Inspectors General: The Fraud in Fighting Fraud
Nocera, Joseph
Inspectors General: The Fraud in Fighting Fraud by Joseph Nocera Fraud in government is a hot topic these days, thanks in large measure to CETA, Medicaid, student loam, defense contracts, GSA,...
...You’re a fool to be a whistle-blower, but you’re a real fool if you blow the whistle to him (the inspector general),” said aveteran HEW dissident...
...The Numbers Game At HEW, the situation is better...
...An inspector general, Justice said, couldn’t serve both Congress and a department head at the same time...
...The Office of Inspector General is supposed to house an elite corps of internal investigators for each agency who will serve as the advance troops in the war a g a i n s t f r a u d , abuse, mismanagement, error, theft, and all the other ways the government wastes money...
...The same forces have made military inspectors general more than willing to go after whistle-blowers instead of those they accuse...
...But neither Ken Mansfield, the Inspector General at DOE, nor Thomas Morris at HEW fits that bill...
...Both are career government investigators known primarily for their ability to survive, to compromise and who have learned, in Lyman Kirpatrick’s phrase, the tolerable limits of what they can do and still keep their jobs...
...It was the challenge of liberalism in the 1960s to enact long-delayed and muchneeded social programs...
...But a closer look reveals that the results in this experiment in good government have been a lot more mixed than anyone connected with it has been willing to admit thus far...
...The Secretary’s latest coup was his sponsorship, a few months ago, of a national conference on waste, fraud, and abuse that attracted hundreds of government gumshoes from all over the country (as well as what has become, for Califano, the requisite dose of favorable publicity...
...They are supposed to have a free hand to investigate anything that s t r i k e s t h e i r fancy, and enough independence and autonomy from their department heads to insure that they can do that...
...Despite his well-documented distaste for personnel matters, Carter has asked each agency for the names of the three finalists for the position of inspector g e n e r a l , and he is personally interviewing the candidates...
...When the office was set up in each department, the inspector general had to take the people who were already there, those who worked in the old office of audit or investigations...
...It allows the secretary to comment upon-but not to edit-the reports...
...The audit staffs are still full of green eyeshade types, people who check the figures all day and if they add up, give the program a clean bill of health...
...That is the kind of potential that lies in the offices of the inspector general and that is why their creation is so important...
...and in general, finding out the answer to that eternal if seldom-asked question of the bureaucracy: “What the hell is going on out there...
...For example, at the Department of Energy, the audit staff and the investigations staff (both of which had existed at ERDA and FEA, the two chief agencies that combined to form DOE) had a history of not communicating with each other...
...ut7 ecliror ?/’The Washington Monthly...
...And if the rest of the inspectors general go the way of these two, the hundreds of program managers in Washington will have nothing to fear...
...Here’s how the GAO put it recently: “On the one hand, the Foreign Service Officer has extensive experience in the foreign affairs area, but on the other hand, this same experience could lead the officer to accept present operating methods without raising questions that might occur to an independent observer...
...The idea has been to show quick results and large savings...
...A year ago last summer, another high-ranking NRC official, one Lee Gossick, was caught fudging on the truth before two congressional committees...
...Finally, after the report was issued, the inspector general held off taking any action in the hope that the official would retire voluntarily, as it is rumored he might...
...Most of the new investigators at DOE, for example, are former FBI agents (there is an incredible network of former FBI agents all working vigorously to hire each other), who have been wellschooled in how to catch bankrobbers, but not in figuring out why a crime took place and how to prevent it, or in chasing down more complicated kinds of computer crime...
...At HEW, although they have over 1,000 auditors who regularly find money misspent or contracts misused, the department has never been very good at getting any of the money back...
...1 was trying to determine what the tolerable limits were of what I could do and still keep my job.’ ” And then there is the matter of loyalty, the misplaced loyalty that puts the agency and personal friendships over any sense of commitment to the government as a whole and, to be blunt, to the truth as well...
...In his forthcoming book, The Search ,for the Manchurian Candidate, John Marks notes another common phenomenon of being an inspector general-the fear that if you do too good a job, you won’t have one...
...She cites one rather chilling anecdote: “Sergeant Hayden filed a complaint against a superior officer charging him with conduct unbecoming an officer...
...The one improvement that has been made at most agencies is ending the practice of having bureaucrats serve for a few years as investigators before moving elsewhere in the bureaucracy...
...personnel are recruited from the line officers who, after a brief stint, return to the line...
...The civil service wouldn’t have it any other way-which meant that the auditor who had been looking at department books for the last 20 years under the office of audit would continue to do that, except that now he would be doing it for the inspector general...
...Despite all the hoopla over inspectors general, there still won’t be anyone asking the question: “What the hell is going on out there...
...The problem, she writes, is that “the I.G...
...In March, 1977, the HEW i n s p e c t o r g e n e r a l b e g a n operation...
...While they were busy missing all this, the projected costs of the program were rising daily (from $25 to $30 billion), the work had fallen far behind schedule, and there were only 68million barrels placed in the ground in three years instead of the scheduled 250 million...
...It is one of the most natural, if most unfortunate, tendencies of bureaucracy that the more powerful your position, the more time YOU'^^ spend on any given day listening to baloney...
...In addition to their crime-busting function, inspectors general are supposed to figure out how to prevent crimes from happening in the first place...
...Morris understands the parameters...
...As the article by Amy Merrill in this issue makes painfully clear, the higher up one is in the bureaucracy, the less one sees of the life below...
...In the crowd, mingling with the state and local investigators, the FBI agents and the postal inspectors, was the newest breed of government sleuth: the people who work in the various federal agencies under the aegis of the inspector general’s offices...
...McTiernan produced a long and windy report that went on for hundreds of pages, but he could not bring himself to face up to the fact that Gossick probably had lied...
...What he is not good at is taking the next (and indeed, the more important) step...
...This bit of private correspondence had originally been “leaked” to The WashinKton Star...
...Jimmy Carter, who himself has not been shy about deploring waste and fraud in government, was a featured speaker at the conference, as was Francis M. Mullen, Jr., a heavyweight at the FBI, who assured the assembled multitudes that they need not fear for job security...
...Which brings us to one of the biggest hitches with the new inspectors general: where they come from...
...When I was in the office of Bob Wilson, the inspector general’s p.r...
...And that is the problem...
...When I asked him if he felt restrained in how far he could go in criticizing Califano’s beloved HEW programs, Morris replied: “I believe in all those programs too...
...To keep Congress and the press happy, Morris has set quotas and target levels for reducing waste up through 1981...
...It was only last October that Carter signed into law a bill establishing an Office of Inspector General in each of 12 federal agencies, and it is a law the President is taking very seriously indeed...
...The Weinstein material is from her book, Bureaucratic Opposition: Challenging Abuses at the Workplace, to be published next month by Pergamon Press...
...With luck, this might get him a transfer to London when his tour of duty as an investigator is up...
...That, for the most part, is still the case...
...Naturally, the committees demanded a full investigation, and McTiernan was given the task of finding out whether or not Gossick had lied...
...This showed witnesses who else was talking and, more importantly, showed them that there wasn’t going to be a lot of confidentiality in the investigation...
...The inspector general’s office has also been quick to chase down fraud exposed in the papers, and quick to insure that they receive proper credit...
...Inspectors General: The Fraud in Fighting Fraud by Joseph Nocera Fraud in government is a hot topic these days, thanks in large measure to CETA, Medicaid, student loam, defense contracts, GSA, and Joseph Califano, the inimitable Secretary of Health, Education and Welfare...
...From the beginning, Califano made it clear that this was the way he wanted the office to run...
...What has not been mentioned much is that Califano blamed a great deal of this on legislated waste (as opposed to fraud)-for instance, he said the failure to pass a hospital cost containment bill was one reason the government wasted billions...
...That can ruin a promising career-it makes superiors mad, superiors who might sit on a promotion board, say...
...As a result, the DOE inspector general has spent very little time finding fraud or waste on his own, and a good deal of time reacting to the latest subcommittee charge...
...Schlesinger and Mansfield are casebook studies in how easy it is to render impotent the vision of an independent inspector general...
...That is not to say that DOE does not have its own internal critics...
...His refusal led to his transfer into the psychiatric facility at another base, Lackland...
...Most departments already had in place an office of audit and an office of investigations, and the people who worked in these sections were never known for their aggressiveness in f i n d i n g and p u r s u i n g i n t e r n a l wrongdoing...
...Systems reviewese threatens no one...
...So Califano’s inspector general, Thomas Morris, has been busy working up computer techniques that allow HEW to pinpoint duplicative welfare payments (savings, according to HEW: $50 million), to identify physicians and pharmacists filing improper Medicaid bills (nine indictments, three convictions, and “54 other cases sent to prosecutors”), to reduce the error rate in social security payments ($93 million saved), and to improve student loan payback rates ($50 million saved...
...James Schlesinger was not at all keen about having people around who would be looking over his shoulder and questioning his programs...
...evaluations of whether the policy was being carried out...
...But the office has not been the stirring, smashing success the secretary likes to make it out to be...
...Califano had reason to worry...
...There’s plenty of fraud out there for everyone,” he said...
...In the State Department, top-level foreign service officers are required to put in a two-orthreeyear stint inspecting the work of our embassies overseas and other State Department offices...
...rhe combination of bureaucratic pressures within the military has thoroughly overwhelmed any desire by an inspector general to do the kind of job the military needs...
...Of course, that sort of thing doesn’t go on only in the military...
...When they replied no, the investigation ended...
...Califano, meanwhile, is in the news almost as much because of his muchballyhooed effort to stamp out fraud in his gargantuan ($ I36 billion in fiscal 1977) department...
...First his investigators intimidated the witnesses by acting so obviously hostile they felt they were being threatened...
...in the summary, he said that Gossick might have made a misleading statement or two, but they certainly weren’t intentional and were made at a time when G o s s i c k was under tremendous strain...
...They either didn’t see or didn’t want to...
...oil supplies), here was the program that would ease us through any future crunch, the first line of attack in our moral equivalent of war...
...The SPRO Fiasco Perhaps the most telling example of how an inspector general’s office can fail is the case of the Department of Energy’s SPRO program (for Strategic Petroleum Reserve Office...
...They give Schlesinger the headaches the inspector general’s office won’t-by leaking to the staff of the House subcommittee on energy and power chaired by Rep...
...That person, McTiernan implied in another report, ought to be drummed out of the NRC...
...Whistleblowers have a hard time seeing much difference between these inspectors general and the offices they replaced...
...With the threat of another oil shortage always hanging over our heads (witness the recent turmoil in Iran and its potential implications for U.S...
...To any reporter who asks, Wilson will gladly hand over a two-page list of all the ways the office has saved government money since coming into existence...
...Mansfield will always stay under c o n t r o l . As a result at DOE the inspector general’s typical role of seeing, speaking, and hearing as little evil as possible...
...Lyman Kirkpatrick, the longtime CIA Inspector General had known about unwitting LSD tests performed by the CIA, Marks writes, but “had never raised any noticeable objection...
...However at the same time McTiernan went after the person who had blown the whistle on Gossick with the bureaucratic equivalent of sharp knives...
...Then the inspector general turned in his report: hundreds of pages of notes, interviews, and memoranda that failed to identify possible violations of federal laws, agency regulations, and standards of conduct, and ignored the most serious finding of impropriety...
...As he has in the past, Califano used the occasion to expound at some length on the basic theme of his anti-fraud itch...
...At HEW, the record is nowhere near that dismal...
...Subsequent actions-the bill having passed Congress in a landslide, and Carter having signed it with considerable fanfare-make it clear that both thought the answer was a resounding “yes...
...He can find phony education consultants, but can’t explain why so many of HEW’S education programs haven’t improved the quality of education in America...
...Like Congress and the...
...It all seems terribly efficient, except as one HEW investigator said, “I’d hate to be the one to have to prove those numbers...
...asking all the stupid and obvious questions no one connected with the program has asked for ten years,” in the words of one administration official...
...Neither the idea nor the title, the actual words “inspector general,” are new to bureaucracy...
...When Califano came into office, the rise in the rate of student loan defaults was on the front pages, and Medicaid scandals were breaking all around him...
...There was a striking, if understandable, empathy for Gossick in this report...
...As long as.the bureaucrats are the only ones who can understand these reports, they can also blithely “minimize their impact...
...There, too, he was asked to drop the charges...
...That hasn’t changed, even though they now both work for the inspector general...
...Under SPRO, the energy department is supposed to buy and store oil in various locations in the Southwest, and for the past three years it has ostensibly been doing that...
...They’re on the other side...
...So when the subcommittee discovered one DOE employee taking worthless t r i p s courtesy of the government and turning in fraudulent travel vouchers, the investigator from the inspector general’s office went to the employee’s superiors, and asked them if he was doing anything wrong...
...According to one person who has seen the process in action, most of the evaluation is done over a long, leisurely lunch where, for example, the London embassy people complain bitterly about the lack ofsupport they get from the State Department, while the evaluator sits there nodding sympathetically...
...The DOE inspector general has also been there from time to time to make sure everything was running smoothly and legally...
...Thus, “the officer serving in the I.G...
...In theory, at least...
...Because both HEW and DOE have had a head start on the other agencies in establishing offices of inspector general, they have track records on which their performance may be judged...
...Of all the thousands of reports issued by government investigators in recent years, perhaps the most telling in this regard was one put out by the Nuclear Regulatory Commission called the McTiernan Report...
...Although Califano has not laid out any explicit directives to this effect, he has not had to...
...has been socialized to see the value of the chain of command,” and doesn’t take kindly to soldiers who complain to him...
...That way, they are insulated from reporters by an extra layer of leakage...
...It was not a coveted assignment, inasmuch as McTiernan had been around a long time, and Gossick had been around just as long, and if they weren’t bosom buddies, they felt a certain kinship as veterans of the nuclear bureaucracy...
...Soon after the office was established, Califano exclaimed grandly that the office’s computers had estimated that between $5.5 and $6.5 billion was wasted every year at HEW...
...At the Department of Energy, because of Schlesinger’s unwillingness to take them seriously, his in-house investigators have been neither aggressive nor effective...
...But Califano has not allowed the kind of criticism he leveled at Congress to be directed at on-going HEW programs by his inspector general...
...In one of its most vital programs, DOE has completely botched the job, and the inspector general’s office was nowhere to be found with the criticism that would have raised the red flags...
...The military has had inspectors general since 18 13, officers charged with looking into military abuses, people formally independent of other channels of command, but to people like Fitzgerald, they have always been on “the other side...
...Then the investigators made each witness sign a single form...
...getting out of their offices and into the field where the caseworkers and the recipients reside and where the frustrations are too immediate to be glossed over...
...This hardly encourages stinging critiques...
...man, I saw a large stack of copies of a letter from Califano to Rep...
...The first five make the newspapers with some degree of regularity because of the fraud they have engendered...
...They are called the division of “Health Care and Systems Review...
...l‘hose were big numbers, big enough that newspapers all over the country picked them up and have been using them ever since...
...another thought he might do well to see a psychiatrist...
...Carter is said to be looking for young, sharp lawyers to head the office of inspector general, people who have the smoothness to handle the press and no desire to become career bureaucrats...
...That was a sound criticism-health care costs have gotten way out of hand, and the government deserves a good helping of the blame...
...Thomas McTiernan was the head of the internal investigations unit at the NRC, a man who had held a number of jobs in the government’s nuclear establishment and was only a few years from retirement...
...If he didn’t do something quickly, Congress could take matters into its own handsbudgets could get cut, programs might be slashed, all the things that give Cabinet secretaries nightmares...
...What they failed to look at was the broader and more important picture: the justifications for the money being spent...
...It would not be completely fair to say that no one at HEW looks at programs...
...Mansfield, it is said, got his job because he is a long-time crony of Senator Henry Jackson, chairman of the Senate Energy Committee, and he has continued to be a survivor...
...Undoubtedly, much of this springs from a genuine desire on Califano’s p a r t to r o o t out f r a u d in his department, but it also comes from the realization that if he didn’t do it, someone else would...
...And for good reason...
...Here the reaction of the Secretary was quite a bit different from Califano’s...
...It is the implicit threat of exposure that makes any evaluation effective, and that can work only if the exposes are written so that the congressman on the oversight committee and the reporter on the beat can u n d e r s t a n d them...
...As a companion to the cops-androbbers responsibilities, the inspector general, in theory at least, has a third job...
...Early on in the administrationindeed, well before Carter signed the bill-two agencies set up Offices of Inspector General...
...This was roundly scoffed at on Capitol Hill, and after Carter made it known he liked the bill just fine the way it was, Justice decided that maybe the idea wasn’t so unconstitutional after all...
...The investigations work is incredibly parochial-never looks at a big picture, never focuses past one person or one crime...
...He now states he was ‘shocked’ by the unwitting testing, but that he ‘didn’t have the authority to follow up...
...This is also why what has happened at DOE and HEW is so lamentable...
...An inspector general who was doing the job the way it could be done would have raised those red flags early and often, would have woken up the Congress and the public to the problems, would have forced changes in the SPRO program before it had become so horribly mismanaged, and would have saved us billions of dollars...
...Deena Weinstein, an associate professor at DePaul .University who has spent some time studying the Army’s inspectors general, finds them generally ineffective even in investigating something as basic as soldier’s complaints...
...Unquestionably, this is one of the most important and useful things the government can do these days...
...Morris explained in an interview, “We have to depend on numbers because that’s what the Congress and the press look at to show results...
...This is program failure of the first magnitude...
...because of Califano’s boosterism, staff morale is high, attitudes are reasonably aggressive, and the investigators have scored a number of victories against fraud...
...Typically, t h e J u s t i c e Department opposed these features of the bill when it was first being discussed, citing the “separation of powers” doctrine of the Constitution...
...press (not so coincidentally) the inspector general at HEW is terrific at finding crooks and robbers...
...In their own ways, both Morris and Mansfield have fallen into the oldest trap of all-instead of asserting independence and authority, they have come to function exactly as their respective Cabinet secretaries want them to...
...The other agency was the newly created Departmerit of Energy, where an Office o? Inspector General was written into the statute that brought DOE to life...
...Then he writes a report about what a great job they are doing in London under the most trying of circumstances...
...John Moss, promising to go after two contractors...
...Not only “could” but does-all the time...
...a tough look at whether the program managers had a firm grasp on the situation...
...Sadly, they do not have the bureaucrats quaking, partly because they are so terribly understaffed and partly because they have the endemic problem of producing unreadable reports, written in the technojargon understandable only to a GS-14...
...He can collar all the student loan defaulters in America, but he can’t (or won’t) tell Califano what’s wrong with the student loan program and how it should be changed...
...One of his superiors, quoted anonymously, suggested he might be a security risk...
...Can’t Get The Money Back Most of the new inspectors general have sent around department-wide memos encouraging whistle-blowers to come forward, and for the most part they have been resolutely ignored...
...In the inspector general’s office, a department with well over 1,000 investigators and auditors, a grand total of 15 people have been given that vital assignment...
...Agencies have always had their share of people who were supposed to be internal investigatorsand more than a few of them were called “inspector general”-and they generally have a sordid past...
...John Dingell...
...An officer of the Inspector General conducted a two-week inquiry and not only confirmed the charges but found further detrimental information against the accused major: ‘. . . petty theft, drinking on duty, and calling the Air Force Secretary a meddling fool and an idiot.’ The Inspector General asked Hayden to drop the charges and when Hayden refused he was ordered to the mental health clinic for evaluation...
...Although he did not protest too loudly in public (how would it look, after all, to say you were against an office dedicated to wiping out fraud...
...Given the history of i n t e r n a l investigations, that is hardly a surprise...
...Inspectors general are supposed to be looking at prograqs with the jaundiced eye of an outsider...
...On The Other Side First, though, some history...
...As a result, long-standing practices have continued of their own inertia...
...The types of people you’re going to i n h e r i t , ” says one government investigator, “are so narrow in focus they will miss the forest for the trees every time...
...In this, Califano’s inspector general’s office c o m e s c o m p l e t e with a convenient set of blinders, for the game they are playing is based on the idea that if you can keep coming up with a steady stream of fraud, you don’t have to worry about the billions wasted every year on sheer (but oh-so-legal) nonsense...
...The inspector general is supposed to be the one who can cut through the layers of baloney and tell the secretary (and the Congress, which wants in on all this potentially juicy information) the truth, the whole truth, and nothing but the truth...
...They are undoubtedly, as Fitzgerald would put it, on Schlesinger’s side, and have no more inclination to uncover problems in the department than Schlesinger has...
...Even the new people hired haven’t improved matters all that much...
...To keep a department secretary’s potentially meddlesome hands off his inspector general, the law strips the secretary of the power to fire him (only the president can do that, with due . cause, and GAO must then investigate the reasons), and it instructs the inspector general to file reports periodically to appropriate congressional subcommittees, compiling a list of what he’s looked into and what he’s found...
...Fortunately for Hayden, the doctors at Lackland discharged him with ‘a clean bill of health’ after two weeks of examination...
...The nation, he has said, has been hurt “by the false claim that many large federal programs, despite substantial expenditures, do not work...
...For all the talk of the independence of the inspector general, Schlesinger knows he has someone at DOE who will never cause him any serious problem or embarrassment...
...the place is crawling with whistle-blowers...
...Here the inspector general (and remember, this is a man with statutory independence-he can’t be fired by the secretary) showed his mettle...
...It adds up to hundreds of millions of dollars...
...Indeed, at HEW, the inspector general was put in place early for precisely that reason: both Congress and the administration were curious to find out how the office worked and whether it should be copied governmentwide...
...In a more serious case last summer, the subcommittee questioned the fitness for office of a high-ranking DOE official, claiming that he had, among other things, falsified his educational background, claimed two jobs he never held, claimed an award he never won, threatened potential DOT contractors while working for that agency, ordered the shredding of government documents to thwart public access, and committed a host of other sins...
...One of these, of course, was Califano’s HEW, where the Secretary eagerly embraced the idea, decrying the excessive waste allowed by the Republicans that had given HEW a bad name and launching his “new-liberalism-is-sound-management” campaign...
...Although they should be working together, the inspector general’s office and the subcommittee staff are not on friendly terms, and the inspector general has reacted defensively (read: bureaucratically) to any charge that’s made...
...One of the little truisms about bureaucracy is that whistle-blowers much prefer to leak to Congress and then let the congressional staffs leak to the press...
...After a good deal of behindthescenes kicking and screaming, Schlesinger accepted his inspector general’s office with all the grace of a kid who’s just been ordered to his room...
...Days become a mind-numbing mish-mash of programs and projects, of projections and processes, of inputs and outputs, of neat little hierarchical boxes on a blackboard...
...Bah,” said A. Ernest Fitzgerald, the king of whistle-blowers, when asked about the new push for inspectors general in government, “they won’t do any good...
...Dingell’s staff is full of good, aggressive people who like nothing better than to call some high official at DOE on the carpet or to slip a little nugget to Jack Anderson, who regularly excoriates the department courtesy of the subcommittee staff...
...This would keep the inspector general from having to do anything unpleasant...
...be entitled, “The Libera P Case Against Joseph Noc.eru i...
...He promptly exiled the inspector general to a condemned building far away from the main Department of Energy headquarters...
...It is a numbers game...
...It is the challenge for liberalism in the 1970s to manage those programs well...
...According to someone involved in those investigations, the investigators spent their whole time looking into specific allegations and complaints-possible misconduct by this official, potential theft by that workman...
...It might Fraud and Abuse...
Vol. 10 • February 1979 • No. 11
