[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




 
            ASSESSING THE STATE DEPARTMENT INSPECTOR GENERAL

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 14, 2007

                               __________

                           Serial No. 110-79

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 14, 2007................................     1
Statement of:
    Krongard, Howard J., Inspector General, U.S. Department of 
      State......................................................   138
Letters, statements, etc., submitted for the record by:
    Krongard, Howard J., Inspector General, U.S. Department of 
      State, prepared statement of...............................   141
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut:
        Prepared statement of....................................   136
        Staff report.............................................    17
    Waxman, Chairman Henry A., a Representative in Congress from 
      the State of California, prepared statement of.............     5


            ASSESSING THE STATE DEPARTMENT INSPECTOR GENERAL

                              ----------                              


                      WEDNESDAY, NOVEMBER 14, 2007

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:15 a.m., in 
room 2154, Rayburn House Office Building, Hon. Henry A. Waxman 
(chairman of the committee) presiding.
    Present: Representatives Waxman, Cummings, Watson, Braley, 
Norton, Lynch, Higgins, Yarmuth, McCollum, Hodes, Sarbanes, 
Welch, Shays, Platts, Cannon, Issa, McHenry, and Foxx.
    Staff present: Phil Schiliro, chief of staff; Phil Barnett, 
staff director; Kristin Amerling, chief counsel; David Rapallo, 
chief investigative counsel; Theodore Chuang, deputy chief 
investigative counsel; David Leviss, senior investigative 
counsel; Margaret Daum and Steve Glickman, counsels; 
Christopher Davis, professional staff member; Earley Green, 
chief clerk; Teresa Coufal, assistant clerk; Caren Auchman, 
press assistant; Ella Hoffman, press agent; Leneal Scott, 
information systems manager; Kerry Gutknecht and William 
Ragland, staff assistants; David Marin, minority staff 
director; Larry Halloran, minority deputy staff director; 
Jennifer Safavian, minority chief counsel for oversight and 
investigations; Keith Ausbrook, minority general counsel; John 
Brosnan, minority senior procurement counsel; Steve Castor, A. 
Brooke Bennett, and Emile Monette, minority counsels; Nick 
Palarino, minority senior investigator and policy advisor; 
Patrick Lyden, minority parliamentarian and member services 
coordinator; Brian McNicoll, minority communications director; 
Benjamin Chance, minority clerk; and Ali Ahmad, minority deputy 
press secretary.
    Chairman Waxman. The meeting of the committee will come to 
order.
    This year, our committee has given a special focus to two 
areas: finding waste, fraud, and abuse, and examining how to 
make Government effective again. Today's hearing on the 
performance of Howard Krongard, the State Department's 
Inspector General, bridges both of these fundamental issues.
    Just as Congress tries to do its job of oversight, we set 
up inspectors general for many of the departments and agencies 
to do the job of trying to stop abuse, waste and fraud of 
taxpayers' dollars, and to make sure that the Government is 
working more effectively.
    When we look at the State Department actions in Iraq, we 
look at the reason for this whole hearing. As we examine the 
construction of the new Baghdad embassy, the oversight of 
Blackwater, and corruption in the Iraqi government, seven 
current and former officials in the Inspector General's Office 
expressed concerns about Mr. Krongard's own oversight of the 
State Department.
    These officials, and others who spoke with the committee 
during our investigation, raised fundamental questions about 
Mr. Krongard's judgment, actions, and effectiveness. They 
described their serious concern about his inadequate oversight 
of the construction of the Baghdad embassy, his failure to 
assist the Justice Department's investigation of Blackwater for 
arms smuggling, his refusal to pursue charges of procurement 
fraud implicating DynCorp, his intervention in the 
investigation of Kenneth Tomlinson, and his lack of 
independence in auditing the State Department's financial 
statements.
    The committee was told that due to Mr. Krongard's abusive 
management style, the Office of the Inspector General is 
bleeding people right and left. What these officials told the 
committee is summarized in a staff report I am releasing today, 
and, without objection, it will be made part of the official 
record.
    One of Mr. Krongard's key responsibilities is providing 
oversight for the State Department's construction of the new 
Baghdad embassy. In a previous hearing, we learned that the 
project will cost $144 million more than projected, is far 
behind schedule, and has potentially life-threatening 
construction deficiencies. There are also allegations that the 
building's contractor, First Kuwaiti, was involved in labor 
trafficking. When Mr. Krongard heard that his staff might 
investigate this issue, he sent them an e-mail that said, as 
one official described it, ``Cease and desist all work. I am 
taking care of this.''
    Mr. Krongard conducted his own personal and unprecedented 
investigation of this potential scandal. According to Mr. 
Krongard, he interviewed six employees who had been handpicked 
by First Kuwaiti. He questioned them without a translator 
present and took virtually no notes. Mr. Krongard then 
concluded that there was no evidence that First Kuwaiti had 
committed human rights violations.
    The reaction of Mr. Krongard's senior staff to this 
investigation is remarkable. Mr. Krongard's deputy said the 
effort was ``unorthodox, didn't comply with any standards, and 
was the furthest thing from an investigation.'' Another 
official warned that Mr. Krongard's investigation ran the risk 
of inadvertently ruining a future prosecution.
    The former head of Mr. Krongard's audit division told us 
that the report ``would never pass muster in my organization 
and in any IG investigation that I have ever worked in.'' She 
also said, ``It is an embarrassment to the community.'' A 
special agent was even more blunt, calling Mr. Krongard's 
report ``an affront to our profession.''
    Given the strong condemnations from the professional staff 
in the Inspector General's Office, this incident alone would 
justify today's hearing. Unfortunately, it is not an isolated 
incident. In fact, I don't believe it is even the most serious 
allegation raised against Mr. Krongard. In the course of our 
investigation, Mr. Krongard's investigators told us he placed 
First Kuwaiti off limits to investigation. They said he refused 
to pursue credible complaints about fraud, waste, and abuse in 
the embassy project, and rejected proposals to audit the 
construction process during construction so that problems could 
be addressed as they happened.
    When the Justice Department wanted to investigate these 
matters, it asked Mr. Krongard for cooperation. He refused 
repeatedly. In one instance, Mr. Krongard e-mailed his staff 
``stand down on this and do not assist.'' In one mind-boggling 
sequence, Mr. Krongard, against the advice of his most senior 
staff, insisted on meeting ``a person of interest'' in an 
investigation involving the embassy without assistance of 
counsel or investigators. Three days after meeting with Mr. 
Krongard, the potential suspect canceled the scheduled meeting 
with audit officials and left the United States.
    Shortly after that, Mr. Krongard insisted on meeting with 
another potential suspect during a trip to Iraq. This time, his 
senior staff not only advised him to cancel the meeting, but 
asked the Justice Department to instruct Mr. Krongard not to 
conduct haphazard witness interviews. Despite the additional 
warning from the Justice Department, Mr. Krongard met with the 
individual. When he returned to Washington, he wanted to 
debrief his investigators on his meeting. The agents were 
worried that the information might taint them and ruin any 
credible investigation. They specifically asked Mr. Krongard 
not to share his impressions with them, but he ignored their 
request and sent one of the agents an e-mail summarizing his 
conversation with the potential suspect.
    Well, none of these actions make any sense. When the 
Justice Department asked for cooperation, Mr. Krongard refused. 
When they warned him that his freelance investigations would 
jeopardize potential prosecutions, he ignored that. When his 
own staff tried to advise him on proper investigative 
procedures, he ignored them.
    If the reports the committee has received from the Justice 
Department and the Inspector General's senior staff are 
accurate, Mr. Krongard has acted with reckless incompetence.
    And the questions about Mr. Krongard's performance aren't 
limited to the embassy in Baghdad. The Justice Department 
sought Mr. Krongard's cooperation as it investigated reports 
that a large private security contractor was smuggling weapons 
into Iraq. Instead of cooperating, Mr. Krongard apparently 
created a series of obstacles to the inquiry. One of Mr. 
Krongard's aides told our committee: ``There was absolutely no 
justifiable investigative management or any kind of reason for 
us to stop that investigation.''
    The Justice Department shares that view and told the 
committee: ``At this juncture, we cannot determine all of the 
ramifications of the IG's conduct, but some of his actions have 
certainly impacted the investigation. For reasons that remain 
unclear, the line IG agents have been forced to funnel requests 
within their own agency through a congressional and public 
relations official. This is not the usual practice. The 
Inspector General also issued a statement, without advanced 
cooperation with Department attorneys, confirming the existence 
of this investigation, which is inconsistent with our law 
enforcement interests.'' That was from what the Justice 
Department told our committee.
    Well, the Justice Department has advised us that ``Mr. 
Krongard's action resulted in a cumbersome and time-consuming 
investigative process and added multiple layers to our 
investigative efforts.'' As of this last Friday, the Justice 
Department still has not received the State Department 
materials it has requested.
    As Mr. Krongard revealed through some ill-advised comments, 
the company implicated in the weapon smuggling is Blackwater. 
We have now learned that Mr. Krongard's brother, Buzzy 
Krongard, serves on Blackwater's advisory board. We have also 
learned that Mr. Krongard concealed this apparent conflict of 
interest from his own deputy, even as he remained actively 
involved in monitoring the Justice Department's criminal 
investigation.
    In the course of today's hearing, we will also examine 
allegations about Mr. Krongard's actions regarding 
investigations into DynCorp and its subcontracts, his decision 
to allow the State Department to replace unfavorable financial 
audits with favorable ones, his contact with Kenneth Tomlinson 
to alert him to a possible investigation of wrongdoing, and his 
management approach to the Inspector General's Office.
    It is a staggering list of allegations from Mr. Krongard's 
own staff. In committee interviews and depositions, the Deputy 
Inspector General, the Assistant Inspector General for 
Investigations, the Assistant Inspector General for Audits, 
their deputies, and the counsel to the Inspector General, along 
with many others, all criticize Mr. Krongard or his 
performance. And a long list of top officials, including an 
Assistant Inspector General for Investigations, a Deputy 
Assistant Inspector General for Investigations, a Deputy 
Assistant Inspector General for Audits, the head of the Office 
for Information Technology Valuations, and a counsel to the 
Inspector General have all resigned since Mr. Krongard became 
Inspector General in 2005. As one current senior official told 
us, ``Joining Mr. Krongard's office was the worst mistake of my 
life.''
    Now, I know that the Republicans on this committee take a 
different view on this matter. Today's hearing and Mr. 
Krongard's testimony will help us sort through the facts. I 
think we all understand the preeminent role the State 
Department now has in Iraq. The Department has to be operating 
on all cylinders if we have any hope of achieving real and 
lasting political reconciliation in Iraq. Countless lives and 
billions of dollars are at stake. There is no margin for error. 
That underscores why Mr. Krongard's office is so essential, why 
it needs to meet the highest standards and why this hearing is 
so important.
    I want to now recognize Mr. Shays, who is sitting in for 
Mr. Tom Davis, the ranking member of the committee, and is 
acting on his behalf, and I want to yield him time for his 
statement.
    [The prepared statement of Chairman Henry A. Waxman 
follows:]

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    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Krongard, welcome to Congress. I just want to say, 
before I read my statement, you have been trashed by this 
committee. They sent a 14 page letter to you and released it to 
the press. All were accusations and allegations, and now you 
have a time to respond. Regretfully, there aren't as many 
Members on our side of the aisle here yet, but I am sure this 
committee will be fair to you, and I want you to take every one 
of those allegations and deal with them as you will.
    Here we go again: oversight by accusation and personal 
attack. Today, the committee is not assessing the State 
Department Inspector General, as advertised. We will not be 
conducting an evidence-based appraisal of Inspector General 
[IG], Howard Krongard or the office he runs. Instead, we will 
ask to focus on a litany of salacious allegations in the futile 
hope loud repetition will do what exhaustive investigation so 
far has not: confer legitimacy on unproven conclusions. It is 
another sad example of the majority's high-profile, low-proof 
approach to oversight that yields far more rancor than reform.
    This so-called investigation also confirms an unfortunate 
penchant by the committee to leap to politically convenient 
conclusions before looking carefully at witnesses who happen to 
be saying what the majority wants to hear. One whistle-blower 
at a previous hearing turned out to have a past so checkered 
his motives and veracity were highly suspect. But easily 
discoverable evidence undermining his credibility was 
overlooked in the committee's unseemly haste to advance its 
anti-administration narrative.
    Here, again, information from several whistle-blowers forms 
the basis of the chairman's charges that the State IG 
interfered with ongoing investigations out of political loyalty 
to the State Department and the White House, censored damaging 
inspection and audit reports, and prevented investigations into 
allegations of wrongdoing in Iraq and Afghanistan.
    But in responding to questions on the record after those 
allegations had been made public, not one of the so-called 
whistle-blowers had any direct evidence to support claims of 
political manipulation. Nor did they provide information to 
substantiate the alleged dereliction of duty by the IG. They 
disagreed with the IG's judgment, but that alone does not make 
those judgments wrong or corrupt. One whistle-blower said his 
conclusions about Mr. Krongard's political leanings was nothing 
more than a hunch.
    It is telling none of those whistle-blowers will testify 
today. Their absence speaks volumes about the lack of substance 
behind this investigation, but their response to specific 
questions about the chairman's charges are contained in a 
Republican staff report being released today. That report 
attempts to bring some balance to this discussion of how the 
State Department Office of Inspector General operates under Mr. 
Krongard. I ask that be made part of the hearing record today.
    Chairman Waxman. Without objection, that will be the order.
    [The information referred to follows:]

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    Mr. Shays. That more balanced view has to include the fact 
the State Department IG has been institutionally weak and 
conflicted for many years due to limited funding, the demands 
of a mandatory global embassy inspection program, and a 
prolonged turf struggle with State diplomatic security services 
over fraud enforcement.
    Add to that dysfunctional mix Krongard's mercurial, some 
might even say abrasive, management style, and the stage was 
set for complaints by disgruntled investigators to be amplified 
and exploited as political fodder.
    When you get right down to it, Mr. Krongard's personal 
style seems to be the only issue here today. But earlier this 
year the Government Accountability Office recommended a broad 
reassessment of State IG staffing, greater use of audits over 
inspections, and other steps to protect the IG's essential 
independence. Those should be the questions pursued by this 
committee, questions about capacity and performance, not water 
cooler gossip and personality conflicts.
    No inspector general should have his or her basic integrity 
and critical independence undermined by political second-
guessing here in this Congress or in the executive branch. I 
hope we can move beyond these shallow, drive-by assaults on 
political targets and focus this committee's considerable 
resources and reputation on addressing the deeper challenges to 
effective and efficient Government.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Chairman Waxman. Thank you, Mr. Shays.
    Without objection, all Members will be permitted to enter 
opening statements into the record.
    We are going to hear from Mr. Krongard. I want to ask 
unanimous consent that the questioning be started off with 10 
minutes controlled by the chairman and 10 minutes controlled by 
Mr. Shays.
    Mr. Krongard, we want to welcome you to our hearing today. 
It is the practice of this committee that all witnesses that 
testify do so under oath, so I would like to ask you if you 
would rise and please raise your hands.
    [Witness sworn.]
    Chairman Waxman. The record will indicate that the witness 
answered in the affirmative.
    You have given us a prepared statement, and that will be 
made part of the record in full. We would like to ask you, if 
you would, to give us your oral presentation. We will have a 
clock that will indicate when 5 minutes are up. There will be a 
yellow light indicating the last minute and then a red when 5 
minutes is up, but I will not enforce the 5-minute rule. We do 
want to hear from you. We would like to ask you to be mindful 
of the time constraints so all Members will have an opportunity 
for questions.
    Mr. Shays. Mr. Chairman.
    Chairman Waxman. Yes, Mr. Shays.
    Mr. Shays. Given that he is the only witness and you have a 
litany of charges, I do hope you will be very generous in 
allowing him to make his comments.
    Chairman Waxman. I think that makes sense, and we will 
certainly do that.
    Mr. Shays. Thank you.
    Chairman Waxman. Mr. Krongard.

   STATEMENT OF HOWARD J. KRONGARD, INSPECTOR GENERAL, U.S. 
                      DEPARTMENT OF STATE

    Mr. Krongard. I had planned to stay pretty close to the 5-
minutes, so I will not go much over it, but thank you, Chairman 
Waxman, Congressman Shays, members of the committee.
    I come before you today voluntarily and anxious to respond 
to inaccurate allegations regarding my performance as Inspector 
General of the Department of State.
    By way of background, prior to May 2005, I had never been 
involved in Government service. I was a lawyer for 40 years in 
the private sector, with 23 years experience as counsel for Big 
Eight and Big Six international accounting firms, where I 
analyzed and defended many audits. Based on my experience, I 
was asked, in 2004, without seeking it or even being aware of 
it, to take on the job of Inspector General at the State 
Department. That position had been vacant for some time.
    At 65 years of age, I came to office with no aspiration for 
any further position and with no agenda other than to do the 
best job I could of carrying out the specific mission 
prescribed for me by senior management at the State Department 
at that time, namely, to restore the capabilities of an IG 
office that had fallen into disrepair and was known to have 
dissension and rivalries, and to make it more efficient, more 
professional, and more relevant to a dynamic post-9/11 world 
environment.
    In view of the allegations that I have politicized the 
office, have acted from partisan political ties, and believe my 
foremost mission is to support the Bush administration, I 
should point out that I have never had any political ties 
whatsoever. I have never been involved in any political party 
activities; I have never worked in a political campaign; I have 
never been a major contributor to any one party; and I do not 
recall even making a political contribution since the year 
2000. When I was considered for and offered the IG job, I had 
never met or spoken to the President or any other person in the 
White House. And even today, after 2\1/2\ years in office, with 
the exception of a person I had known from working for a 
volunteer organization long before coming to Washington, I 
still have never met or spoken with the President or any other 
person in the White House.
    Mr. Chairman, at the time I was awaiting the confirmation 
process and had the natural apprehension as to whether I should 
take on a job I knew very little about, I read your persuasive 
report on the politicization of the inspectors general and I 
thought I was very much the kind of person you were looking 
for.
    In the course of carrying out my mission to restore the 
capabilities of OIG and to make it more efficient, 
professional, and relevant, I sometimes clashed with a minority 
of people in OIG who were resistant to change, who had grown 
comfortable with a leaderless organization, or who may not have 
had the high level of skills or commitment needed in today's 
changing environment. These clashes were unfortunate, but I 
need to emphasize that I never allowed them to affect my 
judgment as to which jobs were to be undertaken or where 
resources should be allocated.
    A recurring theme in the allegations leveled at me is that 
I have impeded investigations that agents in OIG wanted to 
conduct. I want to say in the strongest terms that I have never 
impeded any investigation. Without getting into the specifics 
of any particular investigation, suffice it to say there are 
many times when experience and capabilities, benefits to be 
achieved, likelihood of success, availability of other 
investigative bodies to do the same work, available resources, 
both financial and human, and possibly conflicting parallel 
proceedings have to be weighed in determining whether a 
particular investigation proposed by someone in INV or OIG can 
or should be undertaken and, if so, when. I have tried to make 
these determinations as best I can, with the objective of 
making OIG as effective, efficient, and relevant to the current 
world as I can. Expecting to be informed of investigations 
undertaken by OIG, asking for useful work plans to support 
them, and taking care to avoid conflicts and coordinate efforts 
with other work being done by others, both inside and outside 
OIG, does not constitute obstruction.
    With respect to the allegations of trafficking in persons 
at the new embassy compound, I did what I thought was best in 
those circumstances. I went to the Multi-National Force-Iraq 
Inspector General, the recognized leader in the field of 
inspecting camps in Iraq, and I urged them to add the new 
embassy compound construction worker camp to the many worker 
and guard camps they were already inspecting. The work MNF-I IG 
did was significantly more extensive than my own, but it 
corroborated my preliminary observations. I believed then, and 
I believe now, that MNF-I IG was objective, experienced, and 
the most efficient and effective way for OIG to test the 
credibility of the many allegations to determine what, if any, 
further work was appropriate. MNF-I IG has taken great offense 
at the mischaracterization of their work, and I share their 
feelings.
    In closing, let me share with you what I wrote to every 
member of OIG on May 2, 2007, the second anniversary of my 
swearing in: ``As I begin my third year, I urge each of you to 
reflect on what we have accomplished under very difficult 
circumstances, to take pride in your work and view each product 
you participate in as going out with your name on it, and to 
give me your support as we go forward.
    I also ask you, frankly, to make an effort to reduce some 
of the static that interferes with the harmony we would like to 
achieve. We have enough challenges to focus on without spending 
energy in rivalries between functional offices, the front 
office and staff, and Foreign Service and Civil Service, or in 
rumoring, back-biting, and complaining. Obviously, some of that 
is unavoidable human nature, especially in Government and in 
any limited resource environment.
    Nevertheless, let's do our best to keep this to a minimum, 
to recognize things will never be perfect, to understand that 
all decisions cannot please all people, and, most of all, to 
keep our eye on the ball that keeps us all here: to make OIG, 
the State Department, BBG, and the Federal Government better 
places, more efficient organizations, and more effective in 
accomplishing their objectives.''
    Thank you, sir, and I would be pleased now to respond to 
any questions the committee may have.
    [The prepared statement of Mr. Krongard follows:]

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    Chairman Waxman. Thank you.
    Mr. Krongard. Sir, I would make a comment, if I could, 
because one thing just came up that really does bother me, and 
that was an allegation concerning my brother. I can tell you 
very frankly I am not aware of any financial interest or 
position he has with respect to Blackwater. It couldn't 
possibly have affected anything I have done because I don't 
believe it. And when these ugly rumors started recently, I 
specifically asked him. I do not believe it is true that he is 
a member of the advisory board that you stated, and that is 
something I think I need to say.
    Chairman Waxman. OK. Thanks.
    Well, Mr. Krongard, I gave an opening statement and in it I 
summarized a number of significant issues that I wanted to 
discuss this morning. But I want to start by asking you about 
new information we have received regarding a series of 
conflicts you have had with the Department of Justice.
    On January 18, 2007, the Justice Department requested 
assistance from your office investigating allegations of 
construction problems at the new Baghdad embassy. According to 
John DeDona, the head of your investigations division, the 
Justice Department was seeking assistance in obtaining contract 
files, contract records, payment invoices, and inspection 
reports. But on January 23rd, you directed your investigators 
to stand down on this and not assist.
    The committee asked the Justice Department about this and 
they told us they called you personally to ask for assistance 
in locating contract documents and locating and interviewing 
witnesses. The Justice Department informed the committee that 
you gave them different reasons for your refusal. First they 
said you claimed there were other pending matters involving 
First Kuwaiti. What other matters involving First Kuwaiti were 
you referring to?
    Mr. Krongard. Sir, at that time, both myself and MNF-I IG 
had conducted our onsite work and were in the course of 
preparing reports, and I told the representative of the Justice 
Department of that work and I did tell him that I obviously 
couldn't control the timing of his work, but I said that if 
that could wait until those two pieces of work were completed 
and the reports issued, it would preserve the independence of 
those without possibly suggesting that either MNF-I IG or 
myself was in any way affected by----
    Chairman Waxman. Those reports were about labor 
trafficking.
    Mr. Krongard. And that is what----
    Chairman Waxman. What the Justice Department asked you 
about was information about contracting, possible criminal 
actions with regard to the contracting itself.
    Mr. Krongard. Sir, I differ with that. The scope of work 
that the person from the Justice Department called me about--
and I believe some of this is under seal, so I am a little 
bit--it is hard for me to express other than the scope was far 
broader than what you have just said and did include the 
trafficking issues.
    Chairman Waxman. You are talking about your investigation 
is under seal or the Justice Department?
    Mr. Krongard. No, his, the Justice Department's.
    Chairman Waxman. OK, but you told the Justice Department 
you couldn't give them the contracting information and 
cooperate with their investigation on contracting abuses that 
might involve criminal activities because you were doing your 
own investigation. Your own investigation was on labor 
trafficking and, therefore, you didn't want to give them the 
information on the other issue until you completed your 
investigation. Is that your position?
    Mr. Krongard. No, sir, it is not. There were actually three 
things that the Justice Department was talking about. They were 
talking about conducting interviews, having representatives 
from my staff conduct interviews for or with them; they were 
talking about obtaining documents from the State Department; 
and they were talking about these issues regarding the conduct 
of the workers at the new embassy compound, which, by the way, 
was the essence of what started their work. Their work expanded 
from that.
    With respect to----
    Chairman Waxman. Let me read to you something that came out 
in our report that I want you to react to. One internal e-mail 
sent in January 2007 reported that the Justice Department was 
seeking help from the Inspector General in investigating 
billing for work done improperly or incompletely, theft of 
materials and labor, and alleged corruption of a State 
Department official overseeing contract performance. Now, that 
should have been a high priority. They are looking at criminal 
actions, they want your help, and you are telling them, no, I 
can't help you, I have other things going on.
    According to the committee's investigation, you had already 
refused to allow your investigators to open a case. There were 
no audits underway and we could identify no other investigation 
at the time this Justice Department request was made. The 
Justice Department also informed the committee that you said 
this was not the sort of thing the Office of Inspector General 
did, and it would be a conflict for the OIG to be investigating 
those complaints and conducting a law enforcement 
investigation.
    Is it your position that there is some provision of law 
that prohibits your office from assisting the Justice 
Department?
    Mr. Krongard. Sir, you have made a lot of statements. I 
wonder if I could--I was trying to write down ones. Can I 
comment as I have them?
    Chairman Waxman. Well, my question to you that I want you 
to answer is do you believe there is some prohibition in law 
from your cooperating with the Justice Department and helping 
them when they are asking for your assistance?
    Mr. Krongard. Absolutely not. In fact, I try and cooperate 
with the Justice Department as much as I can, and I applaud 
their efforts. What happened here, as soon as we were able to 
find out what it was they were doing and segment what we could 
and couldn't assist them with because of resource and other 
qualifications, I did do exactly what you have just asked, and 
I gave them the Deputy Assistant Inspector General for Audits, 
together with another person, that were given to them to work 
with them to accomplish the very objectives they wanted to 
accomplish.
    Chairman Waxman. Well, your own investigators had a 
different view. This is how one of your investigators responded 
to the news that you had refused the Justice Department 
request: ``Wow. As we all know, this is not the normal and 
proper procedure. When looking at the IG Act, DOJ and PCIE 
guidelines, and the OIG community as a whole, we are supposed 
to work under the direction of the USAODOJ. I am stunned. I 
hope you documented the orders that were provided to you. 
Wow.''
    In fact, the committee has identified at least three other 
occasions in which the Justice Department came back to you and 
asked for assistance on this investigation. In May, the Justice 
Department sought your assistance obtaining invoices and 
inspection records on whether blast-proof walls in the embassy 
had been constructed properly. In June, the next month, the 
Justice Department sought your assistance obtaining documents 
pertaining to another First Kuwaiti contract. And in July the 
Justice Department requested assistance in getting a copy of 
two cables mentioned in a front-page article in The Washington 
Post regarding construction problems at the embassy. In all of 
these cases you refused their requests.
    You have also apparently resisted the Justice Department's 
efforts to investigate whether Blackwater was engaged in arms 
smuggling in Iraq. On July 10th, John DeDona sent an e-mail 
notifying you that his office would be working with the Justice 
Department on this. John DeDona works at your Office of 
Inspector General. The next day you ordered Mr. DeDona and his 
team to stop immediately. You then directed Mr. DeDona to 
arrange a personal briefing for you from the Justice Department 
and you told him he could not proceed in any manner until the 
briefing takes place. After you received that briefing, you 
agreed to allow one of your investigators to assist, but you 
then assigned your congressional and public relations director 
to oversee his actions, although she had no law enforcement 
background. You described her as your alter ego and directed 
her to provide you with operational awareness.
    You halted an investigation, demanded a personal briefing 
from the Justice Department, assigned your congressional 
affairs director to keep tabs on the investigation. Do you 
agree that these steps were highly unorthodox?
    Mr. Krongard. No, sir, I do not. You have made a lot that 
is very hard for me to respond. Let me take the last one first, 
which is I believe you used the name Blackwater. In early July, 
Stuart Bowen, the Special Inspector General for Iraq 
Reconstruction, asked for the assistance of my office in 
conducting an audit of two Blackwater contracts. We agreed to 
do that and we were already beginning. The initial cooperation 
that we were rendering was the collection of data, the 
collection of information----
    Chairman Waxman. Do you feel that helping Mr. Bowen meant 
that you shouldn't be helping the Justice Department?
    Mr. Krongard. Sir, let me finish, if I can. I think, yes, I 
do, until it is cleared up.
    I came in, actually, I believe it was the following 
morning, after Mr. Bowen and I had completed all of our 
arrangements for the cooperation, and at 7:30 a.m., I found an 
e-mail from Mr. DeDona telling me for the first time of an 
investigation that was long down the road in which our 
investigators were assisting U.S. attorneys in a criminal 
investigation of two Blackwater contracts.
    And when I looked at the papers, they were the exact same 
two. They have a string of numbers, about nine letters and 
numbers long. They were the exact two contracts that we were 
already assisting a civil audit, and I was immediately 
concerned that for us simultaneously to be assisting a criminal 
investigation into the exact same two contracts that we were 
already assisting a civil audit into raised questions of 
parallel proceedings which needed to be de-conflicted before 
one infected or contaminated the other.
    Chairman Waxman. Well, let me interrupt you by saying that 
what you are talking about was an audit of contracts. This was 
a totally different matter, a criminal investigation into arms 
smuggling. And the Justice Department says they still haven't 
received the documents they were seeking 4 months ago through 
your office. This is how the Justice Department summarized your 
actions: ``At this juncture, we cannot determine all of the 
ramifications of the IG's conduct, but some of his actions have 
certainly impacted the investigation. For reasons that remain 
unclear, the line IG agents, who have broad power to obtain 
documents and other evidence relevant to any investigation they 
are conducting, have been forced to funnel requests within 
their own agency through a congressional and public relations 
official, and this is not the usual practice.''
    So it seems to me you are making a lot of judgments as to 
who ought to get information and help from your office, and it 
seems to me you have given a very low priority to the Justice 
Department involving criminal actions that they are 
investigating and deciding whether to pursue.
    Mr. Krongard. Sir, I have a different view of what 
happened. First of all, the contracts were exactly the same two 
contracts; those were the contracts that the criminal 
investigation was going forward with. No. 2, I did not 
institute a delay. I said immediately. That e-mail that has 
been floating around for a long time cuts off the part that 
says until I can get a briefing from the AUSA, and I made 
myself available immediately by telephone. I did not expect 
them to come up to visit me. I didn't expect anything other 
than an immediate phone call so I could tell them of these 
conflicts that I was facing, because I needed to have them 
know.
    Now, as far as what they have said or what someone has said 
they said, I don't know. I can only go by what they said to me. 
And, sir, after that meeting, I received a letter from the 
chief of the criminal division of that U.S. Attorney's Office 
in which he said: ``Thank you for taking the time to meet with 
deputy criminal chief so-and-so and me earlier this week when 
we were in Washington. We appreciate the frank exchange of 
views and information. We will remain cognizant of the issues 
you raised and will work closely with you and your staff to 
move this matter forward in the most expeditious way possible. 
Your decision to allow your case agent to continue to work on 
this matter will make that much easier. Again, thank you for 
your time and interest in this matter. With kindest regards, I 
am.''
    Sir, I think that I helped de-conflict the issue. I made 
available to them the best young investigator I had, and this 
idea that I put a congressional and public affairs person in 
charge is simply untrue. What happened was the data collection 
assistance that was being rendered for SIGIR was being done by 
the person who normally does the data collection. That happens 
to be the person who is the congressional and public affairs 
person.
    Since the same contractual materials was being sought by 
the U.S. attorney in the other matter, I said to her and to him 
she can just make double copies of what she is making for SIGIR 
and give it to you. So she was not doing any investigative--I 
had the special agent who was assigned to them doing that--and 
her role was simply collecting and gathering data.
    Now, as to whether that has been produced, I really don't 
know. I put into the process a program to obtain those 
materials. I suspect, as usual, that there are concerns from 
Diplomatic Security, which is the resident agent for these 
papers, and what gets shown and what gets produced, but I 
really don't know whether it has been produced or not. I know 
that this person has been working hard to satisfy the concerns 
and needs for information of both the SIGIR and the U.S. 
Attorney's Office, and those were my instructions.
    Chairman Waxman. Thank you, Mr. Krongard.
    I am going to turn over the time now to Mr. Shays, but I do 
want to point out what you have said to us contradicts what 
almost everybody else has said.
    Mr. Shays.
    Mr. Shays. Thank you.
    Mr. Krongard, the chairman has given you time to answer 
questions, but when he throws five charges at you at once, you 
would have to be a genius to remember all of them, and I just 
hope that people in this hearing room don't make the assumption 
because you didn't deal with five charges at once and respond 
to them, that they don't have answers.
    We tried to figure out what are the accusations of this 
committee, so we are going to have questions about partisan 
Republican motivations, too close to the State Department 
allegations, financial statement audit, the embassy compound, 
the Karl Rove charge, censors of inspector reports, weapons 
smuggling matter, counterfeit computers, financial audit, 
refusal to produce documents, the travel charge, abrasive 
management style; and in the end I think it is going to come 
down to your management style.
    But let me just go through--even though you had it in your 
statement, I want to go through and at least deal with one of 
these issues and get it off the table, and then we will get on 
to the next, and I want to deal with the allegations of a 
partisan Republican motivation.
    First, to what extent do you believe your mission at IG is 
to support the Bush administration?
    Mr. Krongard. Absolutely not, sir.
    Mr. Shays. To what extent have you been involved in 
politics or contributed any money to a political campaign 
during your adult life?
    Mr. Krongard. I have not been involved in any political 
activities. I have given contributions, which, according to the 
records that have been made public--and I think they are 
accurate--I have not made any contribution ever to the current 
President or since 2000. Prior to that----
    Mr. Shays. My understanding is the last contribution you 
gave was to Bill Bradley.
    Mr. Krongard. I may have made a contribution in the course 
of attending a function put on by the Republican Senatorial 
Campaign, I believe something like that. I think I attended one 
of their functions.
    Mr. Shays. Before 2000?
    Mr. Krongard. It was before 2000.
    Mr. Shays. Have you ever met or spoken to President George 
Bush or any of his senior staff?
    Mr. Krongard. No, sir.
    Mr. Shays. You have never met him?
    Mr. Krongard. No, sir.
    Mr. Shays. And you have never spoken to any of his senior 
staff?
    Mr. Krongard. I don't know where senior cuts off, but there 
is a person who recently joined who I had known long ago when 
we were both on the board of a nonprofit public awareness 
entity, and I knew him then. I have not seen him, but he is----
    Mr. Shays. Do you have any relationship or connection with 
other people in the Bush administration?
    Mr. Krongard. No, sir, none.
    Mr. Shays. Have you ever been to a White House function at 
any time during this Bush administration?
    Mr. Krongard. Sir, I don't think I have ever been in the 
White House except as a tourist.
    Mr. Shays. Do you have any relationships or connections 
with or financial interests in State Department contractors 
which might be the subject of an OIG work?
    Mr. Krongard. No, sir, I do not.
    Mr. Shays. When making decisions about the work of the OIG, 
have you ever taken political considerations into account?
    Mr. Krongard. No, sir, I have not.
    Mr. Shays. When making decisions about the work of the OIG, 
have you ever been influenced by a desire to protect the Bush 
administration?
    Mr. Krongard. No, sir.
    Mr. Shays. When making decisions about the work of the OIG, 
have you ever been influenced by a desire to protect a 
particular company?
    Mr. Krongard. No, sir.
    Mr. Shays. Do you have any idea why someone would allege 
that you have any political motivation or that you are corrupt, 
or both?
    Mr. Krongard. Yes, sir, I do have reasons to believe why 
people would do that.
    Mr. Shays. And in a short sentence or two, explain what you 
think they are.
    Mr. Krongard. Well, sir, it is no secret that I came into--
I took on a mission to come in and try and repair something 
that had been in a bad way. I knew from the beginning that was 
going to put me into conflict with some people who were 
resistant to change, were resistant to what I was trying to 
accomplish, and I did make some enemies. And the people that 
have been interviewed by this committee are not the entire OIG 
and they are not the universe, and while the large percentage 
of their sample may be very much against me, there are people 
in the OIG who supported what I did.
    Mr. Shays. OK, let me say that was the basis for the 
chairman's 14-page letter, and the reason why we are releasing 
this document is those individuals came before our committee 
and we questioned them. So we say the partisan political affair 
allegations, did you have any awareness of those before they 
were outlined in this letter? I mean, well, I can't say no, I 
can't really answer that.
    Further questions: do you believe the Inspector General's 
mission is to support the Bush administration? I could not say 
that, no. We asked no direct evidence, not that I know of. I 
have no knowledge one way or the other.
    This is what these individuals were all saying to these 
questions, these allegations they made. Then, when we put them 
under oath--and the reason they are not here is they would be 
put under oath. So you have had to deal with, frankly, you have 
had to deal with gossip, not people willing, under oath, to 
make these charges.
    I would like to yield the balance of my time to Mr. Issa.
    Mr. Issa. I thank the gentleman.
    I am going to pick up a little bit there. Now, you were 
general counsel to Deloitte, right?
    Mr. Krongard. Yes, sir.
    Mr. Issa. And it is pretty tough to be the pinnacle of an 
organization like that, filled with career auditors and 
accountants and lawyers, isn't it?
    Mr. Krongard. It is a challenge.
    Mr. Issa. These are smart people who sometimes do a good 
job, but, if they don't, they are certainly very good at 
explaining themselves when they don't do a good job, isn't that 
true?
    Mr. Krongard. Truthfully, yes.
    Mr. Issa. OK. So you have kind of undersold yourself a 
little bit ago. You talked about 40 years of not having the 
right experience, but it seems to me like the selection of you 
for this job and your acceptance made you uniquely qualified to 
oversee career auditors who either do a good job or do a good 
job of telling people they do a good job.
    Mr. Krongard. Yes, sir.
    Mr. Issa. When you arrived, essentially, was the latter 
more true, that there were a lot of people who were very good 
at explaining how good they were, but the results at the State 
Department over literally decades had been abysmal when it came 
to accountability? Wasn't that true?
    Mr. Krongard. I think that is fair.
    Mr. Issa. OK. During your tenure, one of the things that 
the chairman has repeatedly come back to, in July, was the not 
yet occurred, but the possibility of cost overruns on the Iraq 
embassy, even though it is on time and on budget and, in fact, 
there are blue dots everywhere where they are fixing the things 
that the contractor didn't do. Wouldn't you say that when it 
came to auditing by anybody, that auditing a large project in a 
combat zone was a unique task that, at best, sending people 
over there would have had a limited ability to really get to 
the bottom of it? I mean, you made a decision not to 
essentially let auditors endlessly go over there to look at a 
building but, rather, made them focus on shortcomings and 
limited their trips to Iraq, isn't that true?
    Mr. Krongard. To be very candid, sir, it was in some ways 
the reverse. I wanted auditors to go. I instituted three jobs 
which required auditors to go. I am talking about auditors now, 
not investigators or inspectors. And in each case the jobs had 
to be cut short or canceled because the auditors refused to go 
to Iraq.
    Mr. Issa. Because----
    Mr. Krongard. I did not have auditors willing to go to 
Iraq.
    Mr. Issa. Because, in fact, it is a combat zone.
    Mr. Krongard. Yes, sir.
    Mr. Issa. You know, I am going to make a quick statement, 
and one that is not intended to help you or hurt you, but Iraq 
is a unique situation. We haven't had an ambassador in charge 
of a war zone in modern history. We normally leave a general in 
charge of a war zone and bring the Ambassadors in when the 
conflict is over. If we did what we had done in every other 
situation, this embassy would be built under the Corps of 
Engineers and the State Department wouldn't have oversight. 
Isn't that sort of a historic fair statement?
    Mr. Krongard. It predates me, but it confirms my 
understanding, yes.
    Mr. Issa. Would it surprise you to know that a few hundred 
feet from here a building of a lesser size is going to costs 
more money? The Capitol Visitors Center has been 7 years plus 
in the making; was already underway when September 11th hit; is 
not finished today; will not be done for a year; will be at 
least 3\1/2\ years; no combat zone, with the possible exception 
of the change in administration here; but, in fact, that it is 
a half billion dollars and, to be candid, they won't tell us 
why it takes a year after completion before there is any chance 
of occupancy.
    Would you say that the Capitol Visitors Center and the 
embassy in Iraq have some similarities, or is it in fact that 
the embassy in Iraq, in spite of everything--being in a combat 
zone, being impossible to get auditors and investigators and so 
on to want to go to--that, in fact, it appears at this point to 
be like any large construction project and simply is going 
through the making the vendor do their job after the fact? And 
we are not talking about the human trafficking, I am just 
talking about the project itself.
    Mr. Krongard. As far as I know, I don't know anything 
different. I don't know much since I was last there in 
September, but as of September that seemed like a fair 
comparison.
    Mr. Issa. OK, the only reason is this is our third hearing 
where that center is the center of attention, and it is sort of 
amazing that something which, as far as we know, is still on 
time and on budget is investigated, while the Capitol Visitors 
Center seems to be beneath investigation, as it is beneath the 
Capitol.
    My time is disappearing quickly, but you have had a tough 
job. You have had a style that has been accused of being 
abrasive, but you appear to have made some change. I want to 
give you an opportunity, though, to talk about the two seats 
that are not there today, the two Justice Department people who 
would make unofficial, unsworn statements and then not be here 
to answer questions. I don't want you to disparage them, but I 
want you to talk about what you believe the correct role is of 
your investigations versus their investigations; where you 
assist and where you continue doing your own investigations, 
because that seems to be the legitimate subject here, of when 
do you simply stand down and hand everything to them, and when 
do you continue your investigations.
    Mr. Krongard. Sir, if I can just correct. The Justice 
Department information, as I know, came through last night. I 
heard about it for the first time last night. So when you are 
talking about the two empty seats, I am not sure if you are 
talking about the investigators from my staff who were the 
principal motivators or whistle-blowers, whatever it is, or the 
Justice Department people. I am not aware that the Justice 
Department is disparaging me.
    Mr. Issa. Mr. Chairman, could we have those records made 
part of the record so that we could actually have all of us see 
the actual accusations that you alluded to in your statement? I 
think it is certainly of public interest.
    Chairman Waxman. I want to inform the gentleman that the 
Justice Department provided the Republican staff with the same 
information that was provided to us, so you have the same 
information.
    Mr. Issa. Mr. Chairman, then can I, without objection, 
submit it for the record?
    Chairman Waxman. We will take it under submission. There 
are some issues the Justice Department raised with both of our 
staffs.
    Mr. Issa. So you are objecting to it going into the record, 
even though it has been alluded to here, Mr. Chairman?
    Chairman Waxman. Well, I will--I don't want to object, but 
I don't want to agree to it, so I will temporarily object and 
we will consider to review the matter.
    Mr. Issa. Thank you. I will let the gentleman continue.
    Mr. Krongard. I will try and answer the Justice Department 
in generalities, because there are some specific investigative 
concerns that I believe the Justice Department has. And this 
will go back, in part, to what the chairman was saying before. 
I never refused the Justice Department assistance at any time. 
I asked for them to tell me what it was they needed and I 
wanted to tell them the parallel proceedings that I was 
involved in. I wanted to make sure that I had the resources. 
Remember, the Justice Department is used to dealing with 
agencies around Government that have large numbers of 
investigators. At any one point in time I have something like 
7, 8, 10, 12 total investigators.
    I was shocked, when I came into this office, to learn that 
of the 29 members or 28 members of the PCIE, which include 
agencies like TVA and Railroad Retirement Board and things that 
you don't think of as being law enforcement agencies, the State 
Department OIG ranked 23rd in the number of investigators. I 
came in to an organization that historically was audit and 
inspection focused by law. The Foreign Service Act of 1980, 
which mandates the OIG to inspect on a 5-year cycle all 
embassies and missions around the world, 275 of them. So 
investigations takes approximately 10 percent of our personnel 
and 10 percent of our resources.
    So in dealing with the Department of Justice, I had to make 
sure that they understood that we had limited experience, 
limited resources, and if a person was already working on one 
Justice Department matter when we were doing, on these very 
same things, three and four--the new embassy compound had at 
least three different Justice Department divisions doing 
investigations. So when I spoke to them, I was trying to de-
conflict, coordinate, and make sure that the resources were 
available.
    Now, granted----
    Chairman Waxman. Mr. Krongard, Mr. Shays has a quick 
question of you, then we are going to move on.
    Mr. Krongard. Sure.
    Mr. Shays. I just want to clarify one point. So the issue 
about cooperation with Justice, Justice was actually asking 
that some of your personnel be directed under their management 
to almost, in a sense, detail them with the Justice Department 
for a period of time?
    Mr. Krongard. Not almost. In the one that we are talking 
about regarding the major contractor, that person was, in 
effect, assigned to them. And as I understand one of their 
complaints last night, they are very upset that person who, 
again, is one of my best people and the only person that had 
been willing to go to Iraq, has taken on another assignment.
    Mr. Shays. So you were basically objecting to losing one of 
your seven people and wondering, I would think, why they 
couldn't detail their own people, instead of your people, when 
you only have seven.
    Mr. Krongard. Well, the latter. I was wondering why they 
couldn't detail their own. But it wasn't that I was concerned 
about detailing them; I was happy to help, and the letter I 
read to you says that I did that. The problem was when another 
investigation has come up and that gentleman has gone to Iraq, 
I understand that they are now unhappy that he has left their 
investigation to do a different investigation.
    Mr. Shays. It is called opportunity cost.
    Mr. Krongard. Sorry?
    Mr. Shays. It is called opportunity cost. If you have used 
a person one way, you can't use them somewhere else.
    Thank you, Mr. Chairman.
    Chairman Waxman. Well, that, of course, is a leading 
question you were just asked, but it seems to me if you have 
people working on the issue that Justice Department is seeking 
information about, you should share the information with the 
Justice Department, rather than say they have to go through 
your congressional liaison person before they have any contact 
with the people who are doing the work for the OIG.
    I am going to move on to others.
    Mr. Issa. Mr. Chairman.
    Chairman Waxman. I am going to move on to others. The time 
has expired. But I do also want to make one other comment. We 
have had complaints from the Republicans that we don't have the 
people to testify before our committee here to testify again. 
All of the witnesses that testified under oath in the 
depositions were subject to cross examination by the Republican 
lawyers, as well as our staff, and we are going to be releasing 
the transcripts of those depositions. So it isn't that we 
didn't have those witnesses here to testify again.
    Mr. Shays. Mr. Chairman, why wouldn't you have them come 
before the committee so the public could hear their responses 
and we could ask them questions? They are the ones who made the 
allegations.
    Chairman Waxman. The people that made the allegations were 
subject to cross examination; they testified under oath. If 
they----
    Mr. Shays. Not before this committee.
    Chairman Waxman. If the gentleman would permit. They 
testified before this committee's deposition under oath. If 
they lied under oath, they are subject to criminal penalties, 
and that should just be understood.
    Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Mr. Krongard, it is good to see you. I note two very 
interesting things: that you speak very much about de-
conflicting, so you have a sensitivity to conflicts, obviously; 
and, second, I note that before the chairman asked you 
questions, but after your statement, you gave us some 
additional information about your brother, Buzzy Krongard, and 
what you said is, to your knowledge, he had no financial 
interest and he did not sit on the board of Blackwater, is that 
correct?
    Mr. Krongard. Yes, sir.
    Mr. Cummings. Well, let's look at that real quickly. One of 
the biggest scandals to hit the State Department in recent 
memory has been the lack of accountability for Blackwater USA. 
Last month, the Secretary of State testified before this 
committee that for more than 4 years there has been a hole in 
the law that allows Blackwater to escape criminal liability for 
killing innocent Iraqi civilians. Just today, papers reported 
that Federal agents investigating the September 16th episode, 
in which Blackwater security personnel shot and killed 17 Iraqi 
civilians, have found that at least 14 of the shootings were 
unjustified and violated deadly force rules in effect for 
security contractors in Iraq.
    Your role as Inspector General is to investigate waste, 
fraud, and abuse in the State Department, but your office has 
not completed any investigation into Blackwater activities. 
Although there is a Justice Department investigation underway, 
you have taken several unorthodox steps that delayed or impeded 
that investigation, such as requiring a personal briefing from 
the Justice Department and requiring all investigative 
documents to go through your congressional affairs director.
    I am trying to understand why you are so reticent about 
investigating Blackwater. I would like to show you a letter the 
committee obtained and ask you to comment on it. This letter 
was sent from Erik Prince, the CEO and Founder of Blackwater. 
He shared that letter on July 26, 2007. Mr. Prince sent this 
letter to Alvin ``Buzzy'' Krongard, your brother. The letter 
invites him to serve on Blackwater's Worldwide Advisory Board. 
This is what Mr. Prince says. He says--and this is Mr. Prince 
to your brother, the one that you said isn't involved with 
Blackwater. He says, ``Being a member of the Blackwater 
Worldwide Advisory Board will provide you with a stellar 
opportunity to continue to support security, peace and freedom. 
Your experience and insight would be ideal to help our team 
determine where we are and where we are going.''
    Mr. Prince's letter goes on to explain that the main 
purpose of the board is to provide leadership advice about the 
path the company should follow.
    Now, here is a second document. This is a September 5th e-
mail that Erik Prince sent to your brother. It says, ``Welcome 
and thank you for accepting the invitation to be a member of 
the board.''
    My question is this: Did you know that your brother, Buzzy 
Krongard, is on Blackwater's advisory board?
    Mr. Krongard. Sir, I dispute that. As far as I know, that 
is not correct. This is--you asked me to comment on this 
letter. Sir, my brother served honorably as a captain in the 
U.S. Marine Corps. He served as the Executive Director of the 
CIA. He has been involved in a lot of activities involving 
security, so it is no surprise that someone like Erik Prince 
would invite him to continue to support security, peace, and 
freedom.
    There is nothing in here that suggests that my brother 
accepted this July 26th invitation. What you have now shown me 
is an e-mail from Erik Prince to a large number of people that 
I assume were all people who received this. I don't see 
anything in here that suggests my brother accepted or attended, 
and, as far as I know, he did neither.
    Mr. Cummings. Well, let me go on, then, because I do think 
the letter indicates that he did accept. But, Mr. Krongard, 
this is one of the most high profile issues facing the State 
Department, and your testimony today is that you didn't know 
your own brother is on the Blackwater board. I find that very 
difficult to believe.
    Let me ask you this. Mr. Krongard, do you know where your 
brother is this week? Do you know?
    Mr. Krongard. No, sir, I don't.
    Mr. Cummings. According to this e-mail, Mr. Prince invited 
your brother to be at a board meeting to discuss strategic 
planning, and this meeting is taking place right now in 
Williamsburg, VA, this week, as we speak. Staff contacted the 
hotel to speak to your brother and the hotel confirmed that he 
was scheduled to be there. Did you know that?
    Mr. Krongard. No, sir, I do not.
    Mr. Cummings. So, now, if your brother is a board member, 
which you said he is not, but if he is, would you consider--I 
know you are sensitive to conflicts. Would you agree that you 
should recuse yourself from anything dealing with Blackwater 
investigations?
    Mr. Krongard. Yes, sir, and that was why--first of all, by 
the nature of my brother's work, you should understand that we 
have never discussed his work or my work. So I had no reason to 
even think that he had any involvement with Blackwater. But 
when these things surfaced, I called him and I asked him 
directly. He has told me he does not have any involvement, he 
does not have any financial interest. If you are telling me 
that he does, absolutely I would recuse myself.
    Mr. Cummings. You will recuse yourself?
    Mr. Krongard. Absolutely.
    Mr. Cummings. Immediately.
    Mr. Krongard. Absolutely.
    Mr. Cummings. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    Mr. McHenry.
    Mr. McHenry. I thank the gentleman for being here today. 
This is just another series of what I refer to as drive-by 
oversight. You were before this committee in July, I believe. 
Five months later you are brought back to rehash the very same 
questions you were asked in July. Thank you for your patience.
    But, again, there are numerous accusations just in the 
chairman's opening statement leveled at you. What is 
interesting is, if these accusations, which were laid out in 
July, if any of this stuff the chairman believes or the 
majority believes is true, then this committee is called 
Oversight and Government Reform. In the previous Congress it 
was Government Reform. Just a matter of emphasis between the 
two parties. So this committee has been all about oversight in 
committee hearings like this, but there has been no 
recommendation from this committee in this Congress for any 
type of government reform to fix these accusations and these 
problems.
    So let me go a little further here. There are accusations 
about Blackwater. Is there an inspector general that deals with 
Iraq?
    Mr. Krongard. Yes, sir, SIGIR.
    Mr. McHenry. A Special IG for Iraq.
    Mr. Krongard. Yes, sir.
    Mr. McHenry. Does the Special IG--and I know there are a 
number of issues related to this, but does the Special IG look 
into accusations about Blackwater?
    Mr. Krongard. Yes. As I said before, he is conducting an 
audit with our assistance of some Blackwater contracts, the 
same ones that are the subject of the criminal investigation.
    Mr. McHenry. Does that Special IG also deal with the 
embassy in Iraq?
    Mr. Krongard. In some ways, yes; in some ways, no. It 
depends on what the issue would be.
    Mr. McHenry. OK. All right. But we have had testimony from 
a number of different folks. There are between 10 and 12 
entities that are dealing with the issues pertaining to the 
embassy, is that correct?
    Mr. Krongard. Yes, sir.
    Mr. McHenry. To ensure that the product is delivered, 
correct?
    Mr. Krongard. Yes.
    Mr. McHenry. All right. What is the contract that is being 
used right now for the building of the embassy, is it a fixed 
price contract?
    Mr. Krongard. There are eight principal contracts. I think 
all of them were fixed price. And to get back, if I can use a 
second of your time to tell the chairman that was saying, back 
in January there were no audits, we actually did. I had 
requested an audit, that is still in process, of the manner in 
which those contracts were let and whether they complied with 
Federal contracting law and regulations, and that audit has 
been going on since, I believe, January.
    Mr. McHenry. All right, thank you. In regards to the U.S. 
embassy, how much oversight and investigation is too much? You 
know, when you have 10 to 12 different entities doing the same 
thing, do you think that there is this tipping point? You know, 
one of your assistant inspector generals that Mr. Shays 
mentioned is John DeDona. He was deposed and he said there were 
10 to 12 different entities pursuing embassy-related issues.
    Now, it would seem to me that there was some true need for 
government reform here when you have 10 to 12 different groups 
looking at similar, if not the same, thing. Is there some level 
of streamlining that we should look at?
    Mr. Krongard. Sir, I hesitate to tell you how to--you are 
so much better at doing your job than I am.
    Mr. McHenry. Fourteen percent of the American people agree.
    Mr. Krongard. At the end, sir, there are two things I can 
suggest that have to do with Government reform in this area, 
but I don't want to take your time on that.
    Mr. McHenry. No, absolutely. Go right ahead.
    Mr. Krongard. Well, some of you may be aware that the 
Subcommittee on International Organizations, Human Rights, and 
Oversight of the Committee on Foreign Affairs had a hearing 
about a week or 10 days ago also concerning my office, and I 
did a lengthy response to them, and in the course of that I did 
make two--I won't call them suggestions, but I raised two 
issues that I do think need to be considered, and they were 
things that had bothered me from the day I took this office. 
The first was the Foreign Service Act of 1980, which mandates 
the inspections of embassies around the world and has 
historically created my office as an inspection-oriented office 
first, an audit-oriented office second, and almost as an 
afterthought, an investigatory body. In fact, the committee 
reports of the Foreign Service Act of 1980 are replete with 
statements about how unique this office was and how different 
it was from the normal IG office, which was audit and 
investigation. So that was one thing I suggested be considered.
    The second thing I have been puzzled about and I suggested 
in my letter to Mr. Delahunt that be considered is why BBG does 
not have its own inspector general, because all of the time 
that people talk about the resources that I have as Inspector 
General of the State Department, I am also Inspector General of 
the Broadcasting Board of Governors with worldwide issues for 
them, and I don't get a single extra penny or person to do 
that. And Corporation for Public Broadcasting has an IG and 
other comparable bodies have an IG, so I just think maybe this 
committee would consider that as well.
    Chairman Waxman. Thank you.
    Mr. McHenry, your time has expired.
    Ms. Watson.
    Ms. Watson. I want not thank you, Mr. Chairman, and I want 
Mr. Krongard to know I take my position on this committee very 
seriously. I was a member of the State Department, did head up 
an embassy, and we need to put a laser beam on the activities 
in our embassies around the globe. If your brother is currently 
at the hotel in Williamsburg, VA, sitting on the board, would 
you repeat that you would recuse yourself?
    Mr. Krongard. Immediately.
    Ms. Watson. OK. Then maybe you want to do it today.
    Mr. Krongard. Recuse myself from anything having to do with 
Blackwater, yes. I mean, I wouldn't step down.
    Ms. Watson. Blackwater. Yes, that is what I am referring 
to. He is sitting on the Blackwater. I understand he is in the 
hotel; he has checked in the hotel. You might want to followup 
on that.
    Mr. Krongard. Well, if he is there for that meeting as a 
member of that committee. He may be there to tell them he is 
not joining. I don't know.
    Ms. Watson. OK, now, remember you are on the record.
    Mr. Krongard. Yes, ma'am.
    Ms. Watson. OK. And you know what today's date is.
    Mr. Krongard. Yes.
    Ms. Watson. OK. Will you recuse yourself from any 
inquiries, audits, or investigations your office conducts 
regarding Blackwater?
    Mr. Krongard. Absolutely.
    Ms. Watson. OK, we have it on the record.
    Now, your office has faced major setbacks in retention and 
recruitment during your tenure as Inspector General, and maybe 
it is because they were incompetent, and that is what this 
committee is all about. We try to sort out what is fact from 
what is fiction and gossip. We seek the truth, and the truth 
has no (R) or (D) or (I); the truth is the truth. So don't feel 
you are being badgered. We are asking you so you can tell us 
what your truth is as you know it.
    Now, since you became IG in 2005, a significant number of 
your senior managers have resigned: the Assistant IG for 
Investigations, the Deputy Assistant IG for Investigations, the 
Deputy Assistant IG for Audits, the head of the Office for 
Information, Technology, and Counsel to the IG; and the head of 
the Audit Division told our investigators the rate of turnover 
in his division is 20 percent to 30 percent per year. Can you 
comment on that and can you get us closer to what the facts 
really are?
    Mr. Krongard. Yes, and thank you for allowing me to speak 
the facts. The facts are that when I came into office, of the 
seven assistant inspector general level positions, five were 
vacant. This is nothing new. This office has been in disrepair. 
I think one of the good things I have done is to bring some 
good people in to the Office, and the people that I have 
brought in, for example, you talk about counsel.
    I believe we are talking about the same person. That person 
was a wonderful person to come in. He was so well suited, it 
took me a couple of months to entice him to come. He came, he 
joined us, and he left in about 6 or 8 weeks for two reasons: 
one, we were not able to give him a permanent SES position. The 
State Department did not have or could not give me an SES 
position for someone who came from a comparable SES position. 
So we had to do a temporary kind of thing.
    Second, when he realized that one of his major assignments 
was to oversee the investigations group, which is the group 
that is the subject matter of much of this, he decided that he 
did not want to serve in that capacity, especially in a 
temporary IG position. So my loss of my counsel was a great 
loss to me.
    Losing the AIG for Investigations and the Deputy AIG for 
Investigations, again, is in part why we are here. They are two 
gentlemen that I lost confidence in. I think for good reason. I 
don't think it is necessary to go into this. But I finally, 
after 2 years, confronted each of them with my loss of 
confidence. I asked each of them if they would stay at the same 
pay grade and do the kinds of things they had originally 
trained to do in special-agent-in-charge positions or some 
other position of their choice, but to give up their management 
positions as assistant and as deputy----
    Ms. Watson. All right, let me just interrupt you because my 
time is almost up.
    Mr. Krongard. Sure.
    Ms. Watson. It is being said about your leadership and the 
Department which you head that your actions have created an 
abusive and hostile environment that led to low morale and the 
staff to exiting, and there are many statements that we have. I 
don't have time to read because we have to go to the floor and 
vote. But can you describe for us--and I think the Chair might 
allow us an intermission to go and vote----
    Chairman Waxman. Get his response, then we are going to 
break.
    Ms. Watson. All right, thank you.
    Mr. Krongard. And, again, thank you for----
    Ms. Watson. Can you describe for us what those comments 
really mean? What was so hostile about the environment?
    Mr. Krongard. Let me say, in all honesty, that my 
experiences in my prior life to this, the 40 years in the 
private sector, my athletic experiences, all the things I have 
done in life really didn't prepare me well for what I found in 
OIG, and I have not handled it as well as I wish I could have 
handled it. I was used to, as one of the gentlemen said before, 
professionals. I never even worked for a corporation. I have 
only worked for four professional partnerships, two of the 
leading accounting firms in the world and two of the leading 
law firms in the world, where the trust among partners was very 
strong, and when you could count on what they would say. And if 
you needed to disagree with someone, everyone understood that 
you had the same mission, to make the product of the firm 
better. So there wasn't the personal affront when you tried to 
change what somebody was doing or correct it.
    That didn't prepare me for what I found where people didn't 
have the same level of trust with each other; where there were 
great rivalries between offices within our organization, 
between the Foreign Service people and the Civil Service, and I 
found myself particularly unable to deal with situations where 
I didn't think I was being dealt with honestly and fairly, 
where I was being given answers that were implausible. And, in 
response, yes, I have been brusque; I have been shrill; I have 
been hard on people. I think abusive may be strong because I 
don't intend to abuse anybody----
    Ms. Watson. OK, let me get to--I have to go, but if I send 
you these statements, would you respond to them in writing? I 
will send you the statements. I would like to get the response 
in writing.
    Thank you so much, Mr. Chairman.
    Chairman Waxman. Thank you, Ms. Watson.
    Mr. Krongard, we have four votes on the House floor. We are 
going to recess until 12:10. I think we will be ready at that 
point to reconvene the hearing. So we are going to stand in 
recess.
    [Recess.]
    Chairman Waxman. The meeting of the committee will come 
back to order.
    I would like to now recognize Mr. Platts.
    Mr. Platts. Thank you, Mr. Chairman. I would like to yield 
my time to Mr. Shays.
    Mr. Shays. Thank you.
    Mr. Waxman, I need to confirm with your own staff, and you 
may want to consult with them, but, first off, we would have a 
conceptual disagreement about witnesses that have come before 
the staff to respond to questions and whether that is adequate 
to constitute information to this committee. I think people who 
make charges should have to face the public and should have to 
face committee members. But you said that these individuals 
were sworn in, and I think that is an incorrect statement. The 
OIG whistle-blower named in your September 18th letter and 
three others making allegations against the IG were not 
deposed. They were not under oath when questioned by committee 
staff; they were simply interviewed and the interview was 
transcribed. They were not sworn. That is my understanding, and 
I think you said they were sworn and that it should be 
adequate. If they were sworn in, I would like to have that 
confirmed, but I would like the record corrected if they were 
not sworn in.
    Chairman Waxman. If the gentleman would yield to me, I am 
looking to see if my staff could further inform about this 
matter, whether the witnesses were sworn in.
    [Pause.]
    Chairman Waxman. As I understand it, we did a combination. 
Some were depositions and some were interviews.
    Mr. Shays. Could----
    Chairman Waxman. If I might finish. But even if it were an 
interview, someone testifying in an interview was subject to 
examination by the Republican staff, and if they lied in an 
interview it would be also a violation of criminal law in 
impeding and obstructing an investigation by Congress.
    Mr. Shays. Would the staff review the OIG whistle-blowers 
named in the September 18th letter and the three others making 
allegations against the IG? We understand were not deposed and 
were not under oath. I would like to have them give us the 
names of each of these individuals, if they would, and tell us 
which ones were under oath and which weren't. My understanding 
is none of them were under oath.
    Chairman Waxman. Well, I think you make a reasonable 
request, and we will provide for the record the people that 
were giving depositions and whether they were under oath in a 
deposition, or whether they were being interviewed, which, to 
me, also requires them to tell the truth or to be subject to 
criminal charges.
    Mr. Shays. Well, Mr. Krongard is under oath, sworn in 
publicly, and he has to face the music publicly, and I think it 
is an outrage that these individuals, I do not believe, were 
under oath and I don't believe they have to face the public or 
the questions that we have.
    So let me now ask you about a financial statement audit. 
Isn't it true that the State Department did not have a so-
called clean financial statement at the time of the Office of 
Management and Budget's deadline for the Department's annual 
financial statement last year? Would that fact be clear to 
anyone who assessed the statement?
    Mr. Krongard. Yes, sir, there was.
    Mr. Shays. Isn't it true that you disagreed with just about 
all of your audit staff by allowing the Department additional 
time to provide some necessary information in the hopes of 
achieving an unqualified opinion, and can you explain?
    Mr. Krongard. Yes, sir. First of all, let me make it clear 
that the OIG does not conduct the audit of the Department's 
financial statements; there is an independent outside auditing 
firm that has been doing it for just about ever, I suppose, and 
the role of the OIG is limited to providing administrative and 
technical support. When----
    Mr. Shays. So let me just--I understand that you asked for 
the advice of officials from the Office of Management and 
Budget and the Government Accountability Office as to the 
priority of allowing the Department to provide information 
after the OMB deadline. Can you explain their response?
    Mr. Krongard. Their response agreed with the course of 
action that we took, and I would add----
    Mr. Shays. That you suggested.
    Mr. Krongard. Yes, sir. Could I just add that the American 
Institute of Certified Public Accountants was also consulted 
and agreed?
    Mr. Shays. When the clean audit was finalized in mid-
December of last year, did you remove any trace of the 
qualified unclean opinion and replace it with a clean opinion, 
or did you make clear that the qualified report initially 
submitted on November 15th had been subsequently revised?
    Mr. Krongard. It was the latter, with the result that the 
State Department was hit twice with the bad news, the first 
report and the second report.
    Mr. Shays. So the bottom line is you didn't protect the 
administration by waiting to get a clean report, you affirmed 
what was suspected.
    Mr. Krongard. Yes, sir, that is correct.
    Mr. Shays. Finally, would you agree that there is a benefit 
in providing full, fair, and accurate information to the 
general public regarding the finances of the Federal 
Government, rather than simply making available the information 
that exists on November 15th, a sometimes arbitrary, but 
nevertheless useful, end of the year deadline imposed on 
agencies for submitting financial information?
    Mr. Krongard. That states my concern perfectly.
    Mr. Shays. Thank you.
    Mr. Krongard. Sir, could I make a statement?
    Chairman Waxman. Well, if it is in answer to a question; 
otherwise, we are going to move on. Well, I don't want to be 
unfair to you, so go ahead and make your statement.
    Mr. Krongard. Yes.
    Chairman Waxman. Ordinarily, your statement time was for 
your statement.
    Mr. Krongard. Well, this is in response to something I 
think you found important.
    During the break, I did contact my brother. I reached him 
at home; he is not at the hotel. But I learned that he had been 
at the advisory board meeting yesterday. I had not been aware 
of that, and I want to state on the record right now that I 
hereby recuse myself from any matters having to do with 
Blackwater.
    Chairman Waxman. I see. You indicated you had called your 
brother to ask him earlier whether he was on the board and he 
told you he wasn't.
    Mr. Krongard. That was about 6 weeks ago, and I was not 
aware. And this board meeting happened yesterday, and I found 
out just during the break that he had in fact attended 
yesterday.
    Chairman Waxman. OK, thanks.
    Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman and ranking member.
    I had some other questions about construction at the 
embassy, but I am going to let those go. Mr. Krongard, this 
change in your testimony that you are describing now, the 
discussions with your brother, is troubling and it raises a 
number of questions. I just want to be straight here. Earlier, 
you testified that you had spoken with your brother and he 
assured you that he was not on Blackwater's board. That was the 
testimony you made earlier. Now you have testified that he 
changed his mind, but he didn't bother to tell you, and I have 
some questions about the timing of all these conversations.
    I have a document here, and I believe you have been shown 
it as well. This is an e-mail. I will let you get it first. It 
is an e-mail to Erik Prince, the CEO of Blackwater, from Gary 
Jackson, the Blackwater official who was setting up the 
advisory board for Blackwater. He is discussing who the likely 
candidates are for board members and he says, ``Your list, I 
think, is Buzzy, General Grange.'' The significant thing about 
this--Buzzy is referring to your brother. The significant thing 
about this e-mail is it is dated June 10th. So this e-mail 
shows that Erik Prince had your brother, Buzzy, on his short 
list for this board of advisers for Blackwater at least 6 weeks 
before the formal invitation was sent on July 26th. Is that 
correct?
    Mr. Krongard. I don't know. I can't speak for this e-mail.
    Mr. Lynch. Well, let me ask you this. When did you have 
your first conversation with your brother about whether he was 
affiliated with Blackwater?
    Mr. Krongard. I only had one. And I should make clear, as I 
tried to say, I am not my brother's keeper and we do not 
discuss our business with each other.
    Mr. Lynch. No, no, no, but you are a witness here and you 
have testified in the past, and you have this body relying on 
your testimony.
    Mr. Krongard. And my testimony, I stand by it.
    Mr. Lynch. So if you are not your brother's keeper, you 
need to say we don't know or something like that.
    Mr. Krongard. I didn't say----
    Mr. Lynch. You can't say my brother is not on the 
Blackwater board.
    Mr. Krongard. As far as I knew, that was a correct 
statement then. It turns out it was the best knowledge that I 
had based on the only one conversation I had, which was----
    Mr. Lynch. OK, when was that? When was the date of your 
conversation with your brother about him being on the 
Blackwater board?
    Mr. Krongard. It was probably about 5 or 6 weeks ago. I 
can't tell you exactly when it was.
    Mr. Lynch. Five or 6 weeks ago.
    Mr. Krongard. Early October, I guess. And that is a guess.
    Mr. Lynch. And during that conversation what did he say?
    Mr. Krongard. The principal focus of the conversation was 
the rumor that was out at that point that he had----
    Mr. Lynch. No, no, what did your brother say? That would be 
relevant to your testimony here.
    Mr. Krongard. That is what I am trying to say.
    Mr. Lynch. OK, please.
    Mr. Krongard. The principal focus of that conversation was 
the rumor that he had a significant financial interest or a 
financial interest in Blackwater. So the principal focus of our 
conversation was did he have a financial interest, and he 
assured me he did not.
    Mr. Lynch. Did he say he was approached by Blackwater?
    Mr. Krongard. He may well have said he was approached by 
Blackwater, but, again, he is approached by a lot of people, so 
that didn't surprise me.
    Mr. Lynch. Did he say he was taking some type of position 
with them?
    Mr. Krongard. No.
    Chairman Waxman. Would the gentleman yield?
    Mr. Lynch. Six weeks ago would have been after the date 
that he received the formal invitation to sit on the board, is 
that correct?
    Mr. Krongard. That is correct. I don't know that he had 
accepted at that time or not. I just don't know.
    Mr. Lynch. And it is actually in October. You are talking--
well, I am trying to do this in reverse, but that would be 
after the date he accepted the position in September. You are 
saying you had this conversation with him in October. So he 
would have already been sitting on the board and----
    Mr. Krongard. I don't know that, because all I see is that 
the first meeting of the board was yesterday. So I don't see 
anything that suggests----
    Mr. Lynch. I see where this is going.
    Mr. Chairman, I would just recommend that we ought to 
subpoena Buzzy and get him in here and testify as to his 
conduct and his conversation with his brother. Thank you. I 
yield back.
    Chairman Waxman. Would you yield to me? The gentleman has 
completed his questioning?
    Mr. Lynch. I yield back, yes.
    Chairman Waxman. If you would yield to me.
    Did you tell your brother why you called him? Did you tell 
him that you were being called on as the Inspector General for 
the State Department to look into actions by Blackwater and you 
wanted to make sure that you didn't have anything that would 
amount to an appearance, even, of conflict of interest?
    Mr. Krongard. Yes. But the only thing that I knew that had 
been rumored was a financial interest. I didn't know anything 
about a board----
    Chairman Waxman. But you told him why you were asking.
    Mr. Krongard. Yes.
    Chairman Waxman. And he said that there was no reason for 
you to worry, in effect.
    Mr. Krongard. That was what I took from it.
    Chairman Waxman. And then he never bothered to call you 
back.
    Mr. Krongard. No.
    Chairman Waxman. Have you had a difficult relationship with 
your brother?
    Mr. Krongard. No. We have gone to great lengths to keep our 
professional experiences separate because of his position and 
because of my position.
    Chairman Waxman. Ms. Foxx.
    Ms. Foxx. Thank you, Mr. Chairman.
    It is my understanding that Chairman Waxman has stated you 
interfered with an ongoing investigation into the conduct of 
Kenneth Tomlinson, the head of Voice of America, by passing 
information about the inquiry to Mr. Tomlinson. Can you tell me 
did you specifically instruct your secretary to fax to Mr. 
Tomlinson's office confidential information from a whistle-
blower, or did you simply ask your secretary to send Mr. 
Tomlinson the congressional inquiry received by your office?
    Mr. Krongard. To be factual, it is neither of those. I had 
no contact, never had any contact at all, either by fax, phone, 
or otherwise, with Mr. Tomlinson. I asked my assistant to fax 
the letter to Brian Conniff, the executive director of the 
Broadcasting Board of Governors, not to Mr. Tomlinson. And as 
soon as I learned the inadvertent event that took place, I took 
steps to recover that immediately.
    Ms. Foxx. Did you at any point discuss this congressional 
inquiry with Karl Rove?
    Mr. Krongard. I have never met, spoken to, or been in the 
presence of Karl Rove in my life.
    Ms. Foxx. Did Karl Rove ever insert himself into your 
office's investigation into the allegations against Mr. 
Tomlinson?
    Mr. Krongard. I have never heard of any such insertion.
    Ms. Foxx. Do you believe that the accidental leak of the 
whistle-blower allegations had a detrimental impact on your 
office's effectiveness in investigating the claims against Mr. 
Tomlinson?
    Mr. Krongard. I don't believe so, and I would have no 
reason to believe so, because when you really get down to it, 
the information in there had been in the general public, had 
been subject to investigations already. The date of that was 
2003. That in no way is meant to be an excuse for doing it 
because it was totally inadvertent and it shouldn't have 
happened, but as to whether it had any impact, I have no reason 
to believe it had any impact. I also, after it happened, told 
the Congressman in question what had happened, and he didn't 
think it was any big deal either.
    Ms. Foxx. Mr. Chairman, I would like to ask Mr. Krongard to 
explain a bit, if he will, on a comment you made earlier when I 
was here, about your experience in coming into this job in 
comparison with your experience in the private sector, when you 
talked a little bit about the problem in the offices where 
people didn't seem to work as a team, where there was 
competition. I don't think that people appreciate enough the 
differences----
    Mr. Krongard. I have thought a lot about this, obviously, 
in the two-plus years I have been here. I would divide it into 
two things, at least in my case, a culture clash and an 
expectations gap. And they are two slightly different things. 
In the culture clash, I brought with me the experience that 
people could be openly critical of each other, just as 
teammates are and partners are, with the idea of making the 
product better. And let me hasten to say I am not saying that 
the people in the private sector--I have been accused of saying 
people in the private sector are better or worse. That is not 
the case.
    But in the private sector, in the partnership, the 
professional partnership environment, you have clients that are 
paying for the time and you have huge professional liability if 
a product is less than perfect. Those two things militate in 
favor of spending enormous amount of time to getting to a high 
level of care in your confidence in the product. I mean, I am 
talking about 99 percent care.
    Because there is no client paying in the Government and 
because you don't have the individual liability, there is less 
of a threshold for care; it isn't the 99 percent that I was 
accustomed to. So I came with an expectation that people would 
really exchange freely criticism, there wasn't pride of 
authorship, and that the whole objective was for the firm to 
have a better product. Those things did not stand me well 
because a lot of what I did was resented.
    I will give you another naivete on my part. I honestly 
believe, because of my training in the private sector, when you 
signed a legal opinion or an auditor's report, the quality went 
in before the name went on. It was your responsibility to be 
absolutely certain of what you were saying and using the firm's 
name. So I believed that all of the reports, the 100-plus 
reports that are issued each year by my office, that they went 
out over my signature, I really believed that I had a personal 
responsibility. I stayed up hours reading every one of those 
and then making comments on them. Well, that really surprised a 
lot of people and it annoyed a lot of people.
    So I did have discussions with the people in my office and 
I recognized that I was expecting too much. But I also 
recognized that the work product of OIG was in fact below where 
it should be, particularly in the eyes of our constituents. The 
history in the OIG was they really talk to themselves and they 
talk to the State Department and they talk to the Ambassadors, 
and that is who they were writing the reports for. I viewed our 
constituency as the Hill, OMB, many other people, and we needed 
to be more responsive to their needs, to have reports that were 
readable and understandable by them.
    So I used the expression, when I talk to my staff from time 
to time about this, let's meet halfway. I know I am expecting 
too much, but I think you have to do better. And now that 
quote, let's meet half way, has somehow been turned against me 
as if it is something wrong. I still believe that concept. I 
know that I was being too hard. I know I was expecting too 
much. I know that my background led me to be demanding, and 
that was not always well received, particularly in an 
organization where I was specifically retained by the 
management of the State Department at that time and told, 
Howard, this is what we expect of you. This organization has 
not been responsive to the needs of the Department in this 
complex world, and we need some changes and we need your 
leadership.
    Ms. Foxx. Mr. Chairman, I would just like to say that, in a 
nutshell, I think he has pointed out what I have observed over 
and over and over again in these hearings and in my experience 
in Federal Government, that there is very little accountability 
and very little sense of responsibility for producing an 
outstanding result. Our Federal Government is broken. I think 
you have pointed this out again. It is broken because of the 
lack of intensity that we have throughout to do things right. 
We saw it in FEMA and Katrina, we see it everywhere, and 
somehow we have to get some accountability set up for 
individual members of this Federal Government so they are held 
accountability.
    We have put this man on the block----
    Chairman Waxman. The gentlelady's time has expired.
    Ms. Foxx [continuing]. And we are not doing anything to 
anybody else.
    Chairman Waxman. The gentlelady's time has expired.
    The Chair now recognizes Mr. Higgins.
    Mr. Higgins. Thank you, Mr. Chairman, for this very 
constructive and substantial oversight of a very important 
issue.
    Mr. Krongard, the U.S. embassy in Baghdad is the most 
expensive embassy ever built; $600 million in contracts to 
build this embassy were awarded to First Kuwaiti Trading and 
Contracting Co. In July, this committee held a hearing in which 
General Charles Williams, the Director of Overseas Building 
Operations for the State Department, testified that ``the 
project is on schedule and on budget.'' But the embassy did not 
open on time and has now been delayed indefinitely due to 
serious construction problems, including hundreds of violations 
of contract specifications and fire safety codes, as well as 
problems with electrical wiring. A fire inspection report 
obtained by this committee concluded that ``the entire 
installation is not acceptable.''
    During the committee's investigation, we identified 
numerous allegations regarding the embassy that came into your 
office. For example, your office received at least five hot 
line complaints regarding the embassy spanning from April 2006 
to July 2007. Your office also received a letter in December 
2006 detailing ``allegations that First Kuwaiti had defrauded 
the State Department through a variety of schemes.'' This 
person later e-mailed you directly and there is evidence that 
you spoke to this individual personally.
    In addition, the Special Investigator General for Iraq 
Reconstruction warned your office in May 2007 that ``things are 
going to blow up'' at the embassy and ``important folks are 
involved.'' Despite all these allegations, you refused to allow 
any investigations into the Baghdad embassy.
    Mr. Krongard, why didn't you allow your investigations 
division to open any investigation into these claims? And I 
don't want to confuse the issue or have you characterize that 
an audit is an investigation. I want to be clear as to what 
kind of investigation I am talking about: that of a criminal 
nature relative to the construction of the U.S. embassy in 
Baghdad.
    Mr. Krongard. Sir, it is hard to answer that other than to 
say I never nixed any investigation. I only had--first of all, 
we had very limited number of investigators, as I say, 7, 8, 
10, 12, at any one time, but only 1 of whom was willing to go 
to Iraq. I never turned down anything that was well thought out 
or justified or supportable. That is all I asked for in terms 
of approving investigations. I never said that somebody 
couldn't open an investigation. I made it clear all of the many 
different things we were doing. And you are saying don't talk 
about audits and so on, but the fact is we have done several 
audits, we have done several inspections. In addition, if you 
are talking about the trafficking in persons issues, I did tell 
people at the time hold off on these until MNF-I IG and myself 
get our reports completed and issued. So, as to that, we did do 
that.
    There has been an investigation going on which I did 
approve. The investigators, they may be back by now because I 
am a little out of the loop, but they were there for some 6 
weeks or whatever it has been. So I don't think that I have 
shut down anything. There have been recommendations made to me 
from the investigators that I did not agree with, and I could 
go into those, if you like.
    Mr. Higgins. Mr. Krongard, your office did eventually 
initiate an investigation, and this happened on September 11th, 
1 week after your office learned that this committee was 
investigating your failure to pursue these issues. Your 
decision clearly came too late. Had you engaged earlier, 
perhaps some of these critical deficiencies could have been 
addressed before they erupted as they did.
    Mr. Krongard. Sir, I don't want to pick on dates, but you 
said September 11th. I mean, I don't know these dates, but if 
you say that the investigation was open on September 11th--
because I was in Afghanistan at that time--this committee's 
letter was dated September 18th, so it would be the reverse.
    Mr. Higgins. OK, let me ask you this. The head of your 
investigations division, John DeDona, stated in an e-mail to 
your Deputy, Bill Todd, that ``Under the current regime, the 
view within Investigations is to keep working the BS cases 
within the Beltway and let us not rock the boat with more 
significant investigations.'' Is Mr. DeDona correct?
    Mr. Krongard. No, he is 180 degrees wrong, because we had 
this dispute many times. It was my view that investigations 
were not pursuing the really meaningful investigations: 
following the money, determining what U.S. big programs were 
doing around the world. My investigators tended to do time and 
expense sheets and I don't want to say petty, because they are 
important, but minor violations of people in embassies and one-
off of visa fraud cases; whereas, I was trying to push them to 
do meaningful cases, such as visa fraud cases by companies and 
interlopers who were allowing large numbers of people to come 
into the country illegally, which constituted a threat to 
national security, where they were doing cases where somebody 
imported some product without paying $15,000 worth of taxes or 
something.
    So I would say that the dispute went the other way.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Cannon.
    Mr. Cannon. Thank you, Mr. Chairman. I think today we got 
news that the State Department has made the point that they are 
not going to send people to Iraq who don't want to go to Iraq. 
Isn't it true that part of your problem here is that you don't 
have people that will go to do investigations in Iraq?
    Mr. Krongard. Sir, you are correct. As I stated before, two 
very important audit engagements had to be either eliminated or 
redone simply because the auditors refused to go to Iraq.
    Mr. Cannon. That makes it sort of hard, right?
    Mr. Krongard. It sure does.
    Mr. Cannon. Are you happy with this policy of the 
Department, not to send people where they don't want to go?
    Mr. Krongard. Sir, that is beyond my competence. I am not a 
policy----
    Mr. Cannon. I am not happy with it. I think it really 
actually is wrong and bad, and I love Duncan Hunter's 
suggestion that we allow people who have been over there, who 
know the culture and may have been injured while wearing the 
uniform, to go back as diplomats. I think that might actually 
help our diplomatic corps significantly.
    Mr. Shays, I am pleased to yield to you, if you would like.
    Mr. Krongard. Sir, Mr. Shays, I know, has been a great 
person in terms of going to Iraq; he has been there many times. 
I have been there, I think, three times.
    Mr. Cannon. You have been there three times, right?
    Mr. Krongard. Yes, sir.
    Mr. Cannon. My sense is Mr. Shays has been there, like, 18 
times.
    Mr. Krongard. I remember.
    Mr. Cannon. If the gentleman would respond to a question. 
Are you the Congressman who has gone to Iraq the most?
    Mr. Shays. I don't know that, but I do know that when I go 
there, I learn a heck of a lot.
    And what I am struck with, Mr. Krongard, first off, I want 
to say this for the record. To have been in contact with your 
brother and to have your brother tell you that he was not 
involved in Blackwater, and then to find out at a hearing that 
he actually attended and then left, and to find out he is 
connected is a pretty outrageous thing. He has done you 
tremendous damage by that, the fact that your brother would say 
he is not involved. I would like to know do you have more than 
one family member, brother, sister, sibling? How many siblings 
do you have?
    Mr. Krongard. At this point in time I have one.
    Mr. Shays. Wouldn't it make sense, given your position, to 
have been up front with your brother, to say, since I 
investigate everything the State Department does, I need to 
know any contact that you have because I need to recuse myself?
    Now, the other argument could be don't tell me anything you 
have because then I am not in conflict. But the problem is 
nobody is going to believe you, frankly, and we can't just say, 
they didn't tell me, but they are involved. If they are 
involved, you need to recuse yourself, and you know that. And 
it would strike me that what you would do is you would say to 
your brother I know what you have done in the past, we didn't 
talk, but now I have my job to do. I need to know everything 
where I may have to potentially recuse myself. Wouldn't that 
make sense?
    Mr. Krongard. Yes, sir.
    Mr. Shays. And I don't know what kind of conversation you 
had with your brother when you were on the phone, but I would 
be one pretty unhappy guy.
    I would like to ask you, you have gone on record as saying 
that you have had no contact with Karl Rove at all, so we are 
dealing with that issue. Mr. Waxman said you interfered with an 
ongoing investigation into the conduct of Kenneth Tomlinson, 
the head of Voice of America and a close associate of Karl 
Rove, by passing information about the inquiry to Mr. 
Tomlinson. I would like to know why did you pass information to 
Mr. Tomlinson?
    Mr. Krongard. As I stated before, sir, I did not pass 
anything to Mr. Tomlinson. I never had any contact, either by 
fax, hone, or meeting, with Mr. Tomlinson.
    Mr. Shays. So you have had no----
    Mr. Krongard. That is correct, I have had no contact with 
Mr. Tomlinson.
    Mr. Shays. When you have to allocate--it is a little 
unsettling, as well, for you to say you have 5, 6, 7, 9, 10 
inspectors. How many investigators do you have?
    Mr. Krongard. Investigators. Well, it varies because we 
have had people on medical disability. It has never been, I 
think, more than, like, 13. In numbers, we sometimes----
    Mr. Shays. What do you have now?
    Mr. Krongard. Roughly--if you don't count the 
administrative people, who only do----
    Mr. Shays. Right.
    Mr. Krongard. We have about a dozen or so, 13, maybe. I 
don't know, there is one that may still be on medical leave, I 
am not sure.
    Mr. Shays. OK. And the issue is they are all involved in 
particular investigations, is that not correct?
    Mr. Krongard. That is correct. And they have differing 
skills and experience, too.
    Mr. Shays. And your issue is if you move them from one 
place to another, then you are not going to have them conduct 
an investigation that--you are going to get blamed no matter 
what you do, just so you know. It is like a constituent of mine 
who will say, Congressman, you haven't dealt with global 
warming, you haven't dealt with the budget crisis, you haven't 
dealt with the war in Iraq, and the list is as long as they 
have. And, you know, they are right. I have to pick and I have 
to choose. So the real issue is what is the motivation behind 
your making a decision, and I think these are very legitimate 
questions. Thank you.
    Chairman Waxman. Thank you, Mr. Shays.
    Mr. Braley, I think you are next.
    Mr. Braley. Mr. Krongard, I want to followup on the very 
insightful comment that was just directed toward you by the 
gentleman from Connecticut, and I want to focus a little bit 
briefly on your background. You are a graduate of Harvard Law 
School, correct?
    Mr. Krongard. Yes, sir.
    Mr. Braley. And you are a practicing lawyer.
    Mr. Krongard. Yes, sir.
    Mr. Braley. So like those of us who practice law, we were 
subjected to ethical rules that included rules that governed 
the appearance of impropriety.
    Mr. Krongard. Yes, sir.
    Mr. Braley. And the need to avoid the appearance of 
impropriety. So you were familiar with that concept before you 
went to Deloitte, correct?
    Mr. Krongard. Yes.
    Mr. Braley. And then when you went to become general 
counsel at Deloitte, you not only had your legal background, 
but you were general counsel to a firm that did auditing and 
accounting that was subject to its own ethical guidelines that 
also included prohibitions on avoiding the appearance of 
impropriety, correct?
    Mr. Krongard. Yes, sir.
    Mr. Braley. And then, when you became the Inspector General 
for the State Department, you were an employee of the executive 
branch.
    Mr. Krongard. Yes.
    Mr. Braley. So you were subject to the standards of ethical 
conduct for employees of the executive branch. Are you familiar 
with those?
    Mr. Krongard. Yes. Yes.
    Mr. Braley. They are found in 5 C.F.R. 2635 and they talk 
specifically about the need for executive branch employees to 
avoid the appearance of impropriety.
    Mr. Krongard. Yes.
    Mr. Braley. Mr. Krongard, according to your Deputy, Bill 
Todd, who met with a State Department official--or, excuse me, 
you met with a State Department official in August 2007 who was 
implicated in potential criminal activity regarding to the 
embassy contract, and 1 day after the individual was 
interviewed by your audit division, you arranged a special 
meeting to speak with the individual privately.
    According to Mr. Todd, he personally advised you not to 
have the meeting, and here is what he told us: ``And Mr. 
Krongard said, until they are a subject, why can't I meet with 
them? And I said, because of the appearance of it. And he said, 
Bill, I have to do my job, so he met with them.'' Do you 
remember that conversation?
    Mr. Krongard. Not specifically, no.
    Mr. Braley. Then 3 days after your meeting, that same 
individual who was the subject of that inquiry failed to show 
up at a scheduled meeting with the auditors. They were informed 
that he had returned to the Middle East and has not returned to 
the United States or made himself available for a followup 
meeting since.
    And this same Mr. Todd reported that you engaged in similar 
conduct involving another individual. When you left the United 
States on a trip to Iraq, this individual was a ``person of 
interest'' in the Justice Department investigation, and after 
you arrived in Baghdad, the individual's status was changed to 
``subject of investigation,'' and Mr. Todd said he informed you 
of this fact and advised you not to meet with the individual, 
stating that it would be questioned by our investigators and 
would give people cause to comment. Do you remember that 
conversation?
    Mr. Krongard. No, I do not. I don't know how it could have 
taken place because I was gone at that time.
    Mr. Braley. Well, this is conversation that took place 
after you had arrived in Iraq. In this case, Mr. Todd went a 
step further and asked the Justice Department to speak to you 
directly, and, according to Mr. Todd, the Justice Department 
did contact you and warned you not to conduct any witness 
interviews while you were in Baghdad. Yet, despite these 
warnings, several members of your staff told this committee 
that you spent several hours with this individual, and when you 
returned to the United States, your investigators were so 
concerned that you might taint their investigation that they 
had specifically asked you not to tell them anything that you 
had learned. Nevertheless, you sent one of those investigators 
an e-mail outlining the substance of your conversation with the 
individual. How do you explain those?
    Mr. Krongard. Sir, I would like to go by, if we had the 
time, one by one, each of them--and I didn't write each of them 
down, but virtually every one of those I disagree with. Let me 
take the most obvious, the Department of Justice. When I 
planned my trip to Iraq, before I went to Iraq I was aware of 
three Department of Justice investigations. I called all three 
of them to tell them exactly what I was doing, what I could do 
for them while I was over there, and did they have any concerns 
about it. Two of them I spoke with on the phone and one group I 
went over and met in person. In fact, some of them really 
appreciated what I was doing because they didn't know what each 
other was doing. I knew more about what each of them were doing 
than they did. So all three of those--and I can give you the 
names, all three groups, because there was more than one 
involved from each of those, I can tell you what groups from 
Justice they were--they knew exactly what I was doing and, as I 
say, I really asked them--and I have records to show this--how 
can I help you while I am there.
    Mr. Braley. Has the Justice Department advised you to 
recuse yourself from embassy investigation?
    Mr. Krongard. Absolutely not. On the contrary. After I had 
completed my work in Iraq with regard to the new embassy 
compound--because that was only a small part of what I was 
doing in Iraq--after I completed that, I got an e-mail that was 
hard to understand, but it suggested--and it may be the one you 
are talking about--it suggested that I should have no witness 
interviews. And, by the way, I would like to tell you what I 
was doing. These were not witness interviews, and I would like 
to tell you what exactly I was doing both with Mr. Golden and 
Ms. French. But when I got that, I was troubled by that. So, 
from Iraq, I made contact with and through my deputy--and I 
forget exactly how it happened, but I spoke with a senior 
Justice Department official to ask him am I reading this right, 
am I supposed to not be doing this after talking with each of 
these people? And that person, after checking on it and getting 
back to us, who is more senior than any of the other people, 
told me exactly not, that there was no problem with what I was 
doing.
    Mr. Braley. So your testimony is that your deputy and your 
entire office counsel did not advise you to recuse yourself 
from the embassy investigation.
    Mr. Krongard. I don't believe I was advised to recuse 
myself, no, I don't.
    Mr. Braley. Have you ever----
    Mr. Krongard. But I have, by the way. Since I came back and 
since the activities of this committee, I have stepped aside 
from that.
    Mr. Braley. Have you formally recused yourself in a public 
way so that people know you are no longer involved in that 
investigation?
    Mr. Krongard. Well, I have sent e-mails to people. I have 
told people. I have told people in the State Department. I 
don't know what else--I don't do press releases, if that is 
what you are talking about.
    Mr. Braley. Are you announcing today that you have formally 
recused yourself, in front of this committee, from any 
investigation into the embassy in Iraq?
    Mr. Krongard. When you say any investigation, I am not 
exactly sure. If you are talking about the one that--by the 
way, when you say I sent the agency, I didn't send the agency. 
In fact, I couldn't have. The agent was one of the whistle-
blowers. If I had sent him to Iraq, I would have been accused 
of retaliatory comment. I discussed with him the opportunity to 
go not only for that, but to do something else that I had been 
working on there which he was very interested in. So I 
presented him with the opportunity; e-mails are replete with 
that. He decided what he wanted to do.
    Chairman Waxman. The gentleman's time has expired.
    There is something I don't understand. Why did you recuse 
yourself from the embassy involvement? The Justice Department 
didn't ask you to recuse yourself. Your brother is not working 
in any way that would involve you having a potential--why did 
you recuse yourself?
    Mr. Krongard. Because of the activities of this committee.
    Chairman Waxman. Because of the investigation of this 
committee you decided you should recuse yourself?
    Mr. Krongard. No, sir. You instructed me in the letter not 
to have any communications with the people who were being 
interviewed by you and not to allow any communications between 
them, and I wrote you back saying that was of great concern to 
me because it paralyzed our office. What effectively we did was 
to sort of keep me out and not to have communications among all 
of our senior people on the specific issues but you raised. But 
your request was even broader than that, it was not to have any 
communication at all.
    Chairman Waxman. Mr. Yarmuth, I am going to give you the 
choice. We can do your 5 minutes now, but we are going to have 
to come back anyway, and it is going to put us pretty close to 
the time, but we should be able to make the vote. So it is up 
to you.
    Mr. Yarmuth. Let me do it. I will try to keep it quick, Mr. 
Chairman.
    Chairman Waxman. OK.
    Mr. Yarmuth. Before I ask the one question I want to ask, 
following up on something that Mr. Shays mentioned, I want to 
just refer to a comment that Mr. McHenry made earlier in the 
hearing--he is not here now--in which he called this a drive-by 
oversight and also mentioned the fact that this committee had 
not done anything legislatively based on what we had heard 
during the course of the year, and I would just like to mention 
that already this year we have passed whistle-blower protection 
legislation, we have dealt with legislation related to the free 
flow of information, Government contracting, Blackwater and 
other private security firms, and also procurement policies and 
defense appropriations bills. So I just want to correct the 
record that Mr. McHenry implied that we--not implied, stated 
that we had not done anything legislatively.
    I want to go back just for a minute to the question of the 
Tomlinson investigation. You said that you had not had any 
contact with Mr. Tomlinson. Yet, people have told us that the 
letter that was sent to your office from Congressman Berman and 
Lantos and Senator Dodd and a complaint actually ended up in 
the hands of Mr. Tomlinson that was faxed to his executive 
director. Did your office have anything to do with faxing that 
letter of complaint to the executive director of the board?
    Mr. Krongard. Yes. Well, not executive director of the 
board. The executive director of the organization.
    Mr. Yarmuth. The organization.
    Mr. Krongard. Yes, sir, I did. The faxing of the letter was 
intended. The faxing of the attachment to the letter was 
inadvertent, and as soon as we learned that we instructed him 
to return it to us, and he assured us at that time that it had 
not been shown to anyone else, and it was only a day or so.
    Mr. Yarmuth. You say it was inadvertent. I mean, it seems 
like a pretty serious mistake to alert someone or alert an 
organization that was being investigated that there was a 
compliant against them.
    Mr. Krongard. The facts are pretty clear. I don't dispute 
the facts in any way. I had a phone conversation with Mr. 
Conniff is his name because of the nature of the information 
that was required from the congressional letter. I told him 
that we would need help at his highest level in getting things 
like time sheets and information and so on, and he said what do 
you need it for, and I gave him a general background, I didn't 
refer to any congressional letter. And he immediately said, oh, 
you are talking about the double-dipping and the 40-hour a 
week. He knew each of the issues. I was brand new; I had only 
been in office about 6 weeks. But, apparently--and this turned 
out to be the fact--these same issues had already been the 
subject of an investigation both by the Corporation for Public 
Broadcasting and the Office of Government Ethics. So he well 
knew the issues. So at that point I said, yes, this is a 
request on the same issues.
    And since he knew those issues, I said I will just send you 
the letter and you can see what it is. And I told my assistant, 
who was a temporary person at the time, fax the letter to 
Conniff. I don't think anybody disputes that was the 
instruction, fax the letter to Conniff. She was within, I 
think, her right to interpret that to fax the attachment. It 
was not my intention that it include the attachment; I was only 
thinking of the letter. When we learned, I think it was the 
next day, that the attachment had been faxed, I instructed my 
legal counsel to call Brian Conniff to ask him to return 
immediately the attachment, and that was done.
    Mr. Yarmuth. But, in fact, Peter Lubeck, who was the person 
who was investigating this, the chief investigator on this 
matter, has testified that one of the witnesses said what 
happened--and this is quoting Mr. Lubeck: ``What happened as a 
result of this, two of the witnesses were observed shredding 
documents related to this case. When I interviewed the two 
witnesses, they said, oh, we were just housekeeping.'' So, 
apparently, that letter had potentially very serious 
implications.
    Mr. Krongard. I think that is a leap of faith, sir. I 
really do. To say that with all the knowledge and all the media 
attention that was being given at that time, already, and had 
been given to these allegations against Mr. Tomlinson, to say 
that a shredding party took place because of my discussion with 
Brian Conniff, who we have no reason not to trust--he was the 
highest ranking officer in that organization--I can't say one 
way or the other, but I wouldn't jump to the conclusion that is 
what caused it.
    Chairman Waxman. Mr. Yarmuth, if you would allow me, I am 
confused, because when Mr. Shays asked you whether you had any 
communications with Mr. Tomlinson or others that would get to 
him, you said no, absolutely not. Now it turns out you directed 
a fax that inadvertently had an attachment to it, which you 
tried to pull back afterwards. Isn't that a communication?
    Mr. Krongard. There is a great difference in my mind 
between the executive director, Mr. Conniff, and Mr. Tomlinson. 
I answered faithfully the question that I did not provide 
anything to Mr. Tomlinson. There was no way we could have 
conducted our investigation without the cooperation of someone 
at a high level of BBG so we could get the materials we 
needed--the time sheets, the pay sheets, all of the records--
and the person we would go to would be the executive director.
    Chairman Waxman. Well, let me tell you this. If you ever 
investigate me and you send an information to my chief of 
staff, I am going to know about it. Don't you think Mr. 
Tomlinson would have known about it?
    Mr. Krongard. No, because the chief of staff is in a 
different relationship than the executive director and the 
chairman of the Board.
    Chairman Waxman. In some offices they talk to each other.
    Mr. Krongard. Sir, with all due respect, I don't know, 
sitting here today, who, other than Mr. Conniff, we would have 
gone to to get information of the type we needed.
    Chairman Waxman. We have another vote on the House floor. 
We are going to recess. There are four votes, so it will 
probably take us a half hour, but we will come back and will 
wrap up at that point, but there are some more questions.
    [Recess.]
    Chairman Waxman. The committee will come back to order.
    Mr. Issa, I want to recognize you for questioning.
    Mr. Issa. Thank you, Mr. Chairman.
    I have a number of questions, but perhaps the one that is 
most vexing to me, on the staff report for House Oversight--I 
guess this is the majority report--I am a little confused. On 
page 93--oh, I am sorry, the minority report. Thank you. I am 
sure it says minority somewhere here, I just missed that.
    There is a quote here that I would like you to comment on. 
It appears that, following the July 31st meeting at the Justice 
Department with Assistant U.S. Attorney and Chief of the 
Eastern District of North Carolina, Robert Higdon, that he 
wrote--and I think I am quoting: Thank you for taking time to 
meet with the Deputy Criminal Chief, Jim Candelmo and me 
earlier this week when we were in Washington. We appreciate the 
frank exchange of views and information. We will remain 
cognizant of these issues and will work closely with you and 
your staff to move this matter forward in the most expeditious 
way possible. Your decision to allow your case agent to 
continue to work on this matter will make that much easier.
    Can you comment on why they would thank you and then we are 
sort of hearing the opposite in this hearing?
    Mr. Krongard. Well, I quoted from this earlier, sir, for 
the same reason. I can only go by what they said to me both in 
the meeting, where they expressed appreciation, and in their 
followup letter. What is being said either second or third-
hand, which I am just hearing, I don't know how to resolve 
those. I go by what they said to me.
    Mr. Issa. OK, I am confused. This hearing, I can't figure 
out if it is about the Iraqi embassy or if it is about you. If 
it is about the Iraqi embassy, the embassy is on time and on 
budget, and normal construction errors, and maybe even not so 
normal construction errors, are being dealt with both through 
your office and through General Williams' office, and so on. 
And in the case of these specific areas of joint investigation, 
it appears as though you and Justice, at least officially, and 
through the participation of resources, are working together. 
Is that what it appears in your case to be?
    Mr. Krongard. Yes, sir. I think that is correct. I think, 
at the end of the day, we have been helping them to the best of 
our ability.
    Mr. Issa. So, Mr. Chairman, my question to you is where is 
the beef? I really have to try to understand your opening 
statement versus these facts, which seem to have--yes, they are 
controverted. They are controverted by the empty seats there.
    I guess I am going to switch from the things that don't 
appear to be here, which there doesn't seem to be a case for 
the Iraqi embassy, per se, being in trouble, other than it is a 
big project and there are things to be fixed. There doesn't 
appear to be any lack of willingness with appropriate oversight 
by yourself and your office to working together with Justice. 
So let me ask you this. You have a lot of areas, 252 embassies 
and missions around the world, that you have to do statutory 
oversight on, that you have to investigate. What are your 
priorities? I would like to know what you are working on, 
because what this hearing is about today appears not to be a 
problem. But I would like to hear about the problems that you 
would like us to know you are working on that maybe we should 
focus attention on.
    Mr. Krongard. Well, that is a really important question, 
sir, because when I came into office, one of the things I spoke 
about at my confirmation and always in the early days was that 
I wanted my priorities to be set not by the calendar, but by 
the priorities of the day. And I come from an audit background, 
where you go to the highest risks first, and I used to say I 
don't want to have to go to Island in the Sun because I haven't 
been there for 5 years and, oh, no, you can't go back to Kabul 
because you were there last year.
    I think the problem is that, when I first came in, 70 
percent of our work was mandated, so what we were working with, 
in order to fix our own priorities, is not significant. I mean, 
most of our work is--when you say what are we working on, I can 
tell you a lot of it, but it wouldn't necessarily be my highest 
priorities. As I said, in investigations, we are doing a lot of 
time and expense. I would like to be doing program.
    Mr. Issa. Well, let me give you an example of a question 
that I have had. State Department took a couple of decades to 
sell and buy a new embassy grounds in Lebanon. They no more 
than closed escrow and I am now told they will never build 
there, that they will have to find a new site. Is that 
something that your department looks at, the decision process 
and whether it was a legitimate change in events as a result of 
the assassination of Hariri, or whether, in fact, this is 
indicative of a selection process that we may be repeating 
around the world at great cost to the taxpayers?
    Mr. Krongard. That is the kind of thing we do, and I hate 
to speculate about something that took place before my time, 
but my recollection is that, before my time, there was an 
inspection of Embassy Beirut that did get into this issue, but 
that is my recollection.
    Mr. Issa. Well, you can followup for the record, if you 
don't mind.
    Mr. Krongard. We will, certainly. And let me tell you, sir, 
that one of the things that was highest on my priority lists is 
in the process of being achieved thanks to the Congress, which 
was setting up a Middle East regional office. Remember, we are 
talking about all these people who act in Afghanistan and Iraq. 
They all have people there. We have never had a single person 
in the Middle East, whether it is Baghdad or Kabul or anyplace 
else, and thanks to the Congress and my efforts of over 2 years 
to try and get support, we were given $1.5 million to set up a 
Middle East regional office, and the people just returned from 
Amman yesterday, where it is being set up. And the reason we 
picked Amman is because our problems aren't just Iraq and 
Afghanistan, they include Beirut, and that is one of the places 
we want to be.
    Mr. Issa. Well, thank you, and thank you for your service. 
And I will end by saying that first week of December the 
President is having a Christmas party. I have an extra guest 
ticket. After today, I know that you have earned it. I would be 
happy to have you use my guest ticket, and then you will get a 
picture with the President and then you will get to meet him, 
as well you should. Thank you for your service.
    Mr. Krongard. Thank you, sir.
    Chairman Waxman. Thank you, Mr. Issa.
    Mr. Shays, you are recognized.
    Mr. Shays. Thank you. Mr. Chairman, first off, I want to 
say that what troubles me about this hearing is that, Mr. 
Krongard, you have not been confronted by your accusers. You 
were confronted with a 14-page document. We don't want our IGs 
to be politically interfered with by the executive branch or 
Congress, and yet you have disclosed that you were basically 
forced to recuse yourself because of this committee, when in 
fact you may not have had to, because of the interference of 
this committee.
    The chairman has said something that I think was totally 
inaccurate. We all make mistakes, but the chairman said we 
don't need to have your accusers here because they were deposed 
by this committee under oath. They weren't deposed and they 
weren't under oath. John DeDona, in regards to the September 
18th letter, was an interview not under oath; Ralph McNamara, 
who has made accusations in the September 18th letter, was an 
interview, he was not under oath; Brian Rubendall and Ron 
Militana, September 28th letter, they were interviewed, but 
they were not under oath; and Peter Lubeck, October 4th, was 
interviewed, but was not under oath.
    They haven't come before this committee. You have not been 
given the kind of courtesy that we have given other people who 
come before this committee to know what they have said and we 
can compare the testimony and they can be under the light of 
public disclosure, as you have been today.
    And then there were two other individuals who are whistle-
blowers who have made accusations that the majority has chosen 
not to share with us who they are, so we can't question them 
about it because we don't know who they are.
    So I just want to say we all make mistakes, and in this 
case I think this committee has made a number. You have made a 
mistake, in my judgment, in not being clear with your brother 
the importance of him being up front with you, and I think that 
has really been not helpful at all. That is the one thing that 
I have learned in this hearing that I think is very 
uncomfortable to me. All the other issues, the travel, the 
allocation of your resources, to me seem fairly straight 
forward. So I leave this hearing thinking that you are an 
honorable man, you have tried to be up front with us, and I 
wonder sometimes why anybody would want to work for Government. 
You ran a big business, you obviously had a lot of employees, 
so it is not like you don't have management skills.
    And your point to us, which I accept, is that you came in 
as a change agent and know you have limited time, and probably 
pushed it a little more quickly in the public sector than you 
can in the private sector, and that is the reality of working 
in the public sector, and it is one reason why Government 
sometimes is ineffective, because it can't respond to the kinds 
of changes that we need.
    I would like to ask you, as it relates to the embassy. 
There have been a number of allegations concerning construction 
deficiencies at the Baghdad embassy. Does your office have 
investigators with the required skills to go to the 
constructionsite and add value to an investigation of issues 
such as the proper wall strength needed to withstand rocket 
attacks, whether the building is properly wired, has proper 
plumbing, or has adequate fire suppression systems?
    Mr. Krongard. No, we don't have that kind of skill.
    Mr. Shays. Isn't it true that the allegations of 
construction deficiencies are being handled by other 
investigative entities that have some expertise in construction 
and building security matters?
    Mr. Krongard. That is true, but without meaning to 
interrupt your train of thought, can I answer more fully? 
Because this is not intended to be self-promotional, but I want 
this fact out on the table, that when I was in Iraq in 
September, I think I made two very valuable contributions. It 
was I who insisted upon and obtained the agreement that the 
fire suppression system would have to be certified by an 
outside, independent, third-party expert and that an outside, 
independent, third-party expert would have to certify as to the 
structural integrity of the buildings. I insisted upon that.
    Mr. Shays. Let me ask you. When you went to Iraq, people 
are treating this as if you were doing an investigation. My 
sense, in hearing you, is that you went as the Inspector 
General to get information in general, that you were not 
conducting any investigation. I surmise from that you were also 
trying to determine where to allocate your resources and what 
areas you felt should be investigated and not. Am I looking at 
it the way I should be or is there more to the story?
    Mr. Krongard. There is more to it. I was gone for 3 weeks, 
I visited five countries, and the principal reason for my visit 
was a----
    Mr. Shays. You visited five countries?
    Mr. Krongard. The whole trip. The principal reason for my 
trip was to do a classified investigation with the Inspector 
General of the Department of Defense. That was what my 
principal reason for that 3-week trip was. I carved it out so 
that I have a couple of extra days on my own in Baghdad----
    Mr. Shays. So that wasn't connected to any investigation.
    Mr. Krongard. Not connected to anything we have talked 
about today. And I carved out some time while I was in Baghdad 
to attend to other things that are of interest to me, where I 
have made contributions: rule of law, anti-corruption, and the 
new embassy construction. So that was something that I carved 
out because I was there, it was not the principal reason for my 
trip.
    Mr. Shays. Thank you.
    Chairman Waxman. The gentleman's time has expired. I just 
want to say, Mr. Shays, again, that the witnesses that talked 
to our committee staffs jointly and that were put up to 
question----
    Mr. Shays. Excuse me. Is this on your time? Because I used 
it on my time. I am just curious.
    Chairman Waxman. Well, I think this is just something for 
the record.
    Mr. Shays. OK, because I just want to say I used my 5 
minutes, and I would appreciate not having to do it. But, 
anyway, continue.
    Chairman Waxman. Well, it looks like you don't want the 
record to be complete, but I just want to point out----
    Mr. Shays. No, I would just like you to use your 5 minutes 
like I used mine.
    Chairman Waxman. I see. Well, I am not going to use my 5 
minutes in correcting a record as chairman of the committee. 
And as chairman of the committee, the procedures by which we 
have followed in interviewing witnesses is to give them a 
choice of a deposition or an interview, and we have never heard 
any objection from the Republican side of the aisle on that 
process..
    Mr. Shays. We don't object to that.
    Chairman Waxman. Excuse me, I am still talking.
    The second point I want to make is that when somebody is 
responding to questions in an interview, as opposed to a 
deposition, they are still subject to criminal penalties if 
they lie or misrepresent information. And, third, you have 
never requested that these witnesses be here today. You have 
come in and completely complained at every opportunity they are 
not here, but we never had a request from the Republican side 
of the aisle to bring them in. So I just want the record to 
reflect that.
    Mr. Shays. Could I ask a question in this regard?
    Chairman Waxman. Yes, certainly.
    Mr. Shays. Am I incorrect, didn't you say that these people 
had been under deposition and had been under oath? That is what 
you said, and I wanted to correct the record that they weren't, 
and that is true. And, second----
    Chairman Waxman. No, I said that some were under oath in a 
deposition and some were interviewed. It was a combination of 
the two.
    Mr. Shays. And they were not. None of these individuals 
that made these charges were under oath, and please----
    Chairman Waxman. That is not an accurate statement.
    Mr. Shays. Please----
    Chairman Waxman. Maybe the individuals you are referring 
to, but not all the people we talked to.
    Mr. Shays. So let me be clear. The individuals that I named 
were not under oath?
    Chairman Waxman. I am going to tell you this, what I told 
you earlier. We will give a list----
    Mr. Shays. I just want the truth. I just want the truth.
    Chairman Waxman [continuing]. Of the people that talked 
under deposition and then talked under interview circumstances. 
We gave, for the most part, the people the choice.
    Mr. Shays. And the question I would then end in, why do we 
swear in a witness if we don't need to swear in a witness, if 
they have to tell the truth anyway? Why are we doing that to 
Mr. Krongard, but we are not doing it to the people who made 
the charges?
    Chairman Waxman. Well, the rules of the committee provide 
that anybody that testifies before a committee meeting, a 
committee hearing must testify under oath. The process by which 
we interviewed or deposed witness has been to give the 
individual a choice. We have never heard any objection from 
anybody to that process. We think it has worked well. It is 
only at this hearing that we are now hearing complaints.
    And, second, we never had a request from the Republicans to 
bring all those witnesses in. We had a report put out by the 
Democrats, a report put out by the Republicans. Mr. Krongard 
knows well the concerns that we have raised and he is here to 
answer them, and he told us, or at least we have seen quotes 
from him, that he welcomed this opportunity. He may not have 
chosen it at his first choice of how to spend the day, but this 
is the only way that we think, is to get him in and answer 
questions.
    Now it is Mr. Cummings' turn, if he wants to ask questions.
    Mr. Cummings. Thank you very much, Mr. Chairman. I will be 
very brief.
    Mr. Krongard, Congressman Shays just made a statement that 
I thought was very profound, when he said that the one thing 
that troubled him was with regard to the statements you made 
with regard to your brother, and I came to this hearing today, 
I must tell you, with an open mind, and if there is anybody on 
this committee who, over the years, has guarded witnesses and 
tried to make sure that they were treated fairly, I have done 
that. But in light of all the evidence we have, it is 
increasingly difficult, I must tell you, to give you the 
benefit of the doubt and to find your testimony credible, and 
let me just explain to you why. And you don't have to look so 
confused, I am just telling you what I am feeling.
    In fact, the only way you can be credible is if all your 
employees who have given sworn testimony to our committee, over 
a dozen that is, are wrong in their statements and if the 
Justice Department is wrong in the information that it has 
shared with us. Let's just summarize your testimony as we close 
this hearing. As I have listened, and I have not been in the 
entire committee, but I have watched it on TV, the Justice 
Department told us you impeded their investigation. You have 
told us that not only haven't you blocked the Department's 
work, but that the Department doesn't believe you blocked its 
work. So you are telling us you are right and the Department is 
wrong.
    The Justice Department and the agent you assigned to the 
Blackwater inquiry told us you put your congressional and 
public affairs officer in charge of obtaining relevant 
documents. You have told us that isn't true, even though the 
congressional and public relations director confirmed the two 
other accounts. So, again, you are telling us you are right and 
they are wrong.
    Your employees have uniformly told us of the abusive and 
hostile environment that you created. This morning you told us 
the problem wasn't with you, but was a reflection of the low 
quality of the people working for you. In fact, you previously 
told them the Office of Inspector General was a ``banana 
republic'' and belittled the standards they followed. In 
response, your Chief Counsel, Erich Hart, told us that ``I 
think everybody in that room was personally offended by that 
statement. I was offended. I come from a military background 
and my standards are exceedingly high.'' In this case you are 
telling us you were right and, again, your senior employees 
were wrong.
    Despite the recommendations of the head of your audit 
division, your chief counsel, and your deputy that you not 
allow the State Department to replace a qualified audit of its 
financial statement with a clean audit, you did this in both 
2005 and 2006. This morning you told us that you did this to 
preserve the integrity of the audit process, notwithstanding 
the views of your top advisors, and when they objected, you 
told one of them he was ``irrelevant.'' Bill Todd, your deputy, 
told the committee that ``Howard said I was wrong. Howard told 
Duda he was wrong and Howard told Erich Hart he is wrong.''
    A number of your senior advisors told us your personal 
investigation into First Kuwaiti's alleged labor trafficking 
was unorthodox, ``didn't comply with any standards,'' was ``an 
embarrassment to the community,'' and ``an affront to our 
profession.'' But this morning you have stuck to your position 
and insist you were right and they were wrong.
    A number of those same advisors and the Justice Department 
have also told us they warned you that your proposed 
participation into an ongoing criminal inquiry was wrong and 
could taint the real investigation. Again, you insisted today 
that you were right and they were wrong.
    In fact, the only time today that you have admitted you 
were wrong relates to your brother, Buzzy Krongard. You were 
adamant this morning that he did not serve on the Blackwater 
board. As a matter of fact, after you gave your statement, you 
were emphatic that you had talked about him and gave me the 
impression that you had just talked to him recently, and then 
came back and said it had been a while. I am just saying that 
was the impression I got.
    Mr. Krongard, I just don't believe that everybody is wrong 
and you are the only one who is right. But I will give you one 
more chance to reflect on these overwhelming facts and 
reconsider your testimony, and if you would like to do that, 
you may.
    Mr. Krongard. Thank you, sir. I am not sure I can do every 
one, because I wasn't writing fast enough. Let's start with 
DOJ. I am accused of impeding their investigation and you say 
that I am disagreeing with them or the people who are speaking 
for them. When I read you the letter, which reflects exactly 
what they said--and that letter very clearly makes the point 
that I was cooperating with them, they appreciated what I was 
doing, they liked my candor, they liked the fact that I had 
assigned to them a good investigator. So I don't think it is a 
question of my saying that they are wrong; I am relying on 
their own words.
    With respect to the congressional and public affairs 
person, it is true as to the documents. You said that I denied 
that the congressional and public affairs person was 
responsible for getting the documents. I stated the contrary; 
she was because she was doing it for SIGIR, as well, and, 
therefore, it made it easy to do it for both. What I said she 
was not doing was any investigative activities. She wasn't an 
investigator, I agree with you.
    Mr. Cummings. Mr. Krongard, I want to interrupt you for 1 
second. That letter from the Justice Department was after the 
July meeting that you had with them. The complaints we are 
getting are from all the things you did after that.
    Mr. Krongard. Well, let me get to that.
    Mr. Cummings. So just the chronology.
    Mr. Krongard. Let me get to that, then.
    Mr. Cummings. OK, go ahead.
    Mr. Krongard. I was following the Congressman's order, but 
let me get to that. I made it clear in my testimony, and I will 
stand by it, that I communicated by phone and in person with 
each of the three branches of the Justice Department that had 
investigations, to my knowledge, before I went to Iraq, told 
them what I was going to do in Iraq, and asked them if there 
was anything I could do to assist them. I don't know what 
else--I am not disagreeing with them. I did talk to them and I 
know what they said to me, so I do disagree with you on that.
    I am not disputing that the problem is all somebody else's. 
I didn't try and say that. I tried to say I have been very hard 
on the people. I came to do a very difficult job. I gave up a 
lot to come down and do that, and I wanted to make the 
contribution that was expected of me, and I wasn't prepared 
very well for what I found, and, yes, I have created an 
environment that a lot of people felt uncomfortable.
    But you haven't heard from any of the people that like what 
I am doing, and admire and respect what I am doing. It would 
have been nice if some of those people had been consulted. But 
I am not saying the problem is all with them as far as the work 
environment. It is a work environment that I have been very 
demanding; I have been very critical. I have tried to get to a 
high level of care. When I read every report and I make 
comments on it, some people view that as micro-managing, some 
people view that as interference.
    Each of the seven names, I believe, that Congressman Shays 
read with respect to giving this adverse testimony are all from 
the investigations group. I came into a situation where that 
investigations group had never been managed. They viewed any 
management, any oversight as interference. So, yes, I am part 
of the problem. I have tried to deal with it. I would like to 
do better.
    There are e-mails in here, frankly, that I am embarrassed 
to see in print when I see them in print by themselves, without 
seeing what led to them and what pushed me to them. But, 
nevertheless, I am embarrassed by them. And it has not been 
asked, but I will tell you I learned a really good lesson 
through this, and I am going to think long and hard before 
hitting that send button, which we all should. E-mail is a 
terrible thing.
    So I don't say it is everybody else.
    As to who is right and wrong, on the audit, absolutely I 
knew I was going against the majority, and I believe to this 
day that one of the best things I have done in the Department 
since I have been there is that memorandum that I wrote with 
respect to why I was doing what I was and had the support of 
the American Institute of Certified Public Accountants, OMB, 
and GAO, and I think to this day what I did was correct.
    And the people who disagreed with me, by the way, even 
though they disagreed with me in principle, acknowledged, 
including Erich Hart, the legal counsel, that there was nothing 
illegal about what we were doing, and our role as not being the 
auditor, but just being the overseer, was only to make sure 
they didn't do anything illegal or unprofessional. So on that I 
really do believe I was right and the other people were wrong, 
and so be it, that is the way.
    On the work on the new embassy compound, as I say, I have 
made real contributions there. With respect to getting the fire 
suppression system certified by an outsider and the structural 
integrity, I pushed for that, and I demanded it and I got it.
    So I have tried to do the best job I can. That is all I can 
tell you. I am not perfect. I am not going to be here telling 
you everybody else is wrong and I am right.
    Mr. Cummings. I see my time is up. Thank you.
    Chairman Waxman. Your time is up.
    Mr. Krongard, the thrust of those last questions is you are 
right and everybody else is wrong. That is the way it appears 
to some of us, but what strikes me is the enormous gap between 
your strong reputation in previous jobs and your performance 
and the Inspector General. There is a string of incompetent 
actions that you took. Now, I took notes when you testified 
originally, and you said I took on a mission that put me in 
conflict with people resisting change. Then you also said I 
never allowed staff to affect my judgments. I sometimes think 
that is an incredible statement, because you had staff there 
that should have affected your judgment, because many of them 
had more information, knowledge, experience than you did.
    Now, all the people that were critical were not from the 
inspections unit. Bill Todd said that what you were doing was 
very unorthodox. He was the Deputy Inspector General. Patty 
Boyd said your audit was an embarrassment. Erich Hart, your 
counsel, said it was wrong to give the State Department more 
time on the audits, which you did for 2 years running.
    Despite strong warnings from the Justice Department, you 
insisted on meeting with a person of interest. You investigated 
and wrote a report on human trafficking that was widely 
ridiculed by your career investigators for being the furthest 
thing from an investigation. Your staff specifically warned you 
not to debrief them on your discussions with subjects of 
investigation for fear that it would taint their investigation, 
and you then proceeded to send a detailed e-mail to one of the 
agents doing exactly what they asked you not to do. In the case 
of Ken Tomlinson, you shared with him a whistle-blower letter 
detailing the allegations that were being investigated. And 
there were other instances. You met with two State Department 
officials that were persons of interest, and that was a 
problem.
    There is one area after another where you seem to ignore 
the people who had ideas of what to do and instructed you that 
they thought there was a problem, but you put your judgment 
over theirs. And I would submit it looks like your judgment in 
every case was not better than theirs. This record of 
incompetence is completely at odds with your previous 
professional reputation. I don't know how to reconcile the two, 
but I know that we can't ignore the facts.
    You have a critical role as an inspector general for the 
State Department. The State Department needs your help to make 
them more effective and to make the most of their resources, 
and the challenges that are facing the State Department are 
enormous in Iraq, particularly; they have profound implications 
for our relations with the entire world. So you have to do the 
oversight to keep them honest.
    Our job is to do the oversight to keep you and the State 
Department honest, and to make sure that you are doing the job 
you need to do.
    Now, our investigation and our hearing today has been 
belittled by the Republicans. When they were in power, they 
didn't do any investigations over anything that might embarrass 
the Bush administration. It is as if they had nothing to do 
with it all. They were only Members of Congress, although the 
Constitution spells out we have a job, providing the checks and 
balances. Now that we are trying to do that, we get a lot of 
criticism.
    But back to you. I will take the criticism. Back to you. 
How is it that you ignore and put yourself in a situation where 
you belittle the people that are trying to have you do your job 
right? Are they all wrong and you are right? And it seems to me 
it is not just a question of credibility; it is a question of 
what has happened has been viewed as incompetent. How do you 
respond to some of these specifics and my general comments?
    Mr. Krongard. OK, let me try, sir.
    Chairman Waxman. And, with that, we are going to end the 
hearing.
    Mr. Krongard. Let me try, sir, because there are some 
things that have been said, really, for the first time to me 
and are wholly implausible. For example, I have heard for the 
first time today that I was told not to tell the investigators 
information that I had acquired in Baghdad, and they didn't 
want to know it and I forced them to know it. Let me read to 
you the e-mail which I sent to the agent--I won't use his 
name--as soon as I got back from Baghdad.
    It says, ``When I was in Baghdad last week discussing so-
and-so, here is what happened,'' and I did tell him. Here is 
the response from the agent on October 5th: ``Howard, thanks 
for the information. I believe this is an area of interest to 
the prosecutors, so I will forward the information to them as 
well.'' That seems to me a total acceptance of what I did.
    I then followed up with him and said, ``Good. Have you had 
a chance to consider my suggestion at our meeting Tuesday?'' We 
had met.
    Chairman Waxman. You wouldn't give your e-mails to the 
Justice Department because you told them what? Why didn't you 
provide the Justice Department the information they need? You 
are supposed to work with them; they are the ones in charge of 
criminal prosecutions, not you. And if they ask for 
information, why wouldn't you give it to them?
    Mr. Krongard. They never asked for this information, sir. I 
had not even been aware that there was an investigation, 
because it happened while I was in Iraq. I provided my 
investigator with the information. I didn't even know he was 
working on an investigation with the Justice Department.
    Chairman Waxman. Well, you are reading aloud from e-mails 
that are not on the public record. Do you want that on the 
public record?
    Mr. Krongard. You have put on the public record a statement 
that I was told something that I wasn't told. This is directly 
contrary. I was cooperating with this agent. I gave him 
information that he liked. I gave him an opportunity to go to 
Iraq and I put the choice to him. I mean----
    Chairman Waxman. Let me just ask you to hold off for a 
minute, because I think you are maybe going to adversely affect 
other investigations by what you are saying here.
    Mr. Krongard. But the allegation----
    Chairman Waxman. We have to respond to the vote.
    Mr. Shays. He has to be able to defend himself to the 
charges.
    Chairman Waxman. Well, I am not going to deprive him of 
being able to defend himself, but if he uses information that 
he has that has some----
    Mr. Krongard. I will submit this right now to you.
    Chairman Waxman. Where did you get that?
    Mr. Krongard. It is my e-mails. It is my record. I produced 
this----
    Chairman Waxman. Now, this is something we subpoenaed and 
we never received. Why didn't we get that when we asked for it 
under subpoena.
    Mr. Krongard. You would have to ask the person who 
processed this. I gave up my e-mails to the person processing 
this. Maybe it was determined that this is, like you are 
saying, affects investigations. It may be. I wouldn't have 
gotten into it but for the allegation against me that has been 
made today.
    Chairman Waxman. I know, but we asked for the information 
from you. We even----
    Mr. Krongard. I gave it to the person. I gave it to the 
person.
    Chairman Waxman. You gave it to our committee?
    Mr. Krongard. No, I gave it to the person--I was recused 
and separated from the production process. I produced all of my 
e-mails to legal counsel in my office who was responsible for 
the production. I don't know if this was produced or not.
    Chairman Waxman. As I understand it, the Justice Department 
objected to our getting that e-mail because they said it was 
sensitive to a prosecution, and now you are reading it.
    Mr. Krongard. The parts that I read went only to whether 
the agent appreciated or objected to my providing him 
information. That is all I have read and that is my point.
    Mr. Shays. You answered his question. Thank you for 
answering his question.
    Mr. Krongard. OK, can I try one more? I mean, there was a 
whole string. Because you asked why I didn't allow my staff to 
influence my job selection and allocation, and you referred to 
what I had said before.
    Chairman Waxman. Not job selection, not allocation of 
funds. They asked you to do and not do certain things, and you 
just absolutely ignored them. In fact, the record that they 
have given us is that you belittled them. You told them they 
were irrelevant, that they didn't know what they were talking 
about.
    Mr. Shays. These are people that haven't come before the 
committee, I am sorry.
    Chairman Waxman. These are people who have come before our 
committee.
    Mr. Shays. Not him.
    Mr. Krongard. My only point was you referred to my written 
and oral statement this morning. I just want to clarify what I 
actually said. I said the clashes were unfortunate, but I need 
to emphasize that I never allowed them, the clashes--not the 
people--to affect my judgment. I did take into account 
recommendations, positions, and other advice that came from my 
staff.
    In the course----
    Chairman Waxman. You took them into account, but you didn't 
follow them.
    Mr. Krongard. I did the best I could. If I felt that my 
judgment, as I did in the audit question that we have talked 
about, was better, I followed mine. But, more important, sir, 
in these de-conflict situations, the investigators who are 
governed by very strict confidentiality, they generally known 
what they are doing. They don't know what the auditors are 
doing and they don't necessarily know what the inspectors are 
doing, and all don't know what the others are doing.
    I am the one that is on the top of this, that has to put 
all this together and make the determinations as to what is 
good from a resource point of view, what is good from a 
conflict point of view, what is good from doing the job that I 
swore to undertake to do. That is my responsibility. Yes, it is 
hard, and maybe I don't always make the right decision, but I 
can tell you my motivation has been nothing different from when 
I came to Washington in the first place.
    Chairman Waxman. Well, no one has attacked your motivation 
except what we are attacking as your competence and your 
credibility.
    Mr. Krongard. Well, sir, I will stand on my record of 
competence.
    Mr. Shays. Mr. Chairman, you have attacked his motivation. 
The whole letter was attacking his motivation. You basically 
charge this man with being corrupt; you charged him with so 
many things. It is an outrage.
    Chairman Waxman. My letter will speak for itself, not your 
characterization of it. The facts will speak for themselves, 
not your characterization of it.
    We have a vote and there are 2 minutes left. Rather than 
ask you to come back further, I think we have gotten to the 
point where we know what your position is and we know what 
others have said, and we know what the Republicans think of 
this and we have our executive summary and the Democratic 
summary of the information we received. We will let the facts 
speak for themselves.
    With that, I am going to adjourn the meeting. Thank you for 
being here.
    [Whereupon, at 2:10 p.m., the committee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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