Sen. Charles E. Grassley (R-Iowa), a frequent critic of the government's internal operations, yesterday faulted the judgment of the top federal official in charge of investigating waste, fraud and abuse at the Pentagon and questioned whether he should continue in his job.

In one case, Grassley said, a criminal investigator was allowed to remain employed at the Defense Department for six months after being convicted of a felony in March 1996 and then retire with full pension benefits. In another case, Grassley said, an agent with "a history of fabricating reports" received a cash bonus for his work and later transferred to the Treasury Department in January "with no record of punishment or accountability."

Grassley said the personnel cases showed "poor judgment" and "irresponsible handling" by Donald Mancuso, the acting inspector general (IG) at Defense and a former director of the Defense Criminal Investigative Service (DCIS).

The criticism by Grassley, involving incidents that happened between 1993 and 1996, comes at a sensitive time for Mancuso, who is on the White House's list of potential nominees for the Pentagon IG post, which has been vacant since March.

In his brief speech on the Senate floor, Grassley said he believed "it is reasonable to question" whether Mancuso should stay on as acting IG and whether he should be nominated and confirmed as the Defense IG.

Mancuso, in a statement released by an aide, said he has not had an opportunity to review Grassley's remarks. But, Mancuso said, "It sounds very much like Senator Grassley may have been misled and I would welcome the opportunity to meet with the senator to clarify any misinformation he may have been provided."

Grassley spokeswoman Jill Kozeny said "the overwhelming evidence" in a 64-page report on the IG cases "speaks for itself." The report, used by Grassley as the basis for his remarks, was prepared by the Republican staff of the Senate Judiciary subcommittee on administrative oversight and the courts, which Grassley chairs.

The allegations were brought to Grassley's attention by a former DCIS agent, who claimed Mancuso knew of possible wrongdoing in the two cases and failed to investigate or discipline the employees involved.

In the case of the felon, who was convicted of passport fraud, Mancuso wrote the judge during trial proceedings on his colleague's behalf, "completely blind to the problem," Grassley said. Mancuso and the employee were considered friends by associates, Grassley said.

In the other case, Grassley said, the agent who eventually transferred to the Treasury IG's office created false reports that were used to discredit and punish other agents at the Defense Department. Colleagues complained to Mancuso and other senior DCIS managers, who "failed to take appropriate corrective action," Grassley said.

Grassley questioned whether the agent should continue to be assigned to a Treasury job that involves investigating criminal and misconduct allegations. The agent could not be reached for comment. The Treasury Department IG office said it would take appropriate action after receiving Grassley's report.

Mancuso, in a letter to Grassley that accompanied the senator's report, defended his handling of the two cases, saying regular administrative procedures were followed. Mancuso noted that he supervised about 500 employees during nine years at DCIS and remains "committed to integrity in leadership within the inspector general community."