Arnold Fields, charged with targeting Afghan fraud, came under fire himself

February 10, 2011

The day before Arnold Fields left his position as the government's top official for detecting and preventing the waste of taxpayer money in Afghanistan, he serenaded his staff with one last song.

"Thank you all for your service," retired Maj. Gen. Fields said at a farewell luncheon in Crystal City after completing 100 push-ups and playing the final chord of "The Impossible Dream" on his guitar. "And remember the mission."

Fields, a decorated Marine combat veteran who, at 64, has military posture, bifocal glasses and a gentlemanly manner, resigned from his position atop the Office of the Special Inspector General for Afghanistan Reconstruction (SIGAR) last month in the wake of a scathing peer review and a brutal congressional hearing at which senators called for his head. On the morning of Feb. 3, he sat in a freshly wallpapered corner office amid packed boxes, polished furniture and his guitar case to discuss what went wrong and what lay ahead.

"There is a certain amount of relief," Fields acknowledged, blaming political pressures and a lack of early funding for debilitating his leadership. "I'm going to be frank with you, sir. Much of this that I have experienced in this capacity, I did not expect."

In a war where countering corruption is critical to success, the watchdog agency tasked with examining the more than $56 billion in Afghan reconstruction funding is, according to some of its own officials, in need of oversight. Accusations of influence-buying, internal debate over whether auditors should put dollar figures on waste and arguments about which reconstruction projects deserved investigation led to the formation of bitter factions and intense office politics.

"I don't feel that I was set up to fail," said Fields, "but I don't feel that I was set up for success."

On June 12, 2008, President George W. Bush appointed Fields, who commanded a Marine infantry battalion in Iraq during Operation Desert Storm and had a role in the reconstruction effort there.

Former national security adviser Gen. Jim Jones, who called Fields "a great leader who rose to the rank of major general and raised his hand to serve his country again," said that he wondered why the Bush administration chose Fields for the job.

"The missing piece is what led them to hire him," Jones said. "Why wouldn't you get an accountant, or someone who has been a businessman, rather than a field Marine? You would have looked for somebody with a more technical background in major financial issues. It's an odd fit."

Within SIGAR, Fields is widely considered an honest and decent soldier deeply committed to the oversight mission. The general consensus is that indecision, an inability to forcefully articulate SIGAR's case to its critics on the Hill, a lack of experience navigating Washington's competing political agendas and internecine conflicts cost him dearly. The distractions kept the watchdog agency from keeping as close an eye as possible on the government's reconstruction efforts in Afghanistan.

Transition of power

Last Friday, President Obama named Fields's deputy, Herb Richardson, to replace him as the acting inspector general.

Richardson, a 61-year-old former FBI special agent who served as principal deputy inspector general at the Department of Energy, has gained a reputation within SIGAR for consolidating power, leading with a firm hand and exercising control. A former champion rower who has assumed a more bureaucratic build, Richardson leaned back in his chair during a Feb. 3 interview and spoke with evident relish of his reputation as agency strongman.

Appointed by a government oversight council on Nov. 8 to conduct what he called a "top-to-bottom review" of the organization, Richardson said he now planned to chart a more muscular and effective course for the agency.

While Richardson has many admirers within SIGAR who welcomed his no-nonsense approach, not everyone is onboard. Most notable among his critics is the inspector general's special adviser Peter Kaivon Saleh, a gregarious veteran of Afghanistan policy who the Richardson faction accused of having exercised a Svengali-like influence over the general.

On Jan. 12, the rift between Richardson and Saleh broke into the open after the two top officials accompanied Fields to a meeting in the Rayburn offices of Rep. Dennis J. Kucinich (D-Ohio).

In the meeting, according to several participants, Saleh talked about a June 2010 letter obtained by a SIGAR staffer from the Afghan attorney general to the Ministry of Public Works, which reported that an $8 million hospital in Khost remained uninhabited, had structural damage covered with patching material and needed to be rebuilt. He also mentioned another lead, that the Takhar province health ministry had recently reported to their superiors that employees from the U.S. Agency for International Development (USAID) came to check on two health centers built with American funds but found nothing.

"It was a shocking story," Kucinich said.

After the meeting, Richardson grew angry at Saleh for bringing up these issues without having any proof to back them up.

"It was certainly something I'd be interested in knowing more about," said Richardson, whose supporters said that Saleh had a track record of unsubstantiated claims. He then said to Saleh, " 'Do you have any supporting documentation you can give me, because if this is a problem I need to look at it.' And I didn't get any."

In an interview, Saleh, who speaks Farsi, said that he had, indeed, provided supporting evidence of the alleged fraud, along with his translations of the documents, to Fields, who, he said, "assured me that Richardson received the documentation."

Saleh added, "I remain dismayed that Mr. Richardson has never bothered to discuss with me those cases, or many others that I am aware of, regarding waste, fraud and abuse in Afghanistan."

Rising concerns

The problems at SIGAR started early.

Fields said he had his "hands tied and my feet tied" by a delay in initial funding that made it difficult for him to staff up, especially considering the relatively small pool of qualified applicants willing to spend time in Kabul. The departments of Defense and State were far from generous in providing staff, as the office's enabling legislation suggested they do. The chief auditor only came on in January 2009.

And then Joseph Schmitz entered the picture.

A dozen years ago, Schmitz's closest brush with controversy had come as brother to Mary Kay Letourneau, the Washington state teacher whose affair with a 12-year-old student landed her in prison and on tabloid front pages.

In the years following the scandal, Schmitz climbed the government ranks and became the Defense Department's inspector general. In July 2005, Sen. Charles E. Grassley (R-Iowa) informed Schmitz of an investigation into whether he had blocked two criminal investigations. When Schmitz left his position as inspector general shortly thereafter, he did so under a cloud, but a 2006 investigation under the auspices of the President's and Executive Councils on Integrity and Efficiency concluded that Schmitz had committed "no wrongdoing."

In January 2009, he joined the D.C. office of the independent risk-management group Freeh Group International Solutions, run by former FBI director Louis Freeh.

According to Schmitz, he and Freeh met with SIGAR officials, including Fields, in the fall of that year to discuss how they could quickly boost the watchdog's maligned investigative capability. The Freeh Group said it ultimately backed out for logistical reasons. In July 2010, a peer review deemed SIGAR's investigative unit substandard, creating the possibility that Attorney General Eric Holder Jr. could strip the agency of its investigative authority. At that point, Richardson says, the Freeh Group referred them to Schmitz. Patti Bescript, a managing director for the Freeh Group, said that Schmitz's formal association with the company had concluded on April 30 of that year, and that there was no such referral or recommendation to SIGAR.

If everyone involved wants distance from Schmitz's hiring, they want even more from the details of his no-bid contract, priced at a level that required fewer signatures - and less oversight - for approval. According to Schmitz, SIGAR leadership told him the agency needed someone to come onboard quickly and conduct an independent assessment, and asked him if he could price the contract under $100,000. "There was something about they could do a sole source if it was under $100,000," Schmitz said.

Richardson said Schmitz initially asked for more than $300,000, a figure of which Schmitz said he "cannot find any record." Richardson said the final $95,000 had to do with reducing cost, not oversight. "There was no collusion," Richardson said.

Schmitz sent letters notifying the members of the Senate Homeland Security and Governmental Affairs subcommittee on contracting oversight about his contract and inviting them to raise any concerns. Five days later they did, and a conference call was arranged for 4 p.m. Minutes before it started, the senators made public a letter calling on Obama to remove Fields. The letter cited the Schmitz contract as a cause for alarm.

SIGAR officials canceled the conference call.

'Murder board'

Fields's prospects for maintaining command of SIGAR looked bleak, and it quickly became apparent that his make-or-break moment would be an upcoming hearing before the subcommittee. Fields needed to be ready.

"We prepared what is called a murder board," Fields said.

On Nov. 15, a dozen staffers filed into Fields's sunny corner office at 9:30 a.m. to play the roles of hostile senators and prepare him with a barrage of questions. The staff had compiled a 40-page document, a copy of which was obtained by The Post, which included anticipated questions and proposed answers, addressing everything from the agency's "terrible turnover rate" to Fields's definition of "acceptable leadership." The plan was to accentuate the positive. Since its inception, SIGAR had performed investigative and audit work in 22 of Afghanistan's 34 provinces, conducted 34 audits and analyzed the construction of multiple Afghan police stations. The watchdog had launched an audit of USAID's $60 million cash-for-work program in Kabul, and prompted the Department of Defense to deploy more contracting officers to Afghanistan.

But as Fields sat behind his mahogany desk facing a panel of role-playing staffers, one name kept coming up again and again: Schmitz.

"Why did you hire Schmitz?" Richardson, playing the part of inquisitor, demanded. Fields floundered in his response, according to multiple staffers who were present. Several SIGAR officials suggested that Fields avoid mentioning Schmitz by name and only refer to an independent "company." With the staff looking on, Richardson then urged Fields to say that he hired Schmitz because SIGAR needed to compensate for its gaps by tapping outside expertise. In an interview, Richardson acknowledged that his suggestion put "blame on the head of investigations as being weak."

During the mock interrogation, the head of investigations, Raymond DiNunzio, countered that Fields should simply tell the truth: Fields hired Schmitz because the contractor's professional association with ex-FBI director Freeh would convey an aura of credibility and professionalism to Holder and help preserve their powers. (DiNunzio declined to comment.) The suggestion, which smacked of influence-buying, prompted a nervous exchange of looks among staffers in the room.

Richardson, who was himself trying to figure out exactly what had happened, pressed Fields as to whether he had paid Schmitz $95,000 only to skirt rules that would have triggered greater oversight if the contract had surpassed $100,000. At that point, Bill Sharp, the contracts officer, interjected to explain that keeping the contract below $100,000 eased its approval. The advisers urged Fields to make clear that Schmitz set the fee and not the other way around.

Staffers who were present said the meeting confirmed their worst suspicions about the bad practices and questionable motives of the agency's leadership. The entire exercise, according to one of those in attendance, amounted to a "sick-to-your-stomach moment."

Congressional hearing

On Nov. 18, wearing a red tie and pinstriped suit, Fields marched into Room 428 of the Russell Senate Office Building. The congressional hearing was enemy territory. A chart on the dais showed that SIGAR, for which Congress had appropriated $46.2 million, had returned only $8 million to taxpayers. Fields opened by remarking, "I would say that it's a pleasure, but I would be telling a lie if I were to say so."

Then he went off script.

"My leadership has been referred to as 'inept.' That's the first time, senator, that in all my life, a man of 64 years of age, who has supported this federal government for 41 straight years - of which 34 have been as a military officer. I don't even allow my own auditors to refer to the people in Afghanistan as 'inept' because it's too general a statement for any human being."

That did not keep Sen. Claire McCaskill, the subcommittee's chair, from eviscerating him. The Missouri Democrat accused Fields of not understanding the basics of auditing. She chided him for not using risk assessment to prioritize the agency's watchdog work. She excoriated him for granting Schmitz a no-bid contract.

"It looked like you were trying to hire someone to help influence the attorney general of the United States," she said. "As opposed to fixing the problem."

Fields did make a point to correct McCaskill, though, when she said the contract was worth $100,000.

"No, Senator," he said. "The contract was worth $95,000."

"Well, you know, I got to tell you the truth," McCaskill concluded. "Once again, I do not mean to be cruel. I do not mean to - this is not fun for me either. It's - it's very uncomfortable to say that I don't think that you're the right person for this job, General Fields - that I don't think you were the right person for this job."

Swan song

Sitting in his office, dressed in the same suit and tie as on his subcommittee appearance, Fields considered that painful suggestion: that he was not the right man for the job. After first characterizing the position as "much more to me a common-sense job than it is a technical-skill job," he later allowed that appointing "someone with auditing skills would have an advantage."

To Fields's chagrin, SIGAR auditors demonstrated philosophical opposition to putting dollar amounts on waste. In some cases they said it was impossible. In others, they argued that there was simply no money to report.

In November, auditors declared that $190 million of military funding had been put to better use because of SIGAR's work. If the number had come out sooner, Fields said, "It certainly would have helped." (The office of Republican Sen. Tom Coburn of Oklahoma has questioned whether SIGAR played a meaningful role in identifying the $190 million.)

There is a rare consensus throughout SIGAR that Fields suffered for his lack of relationships on the Hill. There's less unanimity regarding the reason for it, and the explanations highlight the Richardson/Saleh divide.

On Jan. 7, when Fields's situation looked gloomy, Kristen Gilley, SIGAR's congressional liaison, proposed in an e-mail obtained by The Post that the SIGAR staff sit down with their most powerful critic, McCaskill.

"There is no sense to meeting with McCaskill. Especially with the IG out of town!" Saleh wrote, referring to Fields.

When he read the e-mail, Saleh said that he had long advocated that Fields build a better relationship with McCaskill and other senators on the subcommittee, but that the congressional liaison failed to do so. Instead, he said, SIGAR staffers often visited the Hill without Fields's knowledge, and that he suspected them of undercutting the general.

Even as such infighting raged, Fields sought to keep spirits up.

In preparation for last year's Christmas party, Fields assembled a "SIGAR chorus" to entertain the watchdog group's employees with an Afghanistan-themed version of "Jingle Bells":

A day or two ago/I thought I'd take a ride

And soon Inspector Fields/Was seated by my side

We headed towards Kabul/To help the good cheer flow

And soon we were in Kandahar

Where rockets come and go . . . OH!

"Music has been a part of my life," said Fields, a bass-baritone, who was clearly hurt to hear that several staffers did not appreciate his pastime. "I forced no one to listen," he said. "Nor to necessarily be present for any event at which I have elected to use music as a way of communicating to my staff."

'Where to fall'

On Jan. 3, his job in danger, Fields fired John Brummet, the head of audits, and DiNunzio, the head of investigations, saying he wanted "new blood."

"That was my call," Richardson said.

The day after the firings, Lt. Gen. Douglas Lute, the president's top Afghan policy adviser, called Fields to the White House. The meeting was interrupted, and Lute rescheduled for Friday, Jan. 7.

Minutes before the meeting, Fields busied himself with a briefing book he had ordered to help make his case, demanding brighter colors and bolder bullet points. But the briefing book didn't help.

In their discussion, Fields said the White House suggested he consider his situation in the context of the major personnel changes imminent at the highest level of military and civilian leadership in Afghanistan.

"The dynamic of the discussion was, 'In light of other folks moving on . . . senior leaders associated with management in Afghanistan,' " Fields said, before reciting some wisdom inherited from his mother. "You don't have to throw me down to show me where to fall."

Back in the office on Monday, Jan. 10, he read the White House version of his resignation on a government Web site.

Then he sang "The Long and Winding Road."

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