Watchdogs Unleashed

When drafting the Inspector General Act 20 years ago, lawmakers deliberately tried to insulate government watchdogs from the pressures of politics. So they set up a system that allows inspectors general, after being nominated by the President and confirmed by the Senate, to serve as long they like. Only the President can fire them.

"The IG post is entrenched, and it was made that way so they could step on some powerful toes without getting kicked," said James R. Naughton, an author of the IG Act.

But what happens when those charged with exposing waste, fraud and abuse are themselves accused of wrongdoing? The answer, critics say, is "not enough."

Consider the case of Valerie Lau, the Treasury Department's inspector general. For months, lawmakers have been questioning her fitness for the job. Lau's troubles have two sources: her involvement in the FBI "Filegate" controversy and two contracts she awarded three years ago. She told a Senate subcommittee in 1996 that her office never investigated two Secret Service agents who refuted the White House's claim that outdated Secret Service lists led to a request for FBI files on prominent Republicans. When proof of the investigation turned up a few weeks later, Lau said a deputy had launched the inquiry. Then, last fall, both the Senate Governmental Affairs Permanent Subcommittee on Investigations and the General Accounting Office (GAO) said Lau broke the law by awarding two contracts without getting competitive bids. One contract went to a longtime acquaintance who had recommended Lau for IG. Lau has said she didn't seek other bids because the work had to be done quickly.

The President has left Lau's fate up to Treasury Secretary Robert E. Rubin. Rubin, in turn, says he'll take his cue from the President's Council on Integrity and Efficiency (PCIE), a kind of professional association for inspectors general that is overseen by the Office of Management and Budget.

Just as the American Bar Association has an ethics committee, the PCIE has an integrity committee that looks into charges of misconduct by inspectors general. The integrity committee, which is headed by an FBI agent and includes three IGs, reviews charges of administrative wrongdoing and recommends a course of action to the PCIE chair.

Some accuse the PCIE of being soft. "IGs have rarely, if ever, been disciplined by the PCIE for wrongdoing," Sen. Charles E. Grassley, R-Iowa, said in a November floor speech. Paul C. Light, author of a book on IGs, argues self-policing is inherently flawed. "Just as IGs say departments aren't good at investigating themselves, IGs shouldn't sit in judgment on themselves."

Those who have served on the PCIE say it's effective. They point to the case of outgoing CIA inspector general Fred Hitz. The integrity committee recently reviewed Hitz's investigation of then-CIA Jamaica station chief Janine Brookner. The IG report on Brookner painted her as a heavy drinker who wore suggestive clothing. Brookner blamed disgruntled subordinates for a smear campaign and said Hitz neglected to interview key witnesses who would have backed her up. She sued the agency in 1994 and won a $400,000 settlement.

The PCIE found problems with Hitz's investigation and worked with him to revamp his office's procedures. Hitz announced shortly before the review ended that he would leave the CIA to teach at Princeton University.

The GAO reports that between 1990 and 1995 the PCIE received 72 allegations. Only 14 led to investigations, and none ended in criminal charges or administrative action. Indeed, many charges sent to the PCIE prove to be groundless, the sparks from intra-agency turf wars. Take the case of Susan Gaffney, the IG at the Housing and Urban Development Department (HUD). Senior HUD officials demanded that she get approval from public affairs staff before talking to the press. When Gaffney defended her right as an IG to unfettered media access and defied the order, HUD officials asked the PCIE to investigate her for insubordination and leaking confidential information. Agency officials later withdrew the charges.

But Lau's case is different, says Sen. Susan Collins, R-Maine, the chairwoman of the Investigations Subcommittee. "She's the very person who's in charge of preventing and investigating the kinds of activities she appears to have engaged in." And Light notes that even the slightest appearance of impropriety undermines an inspector general's authority.

The PCIE was slow to take up the Lau case. Grassley asked the council to look into Lau's contracting practices last April. The PCIE opened a case, then closed it in July, saying the GAO and the Senate were already investigating. Last month, it agreed to review the GAO findings against Lau, who took over as IG in 1994 after stints as director of policy in the Office of Personnel Management and consultant to the Democratic National Committee.

Once the PCIE report is in, Rubin has 60 days to act. His options are limited. "Nothing can override that act that says [only] the President can remove IGs. As to who can impose a lesser sanction, that's a murky area of the law," former Environmental Protection Agency IG John Martin said.

On Capitol Hill, Lau's critics wonder if IGs can be held more accountable, but stop short of advocating legislative changes. Having the watchdogs watch themselves "is the best policing we can have," Grassley said. "This Lau case is a black mark. I don't want to draw conclusions from this that the system is a failure."