A White House report released yesterday concludes that board members of the Legal Services Corp. did not violate any rules or laws in collecting more than $240,000 in travel and consulting fees from the government.
But the report to presidential counselor Edwin Meese III from the Office of Management and Budget also recommends closer auditing and scrutiny of the finances of government bodies such as Legal Services to "prevent future abuses."
It attributes the higher expenses to four major factors: the time it took new board members to learn about Legal Services, a larger number of board and committee meetings, a 15 percent government-wide increase in per diem expense levels and the Senate confirmation process for new board members.
The report also shows that more than 60 percent of the consulting fees collected by Legal Services board members were submitted for days that involved neither official board meetings nor travel related to those meetings.
Of the $156,000 in consulting fees collected by the board in the first 11 months of 1982, more than twice the amount paid any previous board, $97,000 was collected "for work reportedly performed on days which involved neither official meetings nor travel to or from meetings," according to the report.
It says the fees appeared to be related to visits to Legal Services programs, or for work "at home or in regular offices on LSC business," a type of billing the report says is allowed.
The OMB investigation was ordered by President Reagan last month after a congressional hearing disclosed the board's high fees and expenses. The General Accounting Office, the auditing arm of Congress, is making an independent review, and the U.S. attorney here has been asked to investigate by a group of Republican members of Congress.
The report released yesterday, a summary of a larger document presented to the White House, notes: "OMB has no official or legal auditing authority over LSC's expenditures; thus our ability to review LSC's activities is limited to the information supplied by LSC."
The OMB found that it was proper for Indiana University law professor William F. Harvey, the board chairman, to collect the $221-a-day consulting fee for his driving time to Washington to attend board meetings.
"Mr. Harvey indicated that he was working while his wife drove and that the consulting fees paid were for Legal Services work," the report says. Harvey collected $25,000 in consulting fees for his part-time job.
The investigation found that Josephine Worthy, a Carter administration holdover who was replaced by Reagan last October, collected $20,031 in consulting fees and spent an additional $17,696 on travel and expenses, mostly to visit Legal Services programs or conferences.
The report notes that in both July and August, LSC acting President Gerald Caplan warned board members that the fees and expenses were high and that the board "will surely" come under criticism. But it adds: "As far as we know, neither the White House nor OMB was advised of the high expenses and possible subsequent public criticism."
The OMB looked into a controversial contract approved by the board for its new president, Indiana lawyer Donald Bogard, a former student of Harvey. It includes a year's severance pay and membership in a private club.
The report found that although Bogard's contract would provide twice as much severance as that for any previous Legal Services president "Bogard's position is that he resigned a career job to accept an uncertain appointment under this board." The report says previous contracts contained a private-club provision.
The report found that while most government corporations are subject to the Government Corporation Control Act, Legal Services has many exceptions. It suggests amending the law to provide "more uniform administrative requirements, including stringent new audit requirements for such bodies."