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Inspector General for Iraq Under Investigation
FBI, Congress Among Those Probing Allegations of Overspending, Mismanagement

By Robin Wright
Washington Post Staff Writer
Friday, December 14, 2007

Over the past four years, Inspector General Stuart W. Bowen Jr. and his staff have probed allegations of waste and fraud in the $22 billion U.S. effort to rebuild Iraq. Their work has led to arrests, indictments and millions of dollars in fines. And it has earned Bowen, who had been a legal adviser to President Bush, many admirers among both parties on Capitol Hill for his efforts to identify overspending and mismanagement.

But Bowen's office has also been roiled by allegations of its own overspending and mismanagement. Current and former employees have complained about overtime policies that allowed 10 staff members to earn more than $250,000 each last year. They have questioned the oversight of a $3.5 million book project about Iraq's reconstruction modeled after the 9/11 Commission report. And they have alleged that Bowen and his deputy have improperly snooped into their staff's e-mail messages.

The employee allegations have prompted four government probes into the Office of the Special Inspector General for Iraq Reconstruction (SIGIR), including an investigation by the FBI and federal prosecutors into the agency's financial practices and claims of e-mail monitoring, according to law enforcement sources and SIGIR staff members. Federal prosecutors have presented evidence of alleged wrongdoing to a grand jury in Virginia, which has subpoenaed SIGIR for thousands of pages of financial documents, contracts, personnel records and correspondence, several sources familiar with the probe said.

The House Oversight and Government Reform Committee, the Presidential Council on Integrity and Efficiency, and the Army's Equal Employment Opportunity Office are also engaged in separate investigations into complaints from SIGIR staff members, according to current and former SIGIR officials and others familiar with the individual probes. The allegations range from retaliatory firing of a whistle-blower to "sustained patterns of inappropriate behavior," according to employee complaints obtained by The Washington Post.

Bowen declined a request for an interview but addressed several questions by e-mail. He said that "no current SIGIR official has been notified that he or she is the subject or target of any such investigation." He also said the congressional investigation had ended, and he refused to comment on the complaint to the Army.

Spokesmen for the FBI, the U.S. attorney for the Western District of Virginia and the presidential council refused to comment, but law enforcement sources said all three investigations are continuing. David Marin, the minority staff director of the House oversight committee, said yesterday that the congressional investigation, which focuses on charges made by SIGIR whistle-blowers, "is ongoing."

There are now so many probes that a senior SIGIR official said the agency's Crystal City headquarters is "gripped by paranoia. It's almost a siege mentality."

That official, and more than two dozen other current and former SIGIR employees interviewed for this article, spoke on the condition of anonymity because FBI and presidential council officials have asked them to refrain from public comments while the investigations proceed. Others did not want to be quoted by name because of fear of retribution by top SIGIR officials.

SIGIR was created by Congress in 2004 to act as the chief watchdog over the effort to stabilize Iraq by building hospitals and schools, training security forces and increasing electricity production. The agency quickly earned a reputation as a tenacious, apolitical investigative body, identifying cases of corruption, wasteful spending and mismanagement that have led to 13 arrests and more than $17 million in fines.

Members of Congress have heaped praise on Bowen, who served as a legal adviser to Bush when he was governor of Texas. He has been asked to testify at dozens of congressional hearings. Democrats have expressed particular delight that a close ally of the president's was willing to speak out about problems with Iraq's reconstruction.

SIGIR claimed in an October 2006 report that its "financial impact" -- the cost savings resulting from its work, the funds it recovered and other benefits -- was as much as $1.87 billion. The report led to an extension of SIGIR's mandate last December. "SIGIR's oversight during this process has been essential to ensuring that the taxpayers' dollars are being used effectively and efficiently," Sen. Norm Coleman (R-Minn.) said at the time.

But after other government agencies challenged that figure, arguing that proper accounting standards were not used in calculating the estimate and that SIGIR did not distinguish between U.S. funds and Iraqi funds, SIGIR revised the number in a report this summer. The new estimate was less than $95 million, only 5 percent of the previous claim.

Government investigators have requested copies of many SIGIR records on costs and savings, according to an investigative document and people familiar with the probe. SIGIR changed its calculations this year, Bowen said, to reflect actual savings and not potential savings.

As SIGIR grew in prominence, dissension was growing within the agency's offices. In 2006, several former SIGIR employees sent an eight-page complaint to the presidential council, an executive-branch oversight body, alleging that the agency's leaders had engaged in fraud, violated federal regulations, created a hostile workplace, abused their positions and "sustained patterns of inappropriate behavior." The council launched an investigation and eventually referred some of the matters to the FBI.

In an e-mail to SIGIR staff members, Bowen described the complaint filed with the presidential council as a result of "disgruntled former employees."

Since then, investigators have broadened their inquiry to include allegations that SIGIR management may have tried to influence staff members who were sought for questioning by investigators, according to people familiar with the inquiry.

Among the issues that have sparked the most internal tension have been SIGIR's overtime practices. Last year, 30 agency employees earned more than the $165,200 salary of a senator or a congressman, according to internal SIGIR documents obtained by The Post. Seven earned $100,000 or more above their salaries, the documents show. More than two dozen earned more than the $174,900 in salary and benefits paid last year to Gen. David H. Petraeus, the top U.S. military commander in Iraq. One SIGIR inspector, who had a $142,000 base salary, earned $346,017 last year, in part by claiming more than 1,200 hours of overtime.

SIGIR staff members, like other federal civilian employees, receive hazard and hardship pay equal to 70 percent of their salaries when they are in Iraq.

At least 30 SIGIR employees charged between 800 and 1,400 hours of overtime and compensatory time in 2006 -- up to almost nine months of additional work stuffed into the year. Thirty-seven others charged between 200 and 725 hours of overtime and comp time.

"The number of hours didn't wash," said a senior SIGIR official. "It's physically and mentally impossible to work that many hours."

Bowen's deputy, Ginger Cruz, said SIGIR's overtime practices are "cost-effective" because one employee earning maximum overtime is cheaper than hiring two people. She said SIGIR this year reduced overtime allowances to 24 hours per two-week pay period. She also noted that other U.S. government agencies provide generous financial packages to employees serving in Iraq.

Federal employee salaries are subject to an annual cap, which is $215,000 for this year. But additional earnings can be paid out the following year or after workers leave the agency.

Government investigators are also probing SIGIR's other expenses, including the book project about Iraq's reconstruction, according to staff members questioned by investigators. The presidential council informed SIGIR last year that the agency was being investigated for "possible fraud, waste and abuse in connection with the printing of the SIGIR history book and possible false statements made to the Office of Management and Budget to justify SIGIR funding," according to a copy of a letter from the council to SIGIR obtained by The Post.

Bowen described the book as SIGIR's "potentially most important project" in a memo he sent last month to the secretaries of state and defense and eight congressional committees.

According to people questioned by investigators and documents obtained by The Post, one of the most serious allegations that the FBI and federal prosecutors are probing is whether top SIGIR officials broke federal laws by accessing employee e-mail messages stored on computers maintained by the Army without proper authorization.

At least four former senior SIGIR officials said they told investigators that Bowen and Cruz looked at employee e-mail. One of them claimed to be an eyewitness to Bowen going through the e-mail of three employees. Another said Bowen and Cruz read the messages "to find out who was loyal and who was not."

The former officials said the e-mail monitoring began in 2005, before the government investigations commenced. They said the monitoring continued into this year in an effort to identify employees suspected of speaking with investigators and other government agencies.

In an interview, Cruz said she participated in administrative investigations "some time ago" that involved a "limited review" of three people's e-mail. Bowen said that "SIGIR policy states that employees do not have an expectation of privacy in the use of their government computers. . . . E-mail reviews can, and have been, conducted by SIGIR management to investigate allegations of work-related misconduct."

The investigations are focusing largely on the actions of Bowen and Cruz, according to current and former senior staff members who have been questioned, as well as congressional sources and other U.S. officials familiar with the probes.

Cruz, a former spokeswoman for the governor of Guam, originally joined SIGIR as a contractor working for the accounting firm Deloitte & Touche. Current and former SIGIR employees have told investigators that Cruz threatened to put hexes on employees and made inappropriate sexual remarks in the presence of staff members. Cruz is a self-described wiccan, a member of a polytheistic religion of modern witchcraft. "We warned Ginger not to talk about witchcraft, that it would scare people," a former SIGIR employee said.

Cruz denied making comments of a "sexual nature" and noted that she was cleared of any wrongdoing by an internal SIGIR investigation into the claim.

After the detailed but anonymous complaint was sent to the presidential council, Cruz sought special dispensation from Bowen for SIGIR to pay her legal fees -- an uncommon practice within government, according to U.S. officials. So far, the agency has paid for more than $32,000 of Cruz's legal fees, according to copies of the invoices provided by SIGIR under a Freedom of Information Act request. Bowen said the agency's general counsel advised him that the payment of Cruz's legal fees was permissible.

The Army's Equal Employment Opportunity Office probe is focusing on a complaint by a former employee who had raised allegations of SIGIR discrimination in the dismissal of her African American assistant, which she charges led to her own dismissal in retaliation. The employee, Denise Burgess, stated in her complaint that she was terminated on the same day she spoke to the presidential council, just two months after receiving an $8,500 bonus from Bowen for exemplary work. Current and former SIGIR employees said they have been asked by FBI investigators about Burgess's termination.

Several staffers interviewed at the suggestion of SIGIR expressed loyalty to Bowen. One senior staff member said he has not seen any firsthand evidence of illegal or inappropriate behavior.

Several current and former officials expressed concern that the practices of SIGIR's leaders are discrediting the work of the agency. "SIGIR's purpose was to look at reconstruction and then go away," said a former senior official. "Are they contributing to the good anymore? No. Were they before? Yes. But they should have stuck to the plan and been willing to stand down in 2008."

Staff researcher Julie Tate contributed to this report.

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