subjects of the Labor IG investigation signed applications to participate in the Public Transit Subsidy program. In signing that document, they certified that they would abide by the terms of the program.
The Public Transit Subsidy program application forms, which these individuals signed, state “making a false, fictitious, or fraudulent certification may render the maker subject to criminal prosecution under title 18, United States Code, section 1001.”
They allegedly took transit subsidies while accepting free rides to work from fellow agents - sometimes in their government vehicles.
The findings of the Labor IG’s report are of particular concern to me for another reason. And this is the most troublesome part for me.
The senior Treasury IG officials involved in fare card abuse were responsible for investigating and referring for criminal prosecution a number of other Treasury Department employees, who had allegedly violated the Transit Subsidy Program.
As I said right up-front, IGs must live by the rules they are sworn to enforce. When they don’t, they lose credibility.
The Labor report also finds that the officials involved “inappropriately intervened in closing [another] investigation” of alleged Public Transit Subsidy program abuse. This one concerned an employee at another agency, who also allegedly violated the transit subsidy program.
According to the Labor IG’s report, the senior Treasury IG officials “escorted” the agent in charge of this investigation to their office, “where they discussed closing the case.”
They apparently “instructed him to cancel” a key interview and “told him the case would be closed.”
Since the investigation was essentially complete, and there was credible evidence to support the allegations, this meeting gave the appearance of impropriety.
The Labor IG investigators interviewed the Treasury IG officials about this meeting. The Treasury IG officials reportedly cited high agent caseloads as an excuse for their attempts to close it down. They also claimed that the police at that agency “were capable of working the investigation” and that “there was no fraud or loss.”
The Labor investigators make one point crystal clear. The claims put forward by Treasury IG officials did not stand up to scrutiny.
The Labor IG investigators determined that the Treasury IG’s office had worked similar cases involving this agency’s employees in the past.
They found that special agents in the Treasury IG office had a typical caseload of 15-16 cases and not the 30-case load claimed by one of the subjects of this investigation.
I understand that the employee involved in these alleged Public Transit Subsidy program violations was given a “Proposed Notice of Removal” on June 18, 2008. This agency is trying hard to crack down on such violations. This should be a wake-up call for Mr. Schindel.
Mr. President, the abuse of the Public Transit Subsidy Program alleged in the Labor IG’s report constitutes – at best – misuse or abuse of public money and – at worst – outright theft.
There is one more very disturbing finding in the Labor IG’s report I want to highlight.
The Labor report “questions the judgment” of the senior Treasury IG officials for their alleged involvement in the re-investigation of another employee misconduct case.
This particular investigation was originally conducted by the Treasury IG for Tax Administration or TIGTA.
Once again, this investigation was referred to an outside agency to ensure greater independence.
According to the Labor report, the TIGTA investigation determined that the Treasury IG agent “misused his position, his issued vehicle, and made false and misleading statements” during the course of the investigation.
For a federal law enforcement officer, making false statements during an investigation – as alleged, could be a career-ending mistake.
As chronicled in the Labor IG’s report, the senior Treasury IG didn’t like TIGTA’s findings and wanted them changed.
The Labor IG’s report is very clear in stating that the only reason for the re-investigation was to change the findings of the original TIGTA investigation.
The Labor IG’s report concluded and I quote: “The appearance is that the sole purpose of intervening in the aftermath of TIGTA’s investigation was to mitigate TIGTA’s findings, particularly by undermining TIGTA’s apparently well supported finding that…[the agent involved]… had made false statements.”
The report goes on to say: “the evidence suggests that TIGTA’s findings were correct.
It is clear that the only purpose of the re-investigation … was to change the findings of the investigation so [the agent involved] would not have a giglio issue.”
The person involved in this case was suspended for ten days in 2006.
The Labor IG also questioned the leniency of agent’s “punishment,” noting that misuse of a government vehicle alone normally carries a 30-day suspension.
TIGTA also alleges that the Legal Counsel to the Treasury IG may have been involved in an attempt to quash or alter TIGTA’s final report of investigation.
TIGTA provided a document which indicates that the Treasury IG’s Legal Counsel “disagreed with the results of the investigation;” he “expected a draft ROI;” and “asked if the Final Report of Investigation could be changed.”
He was informed by the agent in charge that TIGTA “did not submit draft ROIs and would not make any changes to the final ROI.”
The Legal Counsel denies these allegations.
The Labor IG also found the Legal Counsel’s “advice to DOT-OIG questionable regarding the investigation.” The Labor IG reached this conclusion, because the Legal Counsel had listened to the tape recorded interview during which the subject allegedly “made a false statement under oath to the TIGTA agent.”
The three substantiated allegations I have just laid out, which are presented in the Labor IG’s report, are each disturbing in their own right. Taken together, they paint a truly awful picture.
This report is the result of an independent investigation conducted by professional law enforcement officers.
The results of this investigation demand serious, thorough, fair and prompt action.
I met with the Acting Treasury IG Schindel on March 13th to review this matter.
He assured me that he would take decisive action to clean up this mess.
More recently, I was told that the Acting Treasury IG is wrestling with new allegations. Addressing the Department of Labor IG report must be the first priority. He needs to sink his teeth into that material and close it out.
In a letter on May 30th, I asked him again to proceed with his review of this matter “as quickly as possible.”
But I also insisted that it be done by the book, “consistent with all applicable rules and regulations.”
I call on Acting Treasury Inspector General Schindel to keep his word. That’s all I ask. I want him to stick to his repeated assurances: In his letter of February 15th ; In his letter of February 29th ; And at our March 13th meeting; And again in a letter of June 2nd.
I expect no more -- no less.
Indecision is costing money.
To date, these officials have collected three months worth of paid administrative leave.
They are senior executives earning top dollar. Their administrative leave has already cost the taxpayers about $90,000.00 and the number is climbing. Continuing mismanagement and indecision in the Treasury IG’s office is wasting precious tax dollars.
Acting IG Schindel has a responsibility to show that he runs a first-class Inspector General’s office – one that is beyond reproach.
He can’t operate effectively as an IG until he gets his own house in order.
His job is to deter, detect, and report waste but not do it himself.