Oversight body looks into complaints against State IG

FBI agents recently interviewed a former senior official at the State Department's Office of the Inspector General as part of a preliminary inquiry by a federal oversight group into charges that the department's IG, Howard Krongard, blocked investigations of suspected fraud and waste by contractors in Iraq and Afghanistan.

Ralph McNamara, who was a deputy assistant inspector general at State, was forced out of his job over the summer after raising concerns that Krongard had thwarted investigations into the safety of the new U.S. Embassy in Baghdad, which is still under construction. McNamara said in an interview that he met with the agents at FBI headquarters in September for about an hour and answered questions about Krongard.

A key committee of the President's Council on Integrity and Efficiency, the federal body responsible for monitoring the performance of inspectors general appointed by the president, asked the FBI to help with an initial review of complaints about Krongard, according to two sources familiar with the inquiry. The PCIE's integrity committee, comprising inspectors general from several agencies as well as a senior FBI official, opens inquiries into what it deems are serious complaints of impropriety about an IG's performance or conduct.

Inspectors general are supposed to serve as watchdogs to ferret out waste, fraud, and abuse. The PCIE is an advisory body and can recommend, but not mandate, disciplinary actions. It can also refer potential criminal matters to the Justice Department.

"What pushed me over the edge was the fact that we had folks from the State Department preparing to move into the embassy where there were a myriad of complaints," McNamara told National Journal. "The main allegation was that the contractors weren't doing what they were supposed to do and there was product substitution," meaning that potentially unsafe materials were being used for the embassy compound.

McNamara said he and other senior employees in the inspector general's office made several requests to Krongard to allow investigators to probe the complaints, "but they were all refused. No one was allowed to travel to Iraq to investigate."

The FBI's interview with McNamara signals new potential headaches for Krongard, who has been the subject of complaints by six other current and former staffers in the IG's office of impeding investigations into contract fraud and waste in Iraq and Afghanistan. Some of those aides have received protection from retaliation under the federal whistle-blower statute.

Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, has taken up the case against Krongard. In a 14-page letter to the IG dated September 18, Waxman charged that Krongard's "strong affinity" with senior officials at the State Department and "your partisan political ties have led you to halt investigations, censor reports, and refuse to cooperate with law enforcement agencies." He has also called Krongard's office "dysfunctional."

Waxman's letter stemmed from complaints by the former and current IG staff members, as well as e-mails exchanged by some top investigators in the office, that Krongard failed to investigate charges of fraud and waste involving as much as $3.6 billion in State Department contracts in Iraq and Afghanistan.

Soon after the letter was made public, Ron Militana and Brian Rubendall, both of whom are senior investigators in State's IG office, told Waxman that a Krongard aide warned them that they could be fired if they cooperated voluntarily with the congressman. Waxman's committee held hearings over the summer about waste and fraud in the Baghdad embassy project; Krongard testified before the panel in July. Waxman's aides say that he is planning to hold another hearing that will focus on complaints about the IG's performance.

On September 28, Waxman wrote a second letter to Krongard detailing the charges from Militana and Rubendall. That letter prompted Krongard to hire criminal defense lawyer Barbara Van Gelder of Morgan Lewis & Bockius to represent him in the Waxman probe.

"Anybody who gets a letter like that, if they are a cautious and prudent person, will hire their own counsel," Van Gelder said in an interview, pointing out that Waxman's letter suggested a potential criminal violation involving witness intimidation.

Asked about the complaints that Krongard impeded investigations, Van Gelder said, "We believe these allegations are imperfect recollections" that will ultimately be proved false.

A spokesman for Krongard has previously denied that the IG tried to interfere with probes of contractor fraud and indicated that Krongard looks forward to answering questions at an upcoming hearing. Krongard, a veteran corporate lawyer who previously was general counsel for Deloitte & Touche, assumed his State Department post in May 2005.

A central criticism of Krongard is that he was not vigilant in pursuing charges of shoddy workmanship in the embassy project, which was scheduled for completion this fall at a cost of about $600 million. The price tag has soared by $144 million, according to The Washington Post, and the embassy -- which will be the largest of all U.S. embassies -- is not expected to be finished until early next year.

Early this year, the Justice Department reportedly opened an investigation of the prime contractor on the project, First Kuwaiti General Trading and Contracting. According to a document cited by Waxman, Justice asked Krongard's office in January for help with the probe. A former American employee of the company told Waxman's committee in July that First Kuwaiti used forced labor on the project.

In response to those and other charges, First Kuwaiti has defended its work, saying it has a record of "constructing high-quality buildings -- an achievement competitors didn't think possible." First Kuwaiti has denied using forced labor.

Waxman's September 18 letter cited e-mails involving John DeDona, a former assistant inspector general who resigned from the IG's office in August, regarding complaints that Krongard told investigators not to work with Justice on the embassy probe. An investigator wrote in an e-mail to DeDona: "Wow, as we all know [not helping Justice] is not the normal and proper procedure."

DeDona forwarded the e-mail to Deputy Inspector General William Todd, adding, "I have always viewed myself as a loyal soldier, but hopefully you sense my frustration in my voice mail yesterday."

Todd replied: "I know you are very frustrated. John, you need to convey to the troops the truth, the IG told us both Tuesday to stand down on this and not assist. That needs to be the message." DeDona responded, "Unfortunately, under the current regime, the view within INV [the office of investigations] is to keep working the BS cases within the Beltway, and let us not rock the boat with other more-significant investigations."

Shortly after DeDona and McNamara left State in late summer, the IG's office finally opened a probe into the complaints about the embassy project.

Waxman's September 18 letter also referred to an internal e-mail suggesting that Krongard was instrumental in blocking investigators in his office from cooperating with a Justice Department-led inquiry into complaints that Blackwater USA was involved in arms smuggling in Iraq. Two former employees of the security contractor have pleaded guilty to arms smuggling in a North Carolina case and have been cooperating with Justice.

"We were told to immediately stop anything on Blackwater," DeDona said in an interview with National Journal. "I was concerned that this was going to be another case where we were going to be telling DOJ that we couldn't assist them." Separately, DeDona said that McNamara told him to expect a call from the PCIE as its probe into Krongard moves forward.

Waxman has also accused Krongard of improperly providing information to Kenneth Tomlinson, the former chair of the Broadcasting Board of Governors, which oversees the Voice of America. Tomlinson was under scrutiny in a probe by the State Department IG's office in 2006 involving his conduct.

According to McNamara, when Rep. Howard Berman, D-Calif., sent a letter to Krongard requesting that the IG start a probe of Tomlinson, Krongard forwarded the letter to Tomlinson. After investigators and a counsel in the IG's office voiced concerns about the propriety of that action, Krongard asked Tomlinson to return the letter, McNamara said. "Krongard didn't seem to understand the ramifications of his action," McNamara added in an interview.

Tomlinson resigned in January but said he did nothing improper. The IG's probe found, however, that he had run a "horse-racing operation" out of his office, used government resources to financially support his own horses, and improperly placed a friend on State's payroll.

Van Gelder dismissed the charges from Waxman and the whistle-blowers. "We think that the facts, when they do come out, will show that Mr. Krongard never held up or interfered with investigations."

Last month, Krongard said through a spokesman, "[The] allegations, as described to me and in certain media reports, are replete with inaccuracies, including those made by persons with their own agendas."