New DoD Inspector General Cleans House

An independent review of the Department of Defense Inspector General's Office (DoDIG) has determined that the new inspector general, Joseph E. Schmitz, inherited "serious problems" dating back four or five years, according to sources familiar with the executive summary of a report due to be released the week of Sept. 9 in response to an investigation by Insight. The DoDIG would not provide a copy of the confidential summary, but Insight has confirmed that the report contains evidence of "major problems" during the Clinton era, including "falsifying of investigative reports and falsifying audits."

The report is extremely critical of previous leadership and senior management at the DoDIG. Sources familiar with the eight-page summary, the independent review and the problems at the DoDIG tell Insight that already "several people have been fired or forced to retire as a result of the house cleaning by the new IG."

Actions taken by the new inspector general were said to have affected Robert Lieberman, the assistant inspector general in charge of the audit section who retired in August, and three others in the Defense Criminal Investigative Service (DCIS), including two Senior Executive Service (SES) members and one GS-15, who were fired and escorted from the IG office at 400 Army Navy Dr. in Arlington, Va., near the Pentagon.

For the moment, DoDIG denies that any "adverse personnel action" has been taken, but an insider who asks not to be identified tells Insight that the "two SESes and the GS-15 were indeed escorted from the building last week and barred from returning."

The timing of the firings corresponded with the arrival at the office of the eight-page summary, but there are conflicting accounts of whether it was directly related to the summary or a collateral matter. A source close to the investigation describes the dismissals of the three DCIS officials as disciplinary action for their attempted retaliation against a whistle-blower at DCIS.

The new inspector general, Schmitz, ordered the "bottom-up review," which began in April and concluded in July. The independent review was conducted by Alexandria-based Military Professionals Resources Inc.

Sen. Charles E. Grassley (R-Iowa), ranking member on the Senate Finance Committee, tells Insight: "The new inspector general, Mr. Joe Schmitz, has already started to clean house. Heads have started to roll with more to come." For Grassley, the independent review is vindication. "Based on what I've heard and seen, the Independent Review Team appears to be on the right track. The team appears to see the very same problems that I see and seems to be headed toward a hard-hitting final report," Grassley tells Insight.

The previous inspector general, Eleanor J. Hill, was selected by President Bill Clinton in 1995. Hill served until 1999 and left a controversial legacy [see "Controversial Staffer Clouds 9/11 Probe," Aug. 5] that included charges by the Air Force and senior civilian-defense officials that she covered up the Clinton administration's involvement in decontrolling weapons-technology transfers to the People's Republic of China.

Grassley, a staunch critic of the IG's office under Hill's leadership, tells Insight: "My three-year oversight investigations of the Inspector General's Office has uncovered a number of serious problems, including high-level misconduct and the falsification of investigative and audit reports."

Grassley uncovered one such falsified report in the spring of 2001. It began with a failed audit dated Nov. 12, 1998 [see "Government Fails Fiscal-Fitness Test," May 20; "Wasted Riches," Oct. 22, 2001; and "Rumsfeld Inherits Financial Mess," Sept. 3, 2001]. According to a May 22, 2001, letter from Grassley to Secretary of Defense Donald H. Rumsfeld, that audit contained "at least 47 known deficiencies."

During a "routine peer-review" inspection of the IG's audits, the reviewers asked to see the November 1998 audit of "DoD Use of Pseudo Social Security Numbers." According to the Grassley letter, "instead of submitting it and suffering the consequences, a decision was made to destroy all the original work papers and to re-create an entirely new set." While Hill had presided over the original failed audit, the falsified audit occurred after her departure in 1999.

The Grassley letter went on to say, "Senior IG officials apparently ordered the staff to sign and backdate the new working papers as if they had been prepared at the time of the original audit." Sources familiar with the investigation of the falsified audit papers tell Insight that Assistant IG Lieberman was involved and "that is what led to his retirement." The so-called "audit work-paper falsification" led to an internal investigation by the IG's office that is pending.

The DoDIG is an independent entity with audit authority responsible for searching out waste, fraud and abuse. Schmitz is a conservative who is known to have the enthusiastic support of Rumsfeld and the entire Bush team at the Pentagon.

Congressional inquiry finds clues leading to Sept. 11, but no smoking gun
By Ken Guggenheim, Associated Press, 09/17/02

WASHINGTON -- Before the Sept. 11 attacks, intelligence agencies were aware that terrorists could use airplanes as weapons but had no specific warnings that terrorists were going to strike New York and Washington that day, a congressional official said Tuesday.

"We haven't found anything where some part of the government had the information about the where, when and how this attack was going to take place," said the official, speaking on condition of anonymity.

The House and Senate intelligence committees will provide details of the warnings when they hold their first public hearings Wednesday as part of their inquiry of intelligence failures before the attacks.

The official said agencies had a surge of intelligence about possible attacks, peaking in June 2001. Most of the information suggested the attacks would occur overseas, but the inquiry questions whether Americans were given enough information about the possibility of terror attacks in the United States.

The inquiry's preliminary findings, which will be presented at the hearing by staff director Eleanor Hill, doesn't offer conclusions about whether intelligence agencies should have been able to prevent the attacks based on the information in hand.

Rep. Jane Harman, D-Calif., a member of the House panel, said she doubts there is enough information to conclude that intelligence agencies could have prevented the attacks. Instead, she said, there were problems in intelligence gathering and sharing that agencies are now trying to resolve.

"We had inadequate tools to pull together all the clues," she said.

The top Republican on the Senate panel, Sen. Richard Shelby, R-Ala., said some of the most troubling information seen by the committees have already been made public: the Phoenix memo, in which an FBI agent warned that U.S. flight schools may be training terrorist pilots, and the handling of the Zacarias Moussaoui case. Moussaoui was arrested on an immigration charge in August 2001. He has since been charged with conspiring in the attacks.

"Those two events alone could have changed Sept. 11. Would it have, we don't know," Shelby said.

The Bush administration has looked to the intelligence inquiry to provide the definitive report on problems leading up to the attack. But committee members have become frustrated by delays, blamed on the difficulties of declassifying information for public hearings and what they see as a lack of cooperation by the administration.

Public hearings were to begin in June but were repeatedly delayed; none has been scheduled beyond Wednesday. Congressional staff have said the administration has been reluctant to provide high-level officials as witnesses, including Secretary of State Colin Powell and Defense Secretary Donald H. Rumsfeld.

With just weeks left in the congressional year and both intelligence committees likely to lose their senior members, momentum has grown in Congress for a separate, independent commission to look into the attacks.

"I'm afraid if we try to publish at the end of this session a definitive paper on what we found that there will be some things that we don't know because we hadn't had time to probe them and we have not had enough cooperation," Shelby said.

The White House has opposed an independent commission, saying it could lead to more leaks and tie up personnel needed to fight terrorism.

Relatives of Sept. 11 victims have been among the main advocates of the independent commission. Leaders of two groups of relatives, Stephen Push and Kristin Breitweiser, are to be the first witnesses at Wednesday's hearing.

In her report, Hill will look at what intelligence agencies knew about the likelihood of an attack against U.S. targets in 2001 and about the use of airplanes as weapons. At least two other plots involving airplanes are already known: a plan uncovered in the Philippines in 1995 to dive-bomb a jetliner into CIA headquarters in Langley, Va., and a 1994 plan by Algerian militants to blow up an Air France jetliner over the Eiffel Tower in Paris.

A future report will examine what the agencies knew about the 19 hijackers before the attacks.

"This is the beginning. This is not the whole picture," the official said.

Congressional staff members began looking at the attacks early this year. Staff have reviewed some 400,000 documents, about 60,000 to 70,000 of which were considered relevant to the investigation. They have also talked to almost 500 people. The two committees have held closed-door hearings since early June. UPDATED WIRE STORIES

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