Labor official resigns amid corruption probe
By SAM HANANEL, Associated Press July 27, 2011
WASHINGTON (AP) — An assistant
secretary at the Department of Labor has resigned after an internal
investigation found that he improperly steered federal contracts to friends and
former colleagues.
Raymond
Jefferson, who headed the department's Veterans Employment and Training Service
since 2009, used his position to coerce or intimidate other employees to make
the awards without open competition, according to a July 21 report by the
agency's acting inspector general, Daniel Petrole.
Jefferson resigned his post on Tuesday, Labor
Department spokesman Carl Fillichio said.
A former
Army officer who lost all five fingers on his left hand when a hand grenade
detonated prematurely during Special Forces training, Jefferson was tapped by
President Barack Obama to
head the office that helps veterans find jobs and employment training programs.
The report
said that Jefferson and other lower ranking officials engaged in conduct
"which reflects a consistent disregard of federal procurement rules and
regulations, federal ethics principles and the proper stewardship of
appropriated dollars."
The
investigation was prompted after a whistleblower reported irregularities last
year to Sen. Claire McCaskill, D-Mo.
In one case,
the report found that Jefferson and a deputy pressured colleagues to hire
Stewart Liff, an employee management author and
speaker who specializes in boosting employee performance. When that didn't
work, Jefferson told subordinates to instruct
other contractors to hire Liff as a subcontractor at
the highest possible rates.
Liff ultimately received about $700,000 over 16 months, twice as
much as other firms were paid for similar work, the report said.
Liff billed $275 an hour to prepare one consulting report
"that talked about how you should light the work place and what color you
should paint the walls and what the furniture should be," McCaskill said.
"The
irony in this particular management consultant report was the color he told
them to paint the walls was not allowed under government regulations," McCaskill said. "This is the kind of boondoggle that
taxpayers have every right to expect would come to a screeching halt."
Liff did not immediately return a call seeking comment.
The report
also found that Jefferson coerced employees
into hiring Ron Kaufman, a consultant who conducted training seminars as part
of his company, "Up! Your Service." Kaufman
and his wife traveled from Singapore
to three U.S.
cities to provide "customer service" training to veterans office
employees. Kaufman has sought more than $100,000 for his services, but has not
been paid.
Jefferson
also violated procurement rules to hire Mark Tribus,
a former West Point classmate, to provide a leadership training session, the
report said. Jefferson tried to get a
sole-source contract awarded to Tribus, but it was
rejected.
Agency
employees raised concerns about each of the contractors directly with Jefferson, the report found. In an interview with the
inspector general's office, Jefferson said he
instructed his staff to procure all these services "legally and
ethically." But the report found that statements by other office employees
"cast serious doubt upon the sincerity of Assistant Secretary Jefferson's
assertion."
Fillichio said the department has already taken steps
to increase oversight and restrict the procurement authority of the veterans office. The department's lawyers and human
resources staff are also reviewing several lower level officials whose conduct
was called into question in the report.
"Poor
stewardship of appropriated dollars is unacceptable at the U.S. Department
of Labor and will not be tolerated," Fillichio
said.
Jeff Lagda, a spokesman for the Labor Department's acting
inspector general, said the office has decided not to refer the case to the
Justice Department for further investigation.
"It was
a situation where someone decided not to follow procurement or ethics
rules," Lagda said.
Jefferson
earned an MBA from Harvard Business School, served as a White House Fellow and
later was deputy director for Hawaii's Department of Business, Economic
Development and Tourism. He worked as a consultant for McKinsey & Company
in Singapore
before Obama appointed him to the veterans
office.
McCaskill, who heads a Senate subcommittee that
oversees government contracting, said she doesn't fault the Obama
administration for appointing Jefferson, given his
impressive resume. But she plans to take a hard look at what she sees as wasteful
management consultant contracts that appear to offer little benefit to
government agencies.
"We
can't afford that right now," McCaskill said.
"It's just wildly inappropriate."
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