VA official resigns in conference-spending scandal

An investigation into two Veterans Affairs Department conferences have led to employees being put on administrative leave and a top official’s resignation as auditors found waste and mismanagement. The VA paid roughly $6.1 million for two conferences in 2011, but the planning was marred by leadership failures and ethical lapses, the department’s inspector general reported Oct. 1.

The investigation has led to the resignation of John Sepulveda, VA’s assistant secretary for human resources and administration (HR&A). He stepped down a day before the release of the report, which criticizes the department’s questionable spending at two Florida conferences.

The IG found that Sepulveda failed to provide proper guidance to senior executives in his organization related to the conferences. Further, his statement was contrary to his memo to the VA’s chief of staff, in which he wrote his office was controlling costs. According to several people, Sepulveda also had seen a video in whcih an actor parodied a famous scene from the movie "Patton," starring George C. Scott as Gen. George S. Patton. The video cost nearly $50,000 to make, and Sepulveda denies having seen it.

“His hands-off approach contributed to a lack of communications between HR&A senior executives resulting in confusion and a dysfunctional execution of roles and responsibilities,” the IG wrote in the report. Largely, “senior leadership accepted little responsibility for fiscal stewardship.”

In an interview with Federal Times, Sepulveda cited the IG report as the reason for his resignation, saying he “did not want to be a distraction for the administration, [VA] Secretary [Eric] Shinseki and the VA, especially as they continue to work each day to address the urgent needs of our nation’s veterans.”

Sepulveda’s tenure at VA was a relatively brief one. He was sworn in May 20, 2009, having served previously at the Office of Personnel Management, Department of Housing and Urban Development, and the Federal Housing Administration.

More broadly, the IG found that VA officials did not keep track of their spending adequately, leaving auditors unable to get a complete picture of cost. In fact, VA’s processes and the oversight were too weak, ineffective, and in some instances, nonexistent, according to a new report. With the poor documentation, investigators questioned about $762,000 as unauthorized, unnecessary, or simply wasteful expenses.

Further, investigators found that 11 VA employees, who were in charge of managing the conferences, improperly accepted gifts from contractors that were seeking to do business or already doing business with VA. Some VA employees were also buying on the government’s behalf despite having no authority. In addition, one unidentified federal employee has been referred to the Justice Department for prosecution, VA IG officials said in an Oct. 1 conference call.

VA Inspector General George Opfer said Oct. 1 that VA leadership had significant failures in oversight of the conferences, ethical violations by employees, and a lack of management controls and accountability over costs and commitments. “Beyond the individual ethical lapses, which cast all federal employees in a bad light, the management failures resulted in unnecessary costs and unauthorized commitments that diminished these legitimate training events,” Opfer said.

While VA is under investigation for its spending, the conferences fulfilled valid training needs. At the conferences, VA provided 57 individual classes per conference, training about 1,800 VA employees in all.

The IG opened an administrative investigation into the HR conferences, which were held in Orlando, Fla., in July and August 2011, after receiving allegations of wasteful spending.  Staff audited conference expenditures for compliance with government laws and regulations and investigated whether VA employees complied with ethics and rules of behavior. In addition, the IG checked on the reasonableness of the costs and how well they were overseen.

On Aug. 14, VA officials removed the purchasing authority of any employee in the office that is under investigation by the IG, while the investigation was ongoing. Shinseki has also directed an outside, independent review of all training policies and procedures, including the training conferences. The review should be finished by later this fall.

So far, department officials agreed with the recommendations in the IG’s report and laid out plans to address the management faults surrounding the two conferences, and employee misconduct.

“Regarding IG recommendations relating to named career employees, to ensure due process, the secretary will appoint senior officials to review evidence of wrongdoing and to recommend appropriate administrative action. Two of these employees were placed on administrative leave, pending review,” according to a statement from the VA.  Citing privacy considerations, VA officials did not release more detail, but said that “employees who have misused taxpayer dollars or violated VA standards of conduct will be held accountable.”

Linda Halliday, assistant IG for audits and evaluations, said the IG will be watching as VA officials institute the recommendations. “We will certainly be looking at how well VA implements these new policies and procedures, and whether there is an acceptable level of compliance with them as we move forward,” she said.

In August, VA officials directed ethics training for all department employees involved with the planning and conducting training conferences. Contracting specialists will be recertified as well.

Agencies and their conference spending have been in the spotlight since April, when the General Services Administration’s inspector general released an investigation of the 2010 Western Regions Conference in Las Vegas.   And increasingly tight budgets have also prompted agencies to more carefully track where their money goes, and question whether a given conference is worthwhile. Since April, GSA Acting Administrator Dan Tangherlini has canceled more than 30 conferences because he did not find a clear need for the event.