The Knoxville World's Fa w0041 ----- r a BC-04/25/83-FAIR 2takes 04-25 0001 Fair's Gone but Controversy Lingers On By Pete Earley Washington Post Staff Writer

The Knoxville World's Fair closed five months ago, but a controversy lives on at the Commerce Department over the way high-level officials handled charges made against two top fair officials.

The brouhaha has pitted Inspector General Sherman M. Funk against Lionel H. Olmer, undersecretary for international trade, and two of his lieutenants, William Morris and George Pratt.

The dispute centers on the inspector general's contention that Morris and Pratt "hindered" his investigation of fair operations.

Commerce deputy counsel Irving P. Margulies, who fielded all questions for Olmer, Morris and Pratt, countered that Funk's report contains "glaring inadequacies" and "interpretations of the law which the IG's office is not qualified to make."

While disputes between IGs and agency managers are not uncommon, this one has spilled over to the Justice Department, which said Funk's investigation was proper but decided not to prosecute the fair officials, and to the Merit Systems Protection Board, which backed a whistle blower in the fair office whom Pratt had tried to lay off.

The saga dates back to 1980, when President Carter appointed Charles Fraser, owner of the Sea Pines Resort on South Carolina's Hilton Head Island, to the largely ceremonial job of fair commissioner. Fraser took one of his Sea Pines employes, John Polumbo, with him to work as a GS12 in Knoxville.

A short time later, Patti Wilson, the secretary in the fair office, began complaining to Commerce officials that Polumbo was conducting Sea Pines business out of the fair office.

Pratt, who was responsible for the fair as director of the Office of International Expositions, met with Morris, the assistant secretary for international development, and agreed that Pratt should meet with the two fair officials to discuss Wilson's allegations.

According to Funk's report, three days after Pratt met with the men in November, 1981, Polumbo removed 12 boxes of private business files and records from the fair office and told Wilson to erase all private business correspondence from the office's word processor.

Funk said Polumbo offered to pay Wilson for any personal typing she had done for him and asked her to say that she had done the typing on weekends. According to Funk, Wilson refused to accept money from Polumbo.

In his report, Funk said, "Polumbo's attempted payoff of Wilson to ensure her silence bordered on a bribery attempt and was highly prejudicial to the government . . . . " He added that "the actions of Morris and Pratt permitted the destruction of incriminating evidence and the attempted payoff of a key witness."

According to Funk, Polumbo said Pratt told the fair officials: "I don't care if it's true or not. I'm telling you that this is what you need to know is happening, that an investigation will probably take place."

Funk said Commerce employes are required to notify the inspector general immediately if they learn of alleged wrongdoing and are prohibited from "conducting any independent inquiry . . . relating to alleged improprieties."

Margulies counters that agency regulations allow managers like Morris and Pratt to investigate "instances of waste, mismanagement or minor infractions . . . without the intervention of the inspector general."

After his meeting, Pratt wrote Funk a memo that briefly outlined the secretary's accusations. He said the two fair officials had "admitted without hesitation" that they had "technically" violated some rules. But, Pratt said, "the matter, while apparently technically true and regrettable, appears to be rectified, and no further action is necessary."

Funk contends that Pratt wrote the memo to discourage his office from investigating the matter.

But, Funk reported, Fraser and Polumbo continued to conduct Sea Pines business from the fair office. In December, 1981, Wilson again complained, as did another employe, Irene Adrian.

After refusing at first to meet with Adrian, Pratt agreed a month later to see her. He told her to make a formal statement to Funk, who then began his investigation.

Fraser resigned in April, 1982, and Polumbo quit a month later. Funk finished his report Oct. 29.

Polumbo refused to comment for this story, but Fraser said his resignation had nothing to do with Funk's probe. "I resigned because I didn't want to move to Knoxville when the fair opened and because . . . I knew Reagan would want to appoint his own man."

In his final report, Funk accused Fraser and Polumbo of trying to use their federal jobs for personal gain. Among other things, Funk accused Polumbo of drawing a $2,400-per-month salary from Sea Pines while earning a federal salary and charging business-related travel to the government.

Fraser said Funk's charges amount to "a big fat lie." He said that the only money Polumbo received from Sea Pines while he was a federal employe was deferred compensation.

Fraser said Polumbo reimbursed the government $2,500 to cover Wilson's non-government typing. "He didn't think anything about it because my secretaries at Sea Pines had typed hundreds of documents for the fair free."

Fraser filed a formal complaint against Funk with the Justice Department, but Justice said the inspector general had not violated any regulations in making his investigation. Justice didn't comment on the substance of the report.

Funk, meanwhile, referred his charges to John Gill, the U.S. attorney in Knoxville. Gill wrote Funk that there wasn't enough evidence to win a conviction. Gill would not comment to a reporter.

Back at Commerce, Pratt laid off Adrian several months before her contract was scheduled to end, as part of what he described as an overall reduction-in-force. Adrian complained to Funk, who said he warned Morris and Pratt not to fire her.

But Pratt went ahead, and Adrian filed a complaint with the Merit Systems Protection Board

Last month, the board ruled in her favor, saying that the firing was in reprisal for her cooperation with the inspector general. The board said there was no evidence that a "bona fide RIF" had taken place in the fair office.

The MSPB also said Morris and Pratt had failed to "cooperate voluntarily" with Funk and may have "possibly . . . frustrated investigative attempts by the IG."

Olmer, though, rejected Funk's second recommendation that he reprimand his subordinates. "We are convinced that they did nothing wrong," Margulies said. "We assume this matter will end with the inspector general reporting his findings and with us making our statement."