State Dept. contract abuse indicates larger Obama administration accountability issues

Matthew Boyle Investigative Reporter
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There’s a simple reason why the State Department has not had an inspector general since President Barack Obama took office in January 2009: Obama hasn’t nominated one.

This raises questions about government accountability concerning matters like the $52 million that State Department contractor Kathleen McGrade diverted to a company her husband and daughter own and operate.

Even though the State Department is selectively choosing which details to make public and which ones to keep secret, White House officials steadfastly maintain that they are committed to accountability.

Administration spokesman Eric Schultz told The Daily Caller on Thursday that Obama is looking for an inspector general to investigate internal malfeasance at the State Department.

“The Administration is committed to strong Inspectors General, and we are working diligently to identify highly qualified candidates to fill these important posts to ensure that taxpayers are getting the good government they deserve,” Schultz said in an email. “The Administration supports the work and commitment of all of the IG Offices, including those currently being led by Acting IGs, as they strive to ensure that taxpayers are getting the good government they deserve.”

But Schultz would not say when the president intends to fill the vacancy, or what specific qualifications he is looking for in a candidate.

Schultz also would not say if anyone is being considered for the position, or if the president has specific applicants lined up. (State Dept. slow on details following $52 million contract abuse)

Obama has also left “acting” inspectors general in charge at other Cabinet-level departments including Justice, Interior, Labor, Housing and Urban Development (HUD) and Homeland Security. Obama did nominate IGs for HUD and Homeland Security in July.

At the State Department, one question that has gone unanswered is how Kathleen McGrade was able to steer such a large amount of taxpayer money to her family’s company, Sterling Royale Group, over the course of several years. McGrade’s husband, Brian Collinsworth and her daughter, Jennifer (J.L.) Herring are Sterling Royale’s vice president and CEO, respectively.

McGrade began awarding contracts to Sterling Royale in May 2009. She gave her family’s company 43 contracts through June 15 of this year, all unnoticed until The Daily Caller began investigating.

The State Department has since fired her.

“Since they don’t have an IG, and Obama hasn’t appointed an IG, you’ve got nobody watching the hen house,” Americans for Limited Government spokesman Rick Manning told TheDC. “The Inspector General is in place for a reason.”

Manning, who was the chief of public affairs in the Bush administration’s Labor Department, said “acting” inspectors general often won’t investigate the administration they are a part of as faithfully and independently as Senate-confirmed IGs.

“They’ve taken the watchdogs and turned them into lapdogs through intimidating the IGs,” Manning said, adding that “acting” IGs usually hope to get presidential appointments.

“Are you going to rock the boat of the administration that’s considering you for a job?” Manning asked. “You’re not going to do anything until you have the job.”

The Obama administration appears to believe an “acting” inspector general whom the president hasn’t nominated or appointed, and whom the Senate hasn’t confirmed, can be fair. The State Department’s acting IG, Deputy Inspector General Harold Geisel, assured the House Foreign Affairs Committee in April of his fairness.

“Our reports are the true objective measure of our independence and effectiveness,” Geisel said in testimony. “[OIG’s] inspections of Embassies Baghdad, Kabul and Luxembourg, plus our audits of the new embassy construction in Baghdad, passport snooping and the Christmas bomber clearly show that OIG is independent, thorough and responsive.”

A State Department spokesperson echoes Geisel’s belief that he can be an independent and fair watchdog. “The State Department’s OIG is composed of competent and dedicated career professionals who have carried out numerous inspections, investigations, and audits of State Department activities,” the spokesperson emailed to TheDC.

“One can see from a review of the Inspector General’s website that the office is fully engaged in its important mission,” he continued. I would note that in FY [fiscal year] 2010 the number of reports issued annually increased to 157 from 107 in FY 2007. Further, by the close of FY 2010, as compared to FY 2007, open investigations increased from 36 to 101; subpoenas increased from 0 to 25; and contractor suspension and debarment actions increased from 0 to 5.”

It remains unclear whether an Obama-appointed, Senate-confirmed inspector general could have prevented some or all of the $52 million in mistrust McGrade, Collinsworth and Herring sowed at taxpayer expense in recent years. But it took more than two years’ worth of malfeasance — and TheDC”s groundbreaking investigation — to shed sunlight on an indefensible situation.