Strengthening Checks and Balances
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Report

From Sleeping Dogs to Watchdogs: To Ensure Integrity for Our Inspectors General, Congress Must Reform the Integrity Committee

Strengthening the last line of defense against corruption in the federal government
(Illustration: Renzo Velez / POGO)

Introduction

The Project On Government Oversight (POGO) is a nonpartisan independent watchdog that investigates and exposes waste, corruption, abuse of power, and when the government fails to serve the public or silences those who report wrongdoing. We champion reforms to achieve a more effective, ethical, and accountable federal government that safeguards constitutional principles.

Part of POGO’s work includes protecting the integrity of the inspectors general system.1 Inspectors general are independent, nonpartisan watchdogs responsible for holding their affiliated federal agencies accountable by preventing and exposing waste, fraud, and abuse. They play a vital role in ensuring the federal government is acting in good faith and being a responsible steward of taxpayer dollars. In Fiscal Year 2021 alone, federal inspectors general collectively identified $75 billion in potential savings, and which constituted an approximately $22 return on every dollar invested in the inspector general system that year.2

As overseers of the federal government, it is critically important that inspectors general are themselves held to the highest ethical standard. Anything short of that jeopardizes the credibility of all offices of inspectors general and undermines the ability of individual inspectors general to hold agencies and officials accountable.

The Integrity Committee (IC) is the entity tasked with conducting oversight of inspectors general. Established through the Inspector General Act of 1978 (U.S.C. Appendix), the IC is one of eight committees that sit within an interagency council in the executive branch, known as the Council of the Inspectors General on Integrity and Efficiency (CIGIE). CIGIE is responsible for promoting effectiveness across all federal offices of inspectors general. The IC is the one body within CIGIE explicitly created by Congress, and it must report its findings to both Congress and the president.3

The committee is the last line of defense in preventing wrongdoing at the highest levels of the federal government, and restoring public trust when such wrongdoing does occur. The committee is vested with the authority to receive, review, and refer for investigations any allegations of wrongdoing against inspectors general and covered senior-level staff members serving in an office of inspector general.4

According to the IC’s official Policies and Procedures, the committee purports to:

[take] action on allegations of wrongdoing against a Covered Person that involve abuse of authority in the exercise of official duties or while acting under color of office, substantial misconduct, such as gross mismanagement, gross waste of funds, or a substantial violation of law, rule, or regulation, or conduct that undermines the independence or integrity reasonably expected of a Covered Person.5

The committee is the last line of defense in preventing wrongdoing at the highest levels of the federal government, and restoring public trust when such wrongdoing does occur.

While the IC cannot itself technically conduct investigations into allegations of misconduct, it does refer investigations to the executive branch investigative body with the appropriate jurisdiction.6 If an executive branch agency is unable to conduct the investigation due to a conflict of interest or a lack of resources, then the IC is tasked with engaging an assisting inspector general to lead the investigation, selected from a list of offices of inspectors general capable of undertaking work for the IC that is, to the extent possible, from an office of comparable size to that of the one under investigation.

Based on determinations of these investigations into inspector general misconduct, the IC also makes recommendations for disciplinary action — including termination — to Congress, the relevant affiliated federal agency, and the president, when warranted.

The Need for Reform

Unfortunately, the IC is failing in its mission to hold inspectors general accountable for bad behavior. As several POGO investigations have revealed, in various instances the IC declined to open investigations into credible allegations of misconduct, spent so much time on an investigation that its recommendations were no longer as relevant to the affiliated agency in question, and neglected to ensure inspectors general and their staff were held accountable once an allegation had been substantiated.

The following are three recent examples that demonstrate how current limits to the effectiveness of the IC allow some inspectors general and their senior-level employees to perpetuate the same culture of wrongdoing and impunity that they are statutorily responsible for combating.

Example One: DHS Deputy Inspector General Jennifer Costello

In 2021, TheIntercept determined that the IC declined to open an investigation into any complaints made against then-Deputy Inspector General of Homeland Security Jennifer Costello, who reportedly spearheaded an internal pressure campaign to secure the position of acting inspector general for herself.7 Her alleged crusade consisted of badmouthing the then-acting inspector general to staff and leaking information that eventually resulted in that inspector general resigning his post. When then-President Trump appointed Joseph V. Cuffari to serve as a replacement, Costello applied similar bureaucratic tactics to mount a pressure campaign against Cuffari. Costello and Cuffari levied numerous misconduct allegations against each other to the IC over the course of their internal power struggle. Costello was eventually placed on administrative leave in 2020.8 Cuffari remains DHS inspector general to this day, and is currently under investigation by the IC.9

The IC’s inaction with respect to Costello indicates that the committee either misinterpreted or misunderstood its mandate.

The IC’s inaction with respect to Costello indicates that the committee either misinterpreted or misunderstood its mandate. Costello was a covered person under the committee’s investigation jurisdiction, and allegations against her or any other senior officials in an inspector general office should have warranted a meaningful measure of scrutiny.

Had these events not come to light through media reporting, the IC’s unwillingness to address misconduct in the DHS inspector general’s office may have been swept under the rug. In 2020, the DHS office of the inspector general hired the WilmerHale law firm to conduct an independent investigation into the allegations levied against Costello and two other senior staff in the office.10 The public is only aware of this series of events because reporters at TheIntercept obtained WilmerHale’s report of their investigation via a Freedom of Information Act (FOIA) request, then confirmed with sources that the names in the heavily redacted report indeed refer to Costello.

Example Two: FHFA Inspector General Laura Wertheimer

In 2017, the IC received multiple complaints against then-Inspector General of the Federal Housing Finance Agency Laura Wertheimer. After conducting an investigation into these allegations, the IC determined that Wertheimer “abused her authority in the exercise of her official duties and engaged in conduct that undermines the integrity reasonably expected of an IG.”11 Specifically, the IC found that Wertheimer fostered a culture of witness intimidation, abused and retaliated against staff at the inspector general’s office, and impeded the investigation into her wrongdoing by both refusing to fully recuse herself and purposefully denying IC investigators full access to documents and witnesses. As a result, the IC recommended the consideration of “substantial disciplinary action, up to and including removal.”12

While exhaustive, the IC’s investigation dragged on for years, starting in 2017 and concluding in 2021.13 That is an alarming length of time to reach a final conclusion on allegations of misconduct, and it fails to meet the immediate needs of employees of the Federal Housing Finance Agency’s office of the inspector general or the IC’s responsibility to the public. Moreover, it delayed accountability for Wertheimer, who announced on June 29, 2021 that she was resigning the following month on July 30, 2021.14 This announcement came a little more than two months after the IC’s findings were released to the public. It is not outlandish to assume that had the IC’s investigative process functioned in a timely manner, Wertheimer may have stepped down sooner.

Example Three: SEC Inspector General Carl Hoecker

In 2020, the IC fell far short of its charge to enact accountability for then-Securities and Exchange Commission Inspector General Carl Hoecker, despite substantiating allegations of wrongdoing against him. The committee undertook an investigation into allegations that Hoecker was performing substandard investigations to protect the subjects of an internal probe at the inspector general’s office. In addition to substantiating the initial allegations, the committee also found that Hoecker inappropriately contacted a witness in the IC investigation. These serious findings were transmitted to then-SEC Chairman Jay Clayton, with a recommendation that he take “appropriate disciplinary action for this serious misconduct, including removal.”15 CIGIE also alerted key members of Congress. The 2020 CIGIE annual report included a brief mention that an unnamed inspector general abused their authority and engaged in conduct that undermines the independence and integrity of the inspector general system, and should therefore face “appropriate disciplinary action for this serious misconduct, including removal.”16

Despite his serious misconduct, Hoecker remained in the job as top independent watchdog at the SEC until shortly after POGO determined through our own investigation that he was the unnamed official in question.17 Hoecker announced his retirement from the agency a few months after POGO’s reporting. Though Hoecker faced some measure of professional repercussions in the form of a suspension, the decision to anonymize him in the CIGIE annual report and to refrain from publicly releasing the IC report or the executive summary runs contrary to the committee’s mission to promote accountability for inspectors general who commit misconduct.

Challenges

The IC faces several challenges that prevent it from fulfilling its mission to act as a check on the inspectors general system.

  • Inconsistent interpretation of the committee’s investigative jurisdiction. There appears to be a gap between the dispositions on misconduct allegations that a reasonable interpretation of the IC’s publicly available Policies and Procedures should yield and the dispositions that the IC has actually produced. This largely stems from the committee’s inconsistent interpretation of its own investigative jurisdiction, as illustrated in Example One of the previous section, regarding then-DHS Inspector General Jennifer Costello. Such an accountability gap is cause for great concern, because it demonstrates that credible complaints are falling through the cracks.
  • Lack of resources for the IC. Like any organization, the IC’s effectiveness is directly correlated to the resources at its disposal. If Congress and the public expect the committee to be an effective overseer of the inspector general community, it is important to ensure it has the budget and resources necessary to accomplish this goal. Currently, the IC is indirectly funded through the voluntary contributions of its offices of inspector general members, which means the IC cannot be certain of its annual budget until the funding for those offices is resolved. The fact that the committee took years to issue its findings on then-Inspector General of the Federal Housing Finance Agency Laura Wertheimer’s misconduct (Example Two of the previous section) indicates that a lack of resources can have deleterious effects on the committee’s ability to fulfill its mission.
  • Lack of transparency. The IC obscures its activities from both Congress and the public. During his opening remarks for a subcommittee hearing on the IC, Government Operations Subcommittee Ranking Member Representative Jody Hice (R-GA) stated, “The Integrity Committee has a history of limiting the transparency of their investigations into various allegations of wrongdoing, resulting in confusion and concerns about the legitimacy of some investigations.”18 More than just its activities, the committee also has a history of burying its recommendations for disciplinary action, as demonstrated by its treatment of then-SEC Inspector General Hoecker, as explained in Example Three of the previous section.

The IC plays a critical role in overseeing the overall health of the federal government. It is therefore imperative that it be regarded as a place where credible allegations against inspectors general and their senior staff are given due consideration, rather than being forgotten.

The IC must restore the public trust that it has misplaced. One part of doing so requires Congress to play a bigger role in ensuring that inspectors general are subject to robust oversight. Right now, lawmakers take note when an incident involving an individual inspector general’s misconduct comes to light, but in order to address the core weaknesses that allow for such misconduct to occur in the first place, Congress should seek to bring about a more effective and accountable inspector general system.

Recommendations

1. Congress should designate a specific inspector general to automatically take on IC investigations when the need arises.

The IC lacks its own dedicated investigative team. Currently, if the committee chooses to pursue an investigation against an inspector general or their senior reports, it must convince a non-conflicted inspector general’s office to conduct that investigation. Specifically, the committee’s Policies and Procedures state that:

CIGIE will maintain a list of OIGs capable of undertaking investigations for the IC…when so authorized by the IC Chairperson, CIGIE will engage an OIG from the list maintained by CIGIE to investigate the allegations referred by the IC (“Assisting IG”).19

This model poses several challenges.

First, it puts the IC at a severe disadvantage when it comes to completing timely and relevant work, and can result in an inspector general having to engage a number of their colleagues before finding one who has the capacity to conduct an additional investigation.

Second, this makes it difficult for Congress to accurately identify which office(s) of inspector general require additional resources and funding in order to efficiently take on this work.

And finally, in the event that a conflicted inspector general must find another inspector general to lead the investigation, there is a lack of clarity surrounding which inspector general they may engage to lead it. While an engaged inspector general may be conflict-free and technically eligible to conduct an IC-referred investigation, that inspector general may still regularly work with the office facing misconduct allegations, due to the overlapping nature of their affiliated federal agencies’ work. For instance, the State Department inspector general and Department of Defense inspector general frequently collaborate on oversight projects. If one was required to investigate the other — even if it is established that no conflict with respect to that particular investigation exists — this may result in the appearance of a conflict of interest, which can be as damaging to the credibility of an office as the misconduct itself.

One such example arose in 2019, when then-Undersecretary of State for Management at the State Department Brian Bulatao alleged that the inspector general of the department at the time, Steve Linick, acted improperly with respect to a leak investigation involving a draft report from the inspector general’s office. Bulatao claimed that Linick promised to refer the leak allegations to CIGIE, but he instead “hand-picked” then-Acting Department of Defense Inspector General Glenn Fine to lead the investigation, which Bulatao alleged constituted a conflict of interest.20

While Bulatao and then-Secretary of State Mike Pompeo used this as a post-hoc rationale for Linick’s removal, the IC responded directly to Bulatao’s allegations and concluded that they were so lacking in merit that they did not warrant a formal IC investigation.21 Specifically, the committee determined that it was not improper for Linick to seek out another inspector general’s office to conduct the leak investigation, nor was it the case that Fine had a conflict of interest that should have prevented him from allowing the DOD inspector general’s office to perform the investigation.

Though the IC absolved Linick of wrongdoing, his treatment in light of the allegations levied against him demonstrates that the current process is not serving the needs of inspectors general or their political managers.

Congress should clearly designate the top five largest inspector general offices as sharing responsibility for conducting IC investigations when the need arises.

Therefore, Congress should clearly designate the top five largest inspector general offices as sharing responsibility for conducting IC investigations when the need arises. There should be a rotational order that must be strictly observed, in which the designated inspector general office may only refuse to take on an investigation if they themselves are the subject of the investigation or otherwise conflicted out. If an inspector general declines to investigate, that inspector general should be required to send an explanatory letter to the IC. Congress should consider whatever increase in resources these offices will need to accomplish their primary missions without sacrificing quality of work on these internal investigations.

This rotational order would require designated inspectors general to potentially take on investigations for different federal agencies, for which there is precedent in the current inspectors general system. In fact, there are many instances of single inspectors general operating for multiple federal entities, both in a permanent or temporary capacity. For example, the inspector general for the intelligence community is explicitly authorized to oversee programmatic activity within the scope of the Director of National Intelligence, who serves as the head of a coalition of 18 agencies and organizations. Similarly, the inspector general for the Department of Transportation was expressly authorized to oversee both the agency as well as the National Transportation Safety Board after concerns arose regarding a perceived lack of oversight of the board. Along the same lines, the inspector general for the U.S. Postal Service is responsible for overseeing both the Postal Service as well as the Postal Regulatory Commission.

2. The Government Accountability Office should conduct a biennial audit of IC investigations.

The last Government Accountability Office (GAO) audit of the IC’s process to address allegations of wrongdoing was published in 2009.22 Since then, not only have the committee’s Policies and Procedures changed, but several seemingly non-frivolous complaints have also gone unreferred for investigation. Charging GAO with conducting a biennial audit would put additional guardrails in place on the process by which dispositions are made, and would identify other weaknesses within the IC’s investigative process.

In any such GAO biennial audit, the comptroller general may gather confidential information but must not disclose the identity of any witness or complainant to anyone outside of GAO. The names of complaint-filers should be redacted to protect against whistleblower retaliation, along with any other information in the complaint that could identify the complainant.

3. CIGIE should change composition of the IC.

Currently, the IC consists of the FBI designee to CIGIE, the director of the Office of Government Ethics or the director’s designee, and four inspectors general who are appointed by the CIGIE chairperson every four years.23

In 2016, Congress amended the Inspector General Act of 1978 to make the IC chairmanship a formally electable position.24 Previously, the FBI designee was automatically designated as the chairperson. POGO was critical of that original IC leadership structure because it could arguably lead to the IC prioritizing cases related to criminal behavior over cases related to ethical misconduct.25 In this regard, Congress has made progress in reshaping IC leadership so it best serves the committee’s mission.

Despite this improvement, there is still cause for concern when it comes to the IC’s composition and internal structure. This concern is rooted in the fact that in order for the IC to do its job effectively, inspectors general who sit on the IC are frequently put in the position of evaluating whether or not their fellow inspectors general (or staff) should be investigated. In other words, it is an inescapable truth that the composition of the IC challenges the impartiality of sitting members.

In other words, it is an inescapable truth that the composition of the IC challenges the impartiality of sitting members.

While the IC has taken pains to outline standard operating procedures that preserve the independence of committee members in making these determinations — such as outlining the circumstances under which IC members must recuse themselves from considering a matter — these efforts do not fully mitigate the appearance of a potential conflict of interest.

The placement of a retired inspector general or retired deputy inspector general on the IC would be a step forward in terms of removing perception of political bias in determining which investigations to pursue, and would not compromise the committee members’ overall knowledge of IC operations and procedures. This retired inspector general or retired deputy inspector general should be required to serve on the IC for two to four years, to ensure consistency and continuity. Any retired inspector general or retired deputy inspector general added to CIGIE should also be included as a member of the IC’s Allegation Review Group, rounding out the total number of serving members on the group to four and adding another layer of impartiality to the review process.

4. Congress should grant CIGIE its own direct congressional appropriation.

When it comes to funding, CIGIE is not subject to a direct appropriation from Congress, notwithstanding the requirement that the president must include a direct appropriation in their budget. Instead, it receives funds from its offices of inspector general members.26 Michael Horowitz, inspector general of the Department of Justice and former CIGIE chairman, has asserted that this funding model impedes CIGIE’s ability to build robust infrastructure and engage in long-term strategic planning. He said:

CIGIE is funded through the voluntary contributions of its 74 OIG members. As a result, CIGIE cannot be certain of its annual funding until the funding situation of each of its 74 OIG members is resolved. Further complicating matters, because IG contributions to CIGIE are based on the size of each IG’s budget, CIGIE’s funding each year is heavily reliant on the appropriations received by a small number of the largest IG offices. As a result of this funding mechanism, roughly half of CIGIE’s staff is made up of temporary, reimbursable detailees from member OIGs.27

These concerns apply to all the components of CIGIE, including the IC. In testimony before the House Subcommittee on Government Operations, Inspector General of the National Science Foundation and current Chair of CIGIE Allison Lerner reflected Horowitz’s statement. She reiterated that the most important thing Congress can do for the IC is to provide additional and more stable resources. IC staff are required to balance their time between committee responsibilities and their day jobs as inspectors general, which she describes as an “untenable situation.”28

Her concern is valid, especially considering that the IC does not currently have a dedicated staff to run investigations. Rather, the committee relies on its member inspectors general and colleagues from across the inspector general community to assist with ongoing cases as needed.

Establishing a direct appropriation would accomplish a number of goals. First, it would incentivize lawmakers to take a greater interest in overseeing CIGIE and IC operations. Also, it would allow CIGIE and the committee to plan long-term investigative projects without fear that their funding will be reduced the following fiscal cycle. Finally, it would incentivize inspectors general on the IC to more aggressively request additional funds to better accomplish the groups’ mission, comfortable in the knowledge that the money won’t come out of their own budgets.

5. The IC should enhance and refine its reporting requirements.

Congress enacted the Inspector General Act of 1978 (as amended) to require the IC to establish fair, consistent policies and procedures for determining how to handle investigations into allegations of misconduct, among other things.29 The resulting IC policies and procedures detail necessary steps the IC must take in order to ensure that every allegation is heard. First, the IC is to receive all misconduct allegations against inspectors general and their direct reports, and immediately refer them to a subgroup within the IC (known as the Allegation Review Group) for consideration. Second, the Allegation Review Group, which consists of the designees of the attorney general, the special council, and the current IC chairperson, must determine if an allegation should be referred to one of two offices within the Department of Justice or if it should be placed on the IC agenda for consideration at the following IC meeting. Third, the IC makes a final determination on whether or not to refer the matter for investigation by weighing the substance of the allegation against the IC’s threshold standard for wrongdoing, which the IC’s policies defines as:

Abuse of authority in the exercise of official duties or while acting under color of office, substantial misconduct, such as gross mismanagement, gross waste of funds, or a substantial violation of law, rule, or regulation, or conduct that undermines the independence or integrity reasonably expected of a Covered Person.3031

The IC policies and procedures, however, have not worked as Congress intended. Instead of opening investigations into credible allegations, the IC has unfortunately allowed reported instances of waste, fraud, and abuse to be met with silence.

Though the IC’s Policies and Procedures is publicly available on its official website, its contents fail to dispel concerns that Congress has expressed regarding lack of transparency surrounding IC operations.32 Furthermore, it is unclear why some credible allegations that appear to fall within the parameters of the IC’s investigative mandate languish or are otherwise closed without referral for further action.

Instead of opening investigations into credible allegations, the IC has unfortunately allowed reported instances of waste, fraud, and abuse to be met with silence.

Lack of transparency into IC operations is a huge problem, with potentially far-reaching ethical consequences. Because Congress still has little to no insight into many of the allegations the IC has chosen to close without referral for investigation, it is difficult to determine the severity or extent of any current or ongoing misconduct. Essentially, Congress doesn’t know what it doesn’t know, though the report by WilmerHale discussed earlier provides us with at least one example of a credible allegation of misconduct left unexamined by the committee.

According to the IC’s Policies and Procedures, the Allegation Review Group has seven business days after receipt of an allegation to review and make a referral to the Public Integrity Section of the DOJ, the Office of Special Counsel, or the IC for further consideration and investigation.33 Whenever the Allegation Review Board declines to advance a nonfrivolous allegation, that decision — along with a detailed rationale behind the decision — should be conveyed in a confidential monthly disclosure report to designated staffers on the relevant congressional committees in both the majority and minority offices, as well as the president. This would introduce more oversight into which cases are closed out and for what reason. This should not slow the allegation review process.

Furthermore, the IC currently submits annual reports to Congress that include information on the number, status, and disposition of complaints made in the preceding year. However, this data does not capture the IC’s underlying arguments for final action on allegations of misconduct. Congress should require the IC to also include in these reports a detailed rationale behind each decision to open or not open an investigation into an allegation of wrongdoing. There should be an exception to these reporting requirements when the IC, in consultation with the Office of Special Counsel, determines that there is a danger of whistleblower retaliation. Requiring the IC to convey the logic behind a determination in its annual reports would shed light on the allegation review process and allow Congress to take corrective or clarifying action if necessary.

6. The IC should be more transparent about the recommendations it makes for disciplinary action.

Congress should require the IC to include in its annual reporting the names of individuals for whom they have made substantiated findings of wrongdoing, as well as all recommended disciplinary or corrective action — such as any recommendations for placing individuals on administrative leave or removing them from office entirely — and whether that corrective action has been taken. The law should clearly affirm that the Privacy Act does not protect against disclosing the identity of a covered person found to have committed wrongdoing by the IC.

Conclusion

Congress must reform the IC. Doing so would ensure that inspectors general are held accountable when they perpetuate the same culture of impunity and misconduct that they were appointed to root out. The recommendations outlined in this report address the IC’s major challenges, which include a lack of accountability, lack of transparency, and lack of resources. Implementing these recommendations would go far in restoring the public’s trust in the inspector general system.