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Relocation program for senior executives should be investigated across government, watchdog tells lawmakers

Assistant Inspector General Linda Halliday, second from left, Undersecretary for Veterans Benefits Allison Hickey, middle, Deputy Undersecretary for Field Operations Diana Rubens, second from right, testify before Congress in 2014. (Chip Somodevilla/Getty Images)

The top watchdog for the Department of Veterans Affairs told lawmakers on Wednesday that a government program that pays private contractors a 27 percent fee to sell homes of senior executives who relocate “should be looked at.”

“I would think it should be looked at government-wide,” Linda Halliday, VA’s assistant inspector general, told the House Veterans’ Affairs Committee at a hearing on abuses her office discovered in the agency’s relocation program for high-level staff.

The program allowed Diana Rubens, VA’s former deputy secretary for field operations, to move to Philadelphia from Washington for a job for which she volunteered while still keeping her $181,497 salary, even though the new position involved fewer responsibilities. The government paid $274,000 in moving expenses, $212,000 of them to a contractor that sold her home for the government when it was not at all clear that she needed help, Halliday said.

[Senior executives coerced managers whose jobs they wanted to transfer, then took the jobs themselves, watchdog says]

“How did this get so out of control?” asked Rep. Mike Coffman (R-Colo.) “Military brass gets less money for their moves. If you lose money on the sale of your home, there is no compensation for that.”

He said the relocation program — Halliday’s office also identified other senior executives who got similar housing help — “incentivizes this culture of corruption” at VA.

The watchdog’s revelations last month that Rubens and another executive, Kimberly Graves, also manipulated the hiring system to coerce two managers to accept job transfers against their will — then stepped into the vacant positions themselves — has reverberated deep inside the agency.

VA’s top benefits official, Allison Hickey, resigned under pressure on Friday, just days before she was scheduled to testify at Wednesday’s hearing. Investigators said in their report that Hickey had approved Rubens’s and Graves’s moves, as well as irregularities in promotions and reimbursements involving nearly two dozen other senior executives in her department.

The reassignments were designed to circumvent a pay freeze at the Veterans Benefits Administration, the report found.

Rubens, Graves and three other VA officials who were asked to testify Wednesday were no-shows, leading the committee to vote to issue them subpoenas to appear at another hearing, to be held Nov. 2. Committee Chairman Jeff Miller (R-Fla.) said he would ask Hickey to appear as a private citizen.

Investigators found that nearly two dozen senior executives were promoted or moved to new positions at the department and that many of the accompanying salary increases did “not consistently reflect changes in the positions’ scope of responsibility,” the report said.

The inspector general found that relocation expenses are supposed to be reserved for hard-to-fill vacancies. This was hardly the case here, because the women made it clear that they had family in St. Paul, Minn., and Philadelphia and wanted to return there.

And for some of the other transfers, the vacancies were not even announced before the relocation incentive was offered.

Halliday said the relocation expenses that VA paid for Rubens and Graves to switch to jobs as directors of the Philadelphia and St. Paul regional offices, respectively, cost taxpayers about $500,000.

“It was a misuse of position that cost the federal government almost half a million dollars, when you look at the two,” Halliday told lawmakers. “They pushed two individuals who were already in those jobs out.”

Rubens, Graves and the other executives kept their pay even though their job responsibilities were reduced, which Halliday said was allowed by federal personnel regulations.

The basic rate of pay for a career senior executive may be reduced only if the employee received less than a fully successful annual performance review, according to Office of Personnel Management rules.

Rubens had been rated better than fully successful on all performance appraisals. “Based on applicable federal regulations, we determined VA could not reduce her annual salary upon reassignment despite the decrease in scope of her responsibilities,” investigators wrote.