Stefan Selig liked to travel in style.
As he jetted around the world promoting American industry as one of the Obama administration’s top trade officials, he told his staff to book him rooms at luxury hotels from South America to the Middle East — with hot tubs, rooftop decks and gourmet dining.
He rode with luxury-car services, spending $1,800 during a two-day trip to Boston last year. And when he stayed at hotels that were beneath his standards, Selig admonished his staff, complaining about “lousy” accommodations. In a sign of the style he was accustomed to as a wealthy investment banker, he deemed it “unacceptable” that a bartender at a Middle East hotel refilled his assistant’s cocktails with a shot of bourbon and left the “old orange peel and old ice” instead of supplying a fresh glass.
When Selig, the Commerce Department’s undersecretary for international trade, was back in Washington, he enjoyed an office suite at 1401 Constitution Ave. that was renovated at a cost to taxpayers of $50,000. The new carpet alone cost $10,000.
These excesses broke rules for permitted hotel expenses for federal employees and led to questionable costs for a government office renovation, according to a report released Thursday by the Commerce Department inspector general’s office.
Selig, who had been a top executive at Bank of America, is not named in the 45-page report, which refers to a high-ranking political appointee. But two government sources identified him as the subject of the investigation. He did not respond to a request for comment after multiple messages were left Thursday with his daughter and others who answered the phone at his home on Manhattan’s Upper East Side.
Investigators found that while Selig offered to pay for hotel costs that exceeded the government rate, he was reimbursed hundreds of dollars more than he should have been for each night on at least 12 of the 20 trips he took during his first year in the job. The report does not provide a dollar figure for the improper reimbursement he received.
Investigators for Deputy Inspector General David Smith concluded that the improprieties continued over at least a year starting in late 2014 because Selig paid little attention to government travel rules and created a culture where his staff felt little obligation to follow them either — with some fearing that doing so would anger their boss.
Selig, who was executive vice chairman of global corporate and investment banking at Bank of America before Commerce Secretary Penny Pritzker recruited him for the trade post, left the department abruptly in late June after a little more than two years. His departure was not publicly announced and came as the inspector general’s office was completing its investigation.
Commerce Public Affairs Chief Marni Goldberg declined to name the official in the report, but provided a statement defending him, saying he “indicated he was willing to pay for any portion of his travel expenses that was not legitimately reimbursable under government regulations, policy, and the rules.”
The statement said the Commerce Department “is reviewing the [Inspector General’s] findings to determine if additional reimbursements are required, and will seek any reimbursements owed.”
Selig left the complicated red tape of government travel regulations and reimbursement to inexperienced — and in some cases negligent — staff, who at times lied to create reasons why he needed to pay upward of $400 and $500 a night for a hotel room, investigators wrote. In some cases they made up business meetings to accommodate his personal travel, thinking the boss would want to get reimbursed by the government.
His staff also told investigators they bent the rules because they believed that political appointees of Selig’s caliber were entitled to stay in luxury hotels, unlike other federal employees.
“It was [Selig’s] evidently strong preference for luxury accommodations and his decision to rely on [his assistant] for making lodging and other arrangements for his trips that ultimately led to so many of the problems identified in this investigation,” the report said.
“Selig] could have done more to create an environment in his office that would have better facilitated full compliance with governing travel regulations and policies.”
Selig did not prepare his own travel documents, which is not unusual for a high-ranking official. But he signed every voucher his staff submitted to the Commerce Department for reimbursement, certifying that the information was true.
He “did not knowingly” make doctored or inappropriate claims for reimbursement, the inspector general said. But he should have been more careful and attentive to what his vouchers claimed and what his staff was doing to make him happy, circumventing federal rules.
Selig’s staff was not just trying to please the boss while he carried out official duties. One assistant did personal favors for the undersecretary and his family members on the clock and off — paying his bills, making dinner reservations, helping him apply for a membership at an exclusive social club and even arranging sightseeing tours for visiting family, the report said. Often the assistant used Selig’s title to get special treatment, according to investigators.
From the outset, as head of the 2,500-employee International Trade Administration, which focuses on creating jobs, promoting exports and seeking investment in U.S. industry, Selig made it clear he liked luxury accommodations when he traveled, whether to New York or abroad.
He acknowledged to investigators “that he may have expressed a preference to his staff about staying in a ‘superior form of accommodation’ while on official travel,” the report said.
The preference was well understood by his staff.
Selig “clearly likes nice hotels[;] [w]e all know that,” one assistant told investigators, recalling the boss making jokes about having to stay in “crappy hotels.”
When the assistant submitted vouchers to the travel office for reimbursement, the paperwork claimed the extra costs — which came to $1,150 a night at one hotel in Geneva, Switzerland– were necessary because there were no cheaper hotels in the area or because of Selig’s “schedule limitations.”
The government hotel rate varies from city to city, depending on local costs, but is never allowed for luxury accommodations.
Selig was reimbursed $500 a night for the Geneva trip, which included a weekend of personal time. The government rate was $340 a night. He told his staff he would pay for the nights that were not work-related and any costs above the federal rate.
But his staff told the travel office on this occasion and many others that he was authorized to exceed the government rate, in some cases by 300 percent, because he was a senior official and that was a perk given to all senior officials at the Commerce Department.
For one foreign trip, Selig told his assistant he wanted to fly out of the country from New York rather than Washington — at an extra $3,127.00 cost to the government. The assistant, asked by the travel office to justify the extra expense, said Selig had business meetings in New York — and then quickly tried to arrange them, even though one executive said he could not meet with the undersecretary that day.
Selig was not afraid to let staff know when he found his accommodations or service below his standards.
He returned from a trip to Atlanta, according to the report, calling his hotel ” ‘the single worst lodging experience’ he had while with the government,” the report said. Selig told his staff his hotel was ” ‘lousy,’ and acknowledged that he conveyed his dissatisfaction about the hotel to ‘anybody who would listen,’ including his staff.”
Following a trip to the Middle East, one of Selig’s assistants wrote a hotel manager an email to complain about what Selig later called an “unnacceptable” situation.
When the assistant ordered a second drink, the waiter “refilled my old glass with a shot of bourbon and my old orange peel and my old ice, which is really disappointing,” read the email.
The assistant told investigators that he personally did not care about getting a new glass for a second round of drinks. He said he couldn’t recall exactly who told him to send the email but noted that Selig was “very particular about cocktails.” When investigators asked Selig about the email, he denied instructing or suggesting that it be sent.
But he told them, “to go to a [Luxury Hotel A] bar and have what happened [there] is unacceptable.”
When the inspector general’s office interviewed Selig about the personal business he had his assistant tend to, he said the time was “well below the de minimus level.” He thought that “99.9 percent” of senior officials at the Commerce Department did the same.
Back in Washington, Selig got a tour of his suite of offices once the Senate had confirmed him in 2014 and balked. He told his staff the offices “looked awful,” with chipped and peeling paint, a stained carpet, exposed wiring and furniture that didn’t match.
When investigators asked some of Selig’s staff what they had thought of the offices, they described them as pretty much what government offices look like.
Selig pressed ahead with extensive renovations: New ceiling tiles, completely refurbished bathrooms, refinished doors with brass kick plates and more. The cost exceeded the established limits of $5,000 for this kind of work by tenfold.
Selig’s staff told the inspector general the changes were “over the top.”
He told investigators “that agency officials did not keep him apprised of the expense involved in renovating his office suite,” and said he was informed it was completed for less than the $5,000 Congress allotted for such projects.
That amount didn’t cover the cost of the carpet, which was recommended by an interior designer for one of the luxury hotel chains he stayed at on official business, installed throughout his office suite.
It cost $10,000.