POGO Newsletter - January to June 2014 - Volume 18 Issue 1

PROJECT ON GOVERNMENT OVERSIGHT Exposing Corruption. Exploring Solutions. www.POGO.org

POGO Launches Investigation into the Department of Veterans Affairs

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n May 2014, the media began reporting a whistleblower’s allegations that the Phoenix VA Health Care System forced hundreds of veterans to wait weeks or months before seeing a doctor, and alleged that some veterans even died while waiting for care.

As details emerged, it became clear that bonuses awarded to hospital administrators for low wait times for veterans requesting an appointment created an incentive for administrators to cheat the system. Some developed fake waiting lists, where veterans would languish until they were 14 days away from the next available appointment, and then they would be placed on the real list.

PHOTO BY U.S. NAVY PETTY OFFICER 1ST CLASS MOLLY A. BURGESS

January-June 2014: Vol. 18, Issue 1

Soon the media began reporting about similar scams at VA hospitals across the country, and about the retaliation suffered by those who had tried to raise the alarm. It became obvious that something had to be done to stop the systemic problems. So POGO joined forces with Iraq and Afghanistan Veterans of America to launch VAOversight.org, a webpage that allows anyone to confidentially report experiences and information about problems at VAs to POGO investigators. We received an overwhelming response. Nearly 800 veterans and current and former VA employees from all over the country contacted us with their concerns about the Department of Veterans Affairs.

However, just as we began our investigation, the Department of Veterans Affairs Inspector General (IG) delivered a subpoena to our door demanding any and all information we collected in relation to the abuses and mismanagement in the VA healthcare system.

For 33 years POGO has worked with and for whistleblowers, many of whom have been betrayed by the system.

Many of the employees who contacted us feared retaliation and only spoke to us on the promise of complete confidentiality. Even some of the veterans requested anonymity as they were concerned their quality of care would be compromised if hospital officials found out they had contacted POGO investigators. We would never violate the trust they put in us to protect them. We promptly wrote to the IG refusing to release any of the names or contact information entrusted to us.

POGO will continue to investigate the culture of whistleblower retaliation at the VA, and how making the numbers look good at the expense of veteran care became such a widespread issue. And we will work to make sure this problem is fixed once and for all. ■

In This Issue: 1 POGO Looks into Problems at Department of Veterans Affairs

2 Director’s Letter 3 Retiring SEC Lawyer Has Critical Words for Agency 3 POGO Earns Journalism Awards 4 DoD IG Narrows Whistleblower Protections 4 U.S. Joins Extractives Transparency Initiative 5 The Contamination of Camp Lejeune 6 POGO’s Annual Report

Staff Danielle Brian, Executive Director Scott Amey, General Counsel Angela Canterbury, Director of Public Policy Paul Chassy, Ph.D., J.D., Investigator Lydia Dennett, Investigator Danni Downing, Editor & COTS Director Abby Evans, Donor Relations Manager Ned Feder, M.D., Staff Scientist Andre Francisco, Online Producer Neil Gordon, Investigator David Hilzenrath, Editor-in-Chief Lynn Mandell, Finance Manager Johanna Mingos, Data Specialist Joe Newman, Director of Communications Chris Pabon, Director of Development Ethan Rosenkranz, National Security

Policy Analyst Keith Rutter, Chief Operations Officer & CFO Pam Rutter, Web Manager Michael Smallberg, Investigator Mia Steinle, Investigator Peter Stockton, Senior Investigator Winslow Wheeler, Director of the CDI Straus Military Reform Project Adam Zagorin, Journalist-in-Residence Christine Anderson, Public Policy Fellow Avery Kleinman, Beth Daley Impact Fellow Tamer Azar, Legal Fellow Emily Binkow, Legal Intern Joshua Christensen, Legal Intern Max Johnson, Intern Michelle Li, Intern Anaika Miller, Intern Gabriela Urias, Intern Cristian Williams, Intern

Board of Directors David Hunter, Chair Lisa Baumgartner Bonds, Vice Chair Dina Rasor, Treasurer Ryan Alexander Henry Banta David Burnham Michael Cavallo Andrew Cockburn Mickey Edwards Janine Jaquet Morton Mintz Nithi Vivatrat Anne Zill Charles Hamel, Board Emeritus

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Letter from the Executive Director Dear Friends, What do we at POGO look for in government oversight? There are a number of factors that matter to us.

First, we don’t believe the point of oversight is just to grab headlines. Yes, working with the media is essential for meaningful oversight. It really is just like a tree falling in the forest. But the point of gaining media attention is to ultimately affect positive change.

Broader public awareness of a problem galvanizes energy around advocacy for reform, and often provides the much needed kudos or embarrassment that policymakers sometimes need as an incentive to make difficult policy changes.

Second, we believe accountability is an essential ingredient. That doesn’t mean, however, that we are happy with finger pointing or the blame game. That is lazy and accomplishes little. Accountability means going beyond “ain’t it awful” to identifying the cause of the problem, proposing solutions, and working to implement those solutions.

Third, there is much talk about bipartisanship being an end in itself.

I don’t buy that. Just because a Democrat and a Republican agree about something doesn’t mean it’s a good idea. There are plenty of examples where moneyed interests have bought supporters in both parties, and the resultant reforms made things worse. However, we do believe that genuine government reform efforts must be bipartisan. How can you tell the difference? There is the smell test, based on who is paying for the advocacy. But to some extent, it’s just like Justice Potter Stewart’s definition of pornography: “I know it when I see it.”

In the end, oversight isn’t something to be used to score political points off the other party; instead, oversight should be conducted to try to fix an existing problem (or at least make sure the problem doesn’t get worse) or to shine a light on things that need to be fixed. If those things aren’t accomplished, then all you have left is a lot of hot air.

Sincerely, Danielle Brian, Executive Director

PHOTO COURTESY OF FLICKR USER ALEX PROIMOS

SEC Insider Echoes POGO’s Concerns About Tepid Approach to Enforcement

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he retirement of a mid-level government attorney is rarely the subject of front-page news, but James Kidney, a veteran trial lawyer at the Securities and Exchange Commission (SEC), made headlines this spring when he lambasted the agency’s approach to enforcement as he headed out the door.

In remarks prepared for his retirement party, Kidney said that senior agency officials were more interested in advancing their careers at the top of the corporate world than in regulating it aggressively. His comments echoed concerns that POGO has raised for years about the SEC’s ineffectual oversight of big businesses.

The SEC “polices the broken windows on the street level and rarely goes to the penthouse floors,” said Kidney, who joined the SEC in 1986 and spent most of his career at the agency.

Kidney said the revolving door between the SEC and corporate America was partly to blame for the agency’s weak enforcement. “I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” he said. “They mouthed serious regard for the mission of the Commission, but their actions were tentative and fearful in many instances.”

What made Kidney’s remarks extraordinary was that they were delivered so bluntly by a veteran of the agency’s Enforcement Division.

The SEC touts its record in probes tied to the 2008 financial crisis. But Kidney said the agency often pursues easy targets to boost its enforcement stats (“picking on the little guys”) while going easy on deep-pocketed defendants. “For the powerful, we are at most a tollbooth on the bankster turnpike,” he said. “We are a cost, not a serious expense.”

Kidney’s comments drew praise from many SEC critics, including Jonathan Weil of Bloomberg View, who put forth a novel suggestion: “Here’s a thought: How about making Jim Kidney an SEC commissioner the next time a seat comes open?” ■

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he Project On Government Oversight won prizes in June for business journalism and investigative reporting.

The Dateline Awards were conferred by the Washington, DC, chapter of the Society of Professional Journalists.

POGO’s Michael Smallberg won a business news prize for his report, Dangerous Liaisons, which explored the revolving door between Wall Street and its regulator, the Securities and Exchange Commission. “Eye-opening report on an agency supposed to protect Michael Smallberg Adam Zagorin us from the next financial meltdown,” the judges wrote.

POGO’s Adam Zagorin and David Hilzenrath won an investigative reporting award for Embassy (In)security, a package of articles about persistent vulnerabilities at the U.S. embassy in Afghanistan and problems related to the outsourcing of diplomatic security to private contractors. “Top-rate reporting” and an “important story,” the judges said.

Both awards were for reporting by Websites.

The first of the Embassy (In)security stories, “A ‘Mutiny’ in Kabul: Guards Allege Security Problems Have Put Embassy at Risk,” was published jointly with ForeignPolicy.com.

In Dangerous Liaisons, POGO reported that former employees of the SEC routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law. The report was based in part on thousands of records, many of them obtained by POGO through the Freedom of Information Act. Since the report was published, the SEC and the U.S. Office of Government Ethics have addressed one of the issues POGO spotlighted by eliminating an exemption from ethics rules for certain SEC employees.

For the same work, Smallberg was previously named a finalist for a “Best in Business” award from the Society of American Business Editors and Writers. ■

PHOTOS CREDIT: PAM RUTTER

POGO Wins Journalism Prizes

Vol. 18, Issue 1 ■

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DoD IG Narrowing Whistleblower Protections

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he Department of Defense (DoD) Inspector General (IG) has recently narrowed the list of people to whom a whistleblower can report misconduct, and thereby be protected from reprisals. Specifically, the DoD IG is ignoring the fact that there is a broad category of government employees who conduct contract management duties and therefore are people to whom whistleblowers can make protected disclosures.

On May 20, 2014, POGO sent a letter to Jon T. Rymer, DoD’s IG, detailing the case of John Edwards, a former Science Applications International Corporation (SAIC) employee.

Edwards reported overbilling on a federal contract to his SAIC supervisors and government contract officials. One DoD contract management official thought enough of the complaint that he requested “immediate corrective actions by SAIC.” Soon thereafter, Edwards was removed from all of his projects at SAIC and subsequently terminated despite never having received a negative performance review.

Edwards had thought he had made a disclosure to the appropriate officials, and as a result would be protected by whistleblower protections laws. Unfortunately, his complaint was denied by the IG, which stated that the DoD officials who had received his complaint were not authorized contracting officials—officials responsible for “contract oversight and management.” It appears, however, that the IG incorrectly applied the law. The statute says that the disclosure must be made to DoD employees responsible for “oversight or management.” Edwards’ disclosures were made to two DoD officials who each had management responsibilities involving the contract in question.

This is exactly the type of situation Congress wanted to avoid when it improved the statute in 2008 and 2013, expanding the appropriate officials inside DoD and company management to ensure that reports to such individuals would be protected.

POGO urged Rymer to reconsider the facts in this case and provide Edwards, and similarly situated whistleblowers, with the protections provided by law. The government should be incentivizing whistleblowing, not making it more difficult and hazardous. ■

U.S. Joins Extractives Transparency Initiative

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n international organization working to bring greater transparency and accountability to natural resources extraction accepted the United States as a candidate for membership on March 19 at a meeting of its board in Oslo, Norway.

The decision by the Extractive Industries Transparency Initiative (EITI) Board caps a three-year application process spearheaded by the Department of the Interior and a federal advisory committee, on which POGO Executive Director Danielle Brian serves. The U.S. advisory committee includes representatives from civil society, industry, and the government.

“EITI is a perfect example of open government principles in action,” said Brian, who chairs the committee’s civil society sector. “I’m proud of what U.S. EITI has achieved so far, and I think that the work ahead will ultimately enrich public policy discourse.”

With the acceptance of its candidacy application, the United States is one step closer to ensuring that its citizens have access to useful, comprehensive information about the management of the country’s natural resources. Royalties from natural resources taken from public lands are among the U.S. government’s largest sources of income: last year alone, the Department of the Interior collected more than $14 billion in royalties and other fees from extractive companies using public resources.

The EITI standard requires governments to publicly disclose their revenues from oil, gas, and mining assets, and for companies to make parallel disclosures regarding payments. The scope of EITI in the United States will go beyond the international standard. In addition to information about oil, gas, and coal, the U.S. EITI reports will include information about hardrock minerals (such as gold, silver, and copper) and renewable energy sources (such as geothermal, solar, and wind). The goal is to ensure that citizens get what they are owed for natural resources extracted from public lands. ■ Vol. 18, Issue 1 ■

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Prosecutorial Misconduct in the Department of Justice

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n internal affairs office at the Department of Justice has found that, over the last decade, hundreds of federal prosecutors and other Justice employees violated rules, laws, or ethical standards governing their work. The violations include instances in which the attorneys have, according to the internal affairs office, misled courts, withheld evidence that could have helped defendants, abused prosecutorial and investigative power, and violated constitutional rights.

The Project On Government Oversight combed years of government reports and reviewed Justice Department data obtained through the Freedom of Information Act. We learned that, from fiscal year 2002 through fiscal year 2013, the Department’s Office of Professional Responsibility (OPR) documented more than 650 infractions. In the majority of the matters—more than 400—OPR categorized the violations as being at the more severe end of the scale: recklessness or intentional misconduct, as distinct from error or poor judgment.

But that was only part of the story. No less significant is what the Justice Department keeps from the public: it does not generally make public the names of attorneys who acted improperly or the defendants whose cases were affected. Thus, the Department, its lawyers, and the internal watchdog office itself are insulated from public scrutiny and accountability.

Is the Justice Department taking prosecutorial misconduct seriously enough? Or is it pulling punches? And has Justice Department management watered down the results of the watchdog’s probes?

The cases summarized in OPR reports included examples such as: • A Justice attorney failed “to timely disclose to the defense a tape recording of the crime despite repeated defense requests for the information.” (The Department gave the attorney a 14-day suspension.)

• A Justice attorney failed to tell the defense that someone had contradicted a key witness for the prosecution and had implicated that witness in the crime. (The Department gave the attorney a 10-day suspension.)

During its investigation, POGO identified a number of reforms that could promote a more just and transparent system, and we will continue to pursue those reforms. ■

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etween 1957 and 1987, as many as one million Marines, Navy officials, family members, and civilians at Camp Lejeune Marine Corps Base were exposed to water contaminated with toxins linked to rare cancers and other ailments. For years, the Marine Corps kept this secret covered up.

Once victims learned of the ccontamination, they began fighting for justice.

POGO has worked with many of them, and with concerned Members of Congress, to expose the contamination and the government’s cover-up of the issue. In 2012, the hard work paid off as the Janey Ensminger Act became Master Sgt. Jerry Ensminger (Ret.) protests the U.S. law, providing some health care for illnesses related to the contamination. government’s continued denial of responsibility for Unfortunately, a case recently decided by the Supreme Court suggests that the Camp Lejeune. fight is far from over.

The question in CTS Corporation v. Waldburger was whether a North Carolina law invalidates claims made 10 or more years after the pollution last occurred—claims like those of the Camp Lejeune victims. The law involves a “statute of repose,” which cuts off legal rights if action is not taken by a certain date after the defendant’s last action, in this case, the date the polluting stopped. This was a particularly important case since the health damages by the toxins may not manifest for decades.

The Department of Justice weighed in with amicus briefs in support of CTS Corporation, the polluter. It did so, according to its brief, because of ongoing litigation regarding the contaminated drinking water at Camp Lejeune. In other words, it wanted to get the government off the hook for paying for the deaths and illnesses caused by the Marine Corps’ and Navy’s decadeslong poisoning of those who were serving our country.

Unfortunately, the Court decided in favor of the polluter. This ruling could be dire for all water contamination victims. The DOJ immediately filed a request that Camp Lejeune cases be thrown out based on the precedent set by the case.

The North Carolina legislature quickly clarified that it was not its intent for the 10-year deadline to apply to exposure to groundwater pollution. After unanimous passage through the legislature, the governor signed the bill on June 20.

We hope this change will prove enough to counter the Administration’s claims that Camp Lejeune cases should be dismissed. The victims have been waiting for justice long enough; it’s time for the Administration to stop trying to stymie such justice. To stand by Camp Lejeune victims, you can sign our petition at http://bit.ly/1kVGsVn. ■ Vol. 18, Issue 1 ■ 5

PHOTO CREDIT: PAM RUTTER

The Contamination of Camp Lejeune

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Annual Report Available The Project On Government Oversight works hard to bring transparency and accountability to the federal government. And we practice what we preach. In that light, we’re happy to announce that our 2013 Annual Report is available. You can view it, and all our past annual reports, online at http://www.pogo.org/about/ annual-reports/. If you would like to receive a print copy, please call Danni Downing at (202) 347-1122.

Mission Statement The Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.