GSA Scandal: Case Catapulted to DOJ

on April 17, 2012 at 5:30 PM

The General Services Administration’s Inspector General testified Tuesday that he has referred allegations of fraud and corruption to the Justice Department for possible criminal prosecution in the agency’s $823,000 Las Vegas conference scandal. And a clearly outraged subcommittee chairman threatened to disband the GSA altogether.

While declining to elaborate, GSA IG Brian Miller, told a House Transportation subcommittee that he did “send a referral” to the DOJ, which is administrative language for calling on the Justice Department to investigate whether any of the fraud and corruption charges uncovered in his report merit criminal charges.

Asked by subcommittee chairman Rep. Jeff Denham, R-Calif., (pictured in a recent photo above) if he could provide the subcommittee the details of the referral, Miller said “very little. We made the referral and that’s about it.”

The Justice Department never comments on criminal referrals.

The IG’s report includes charges of possible bribes and kickbacks in the GSA’s Las Vegas conference scandal that has featured what officials testified Tuesday were “made-up” awards, lavish parties, deals for 2,000-square-foot suites, in a four-day retreat for 300 employees in 2010. In the wake of the scandal, former GSA administrator Martha Johnson resigned, and two other top officials, Jeffrey Neely and Bob Peck, have been placed on administrative leave, along with ten career employees.

Neely, the commissioner of GSA’s Region 9, which held the Las Vegas conference along with other questionable trips, including to Hawaii, Guam and Saipan, did not appear at the hearing of the Subcommittee on Economic Development, Public Buildings and Emergency Management.

Tuesday’s hearing was the second of four scheduled before Congress on the matter.

During the hearing, Republicans elicited testimony that GSA officials, including Johnson, met with OMB director Jack Lew and Personnel Director Nancy Hogan to discuss the inspector general’s report before heads rolled at the agency. The meetings were as early as mid-March. Johnson put Neely on leave March 19. She resigned after the IG’s report was released April 2.

But Norton and Rep. Elijah Cummings, D-Md., pointed out that it was a Democratic appointed official, GSA deputy administrator Susan Brita, who blew the initial whistle on the western region’s conference excesses.

The scandal has led to a game of political football, with Republicans saying it shows mismanagement at the highest level of government and Democrats insisting that the GSA scandal was limited to a few bad actors in one agency.

“The American public deserves to have money paid back,” Denham said. “And if crimes have been committed people will go to jail. This is about the distrust of the American people in its government. If you can sense my anger and frustration, you should see it at home.”

He added: “Let me just issue a warning. I am prepared to systematically pull apart GSA to the point where we will make it a question to the American public as to whether GSA is needed at all. The wasteful spending is going to stop and the transparency is going to begin.”

Del. Eleanor Holmes Norton, D-D.C., was equally appalled at the actions of the agency, questioning its procedures and lack of oversight. But she said dismantling GSA is not the way to go.

“I am more shocked and saddened than most,” she said. “For the most part I have found GSA appointed officials and GSA career officials alike to be among the most dedicated and professional federal employees. The actions of a few officials have cast a shadow of the rest of federal employees.”

Norton, Denham and other members of the panel were particularly critical of Peck, who agreed to testify at the hearing. Peck blamed the abuses on Neely and the western region staff, but the members of Congress pummeled him over his own actions. In particular, they criticized Peck to recommended Neely for a raise and a bonus, even after issuing him a letter of reprimand over some of the conference excesses. Peck explained that by the ranking system used by GSA Neely’s department had exceeded all their goals for the year, indicating he should get a raise.

The members of Congress found that unfathomable.

“There are criminal issues at stake here,” Denham said to Peck. “You felt it was important to go against committee staff and give him a bonus. That is a culture in an agency that says no matter what is going on … we’re going to have business as usual.”

Johnson attempted to explain that she, too, agreed to the raise for Neely, despite the reprimand, because she felt that he deserved it for attaining goals of leasing a certain amount of property. That was met with derision by the committee.

Miller, the IG, testified about the many ways that the Las Vegas meeting flouted the rules set in place by the agency. For instance, the rules state that if you have an awards ceremony, you can accompany that awards event with food. In this case, he said, the GSA made up awards, even calling one the “jackass” award – so that they could bring in lavish plates of food and hors d’oeurves.