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.
Scott Wheeler is a reporter for Insight magazine.