[Congressional Record Volume 143, Number 151 (Monday, November 3, 1997)]
[Senate]
[Pages S11613-S11614]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE PERFORMANCE OF TREASURY IG VALERIE LAU

  Mr. GRASSLEY. Mr. President, I rise today to inform my colleagues 
about an instance of failed leadership in protecting the taxpayers' 
money, and in executing the law enforcement functions of our 
Government. It's a story full of irony, of abuse of power, of a 
breakdown in the people's trust.
  Last Friday, and again today, hearings were held by the Governmental 
Affairs Permanent Subcommittee on Investigations. The chairman of that 
subcommittee is Senator Susan Collins of Maine. The subject was the 
performance and conduct of the Treasury Department's inspector general, 
Valerie Lau, and her staff.
  During Friday's hearing, we learned that Ms. Lau personally let two 
illegal contracts, including one to a long time associate, Mr. Frank 
Sato. IG Lau violated procurement laws and regulations in the sole-
source procurement of the two consulting contracts. The judgment that 
these two contracts were illegal was not made by members of the 
subcommittee. It was made by the independent, nonpartisan General 
Accounting Office.
  The GAO also found that IG Lau violated the standards of ethical 
conduct. This is because she failed to disclose her personal and 
professional relationship with Mr. Sato.
  Today, at the subcommittee's second hearing, we heard more. We 
learned that IG Lau and her staff provided false and/or inaccurate 
testimony to Congress and congressional investigators. We learned of 
the destruction of a document. The document was destroyed, in my view, 
as part of a cover-up. It was to hide the fact that a potentially 
criminal investigation had been launched--without merit--of two agents 
of the U.S. Secret Service. It was in retaliation for their testimony 
before Congress in the FBI Filegate matter. Again, that is my own 
judgment.
  The IG and her staff, as well as other Treasury officials, had told 
my staff as well as officials of the Secret Service that a potentially 
criminal case had been opened. Then, the IG and her staff denied having 
told us that, and maintained that such a case was never opened. The 
record now shows that those statements were false: There was, in fact, 
such an investigation of the two agents.
  Also today, we learned that the IG presides over an agency that has 
become totally demoralized. It's clearly because of failed leadership 
at the top. Wrongful and questionable activity can be assigned to 
virtually the entire upper level of the IG's office. The troops below 
are suffering from bad morale. The office of the Treasury IG has been 
severely crippled.
  The irony in all this is that an inspector general's job is to detect 
these very violations in others. An IG is not supposed to commit them.
  One of the illegal contracts that the IG let, grew from $85,000 to 
$345,000. That's called contract nourishment. There's not much to show 
for it. Except 1,000 rulers, Mr. President. The rulers are 6 inches in 
length. They're made of flexible plastic. They have the inspector 
general's mission, vision, and values statement printed on them to 
remind employees of who they are and what they do.
  Mr. President, I take the amount of rulers purchased--1,000--and 
divide that into the cost of the contract--$345,000--and I come up with 
a value per ruler of $345.
  That's right, Mr. President. The $345 ruler.
  Mr. President, this is not the first time in my experience that the 
Government bought ordinary products at extraordinary prices. I recall 
coming to this floor in 1983. I had with me a small steel washer that 
was a spare part for an Air Force airplane. The price of that washer 
was $364. It was worth only about a quarter.
  The Pentagon, at the time, defended the cost of the washer. First of 
all, it

[[Page S11614]]

wasn't just a washer, you see. Why, it was a ``sheer pin spacer.'' And 
the $364-price tag wasn't really outrageous. After all, it was 
precision-molded from space-age alloys; extremely light weight, less 
than half an ounce; no moving parts; easy-to-handle circular shape; 
plus, there was inflation; transportation costs; special packaging; 
obsolescence; breakage; deterioration; pilferage; and so forth. All of 
these are costly. So, $364 was an absolute bargain, according to the 
Pentagon, for a steel washer. Excuse me--a sheer pin spacer.
  Given my experience with military spare parts, I thought to myself: 
Now, what could possibly be the justification for the Treasury IG 
first, buying all these rulers, and second, buying them at $345 per 
copy?
  Well, let's look at the first question: Why does the IG need all 
these rulers? There are only 300 employees in the office. Yet, she 
bought 1,000. That's three rulers for each employee. Perhaps the extra 
700 are spare parts.
  Also, Congress recently passed the Government Performance and Results 
Act. That act gives Congress the ability to measure the performance of 
Government agencies. It does so by requiring agencies to come up with 
performance goals, and then provide us with data so we can measure 
their performance against their goals.
  The contract in question provided no real benefit to the taxpayers. 
It was intended to boost morale. But testimony from witnesses at 
today's hearing said morale was worse after the study than before it. 
That means, the only real, tangible benefit to the taxpayers out of 
this contract were the 1,000 rulers.
  So I must assume, Mr. President, that the IG needed these rulers to 
help measure performance. Is it possible the IG took the measurement 
function a little too literally?
  If so, that gives new meaning to the term ``performance 
measurement.''
  Now that might justify why we purchased the ruler. But it doesn't 
justify the price tag.
  Perhaps I could take a stab at that. I note that the ruler is 
lightweight--less than half an ounce. It looks like it could be made of 
precision-molded space-age teflon. No moving parts. Flat, streamlined 
sides for trouble-free underlining. Able to withstand thousands of 
whacks on the knuckles. Customized to fit in most standard pockets. 
It's a real triumph of 21st century technological configuration. Then, 
of course, there's the packaging costs, the cost of inspection, 
planning, transportation, and so forth. Just like the DOD steel washer. 
A real bargain, Mr. President.
  With that kind of price tag, this IG is perhaps better off working at 
the Pentagon as a contracting officer, rather than an IG guarding the 
public's Treasury. At least at the Pentagon, a $345 ruler would not be 
an anomaly.
  But seriously, Mr. President, clearly the aforementioned is a major 
embarrassment for the inspector general, who needs to always be beyond 
reproach, for the Secretary of the Treasury, and for the President, who 
nominated this IG. And also the Congress, which confirmed the IG.
  But nothing is more unconscionable than what this IG's office did in 
perpetrating a potentially criminal investigation of two dedicated 
agents of the U.S. Secret Service, in retaliation for their testimony 
before two committees of the U.S. Congress. And after opening such a 
case, it was denied and covered up. As part of the cover-up, an 
official document was destroyed.
  I have seen similar abuses of power in the past, since I arrived in 
Congress. That's not what's new. Bureaucracies do that all the time. 
That's why we have IG's. IG's are supposed to catch those who abuse 
their power.
  What's new in all this is that the abuse of authority is by someone 
in whom the citizens have vested the powers to combat such actions. I 
have never seen such an abuse of power by a Federal law enforcement 
official.
  The responsibility of employing such powers is of enormous 
proportions. The full powers of the IG's office were directed against 
the most precious right that exists in this country--the civil 
liberties of two American citizens. It cost these two agents over 
$26,000 so far. Worse, there has been a cloud over them and their 
families for more than a year.
  What happens the next time these agents are in a court of law, or 
being interviewed for a future job opportunity? Suppose they are asked, 
``Have you ever been the target of a criminal investigation?'' How are 
they supposed to answer that question? Technically, they were targeted 
improperly. But if it's a yes-or-no question, they would have to answer 
yes. It's just not fair.
  The process of correcting the wrong that was done began today. The 
IG, after a year of denials, contradictions, and wordsmithing, finally 
apologized at this morning's hearing. It was a year overdue. 
Nonetheless, it was the appropriate thing to do.
  I mentioned earlier that this ruler, purchased as part of one of the 
illegal contracts, displays the IG's value statement. Ironically, the 
actions of upper management in the IG's office systematically violated 
almost every one of them.
  The value statement reads as follows:

       The core values which govern all of our employee and 
     organizational actions are trust, mutual respect, integrity 
     and competence. These values are demonstrated through 
     qualities such as fairness, honesty, cooperation, open 
     communication, shared goals, and a commitment to excellence.

  Mr. President, in my view, the taxpayers would have got more value 
out of this contract had the Treasury IG's office practiced the values 
listed on this ruler. It did not. And that reflects a major leadership 
void in that office.
  I mentioned earlier that the IG engaged in the fine art of 
wordsmithing. Instead of answering questions, she did a soft-shoe 
routine. For example, when GAO found that she let two illegal 
contracts, her response was to call them ``technical violations.'' That 
response hardly instills confidence that this IG should remain in that 
job. Quite the contrary, it speaks volumes about the need for a new IG.
  Mr. President, the Secretary of any Department is required, under the 
Inspector General Act of 1978, to generally supervise the IG. I hope 
that Treasury Secretary Rubin makes himself familiar with the facts and 
findings of the investigation by the Permanent Subcommittee on 
Investigations. Were he to do that, I am confident that he would reach 
the same conclusion I have--that the IG's own actions have undermined 
her moral authority to lead that office. Her ability to continue to run 
that office effectively, and in the taxpayers' interest, has been 
compromised.
  I do not come to this judgment frivolously. I have been intimately 
involved in the investigation and circumstances of this case for over a 
year. I worked with Chairwoman Collins for several months, who did an 
outstanding job on this investigation, Mr. President. She and her staff 
are to be greatly commended for digging out all the facts on this case, 
and laying them in front of the American people.
  So I feel an obligation to call on the Treasury IG to step aside so 
that a new IG and IG management team can be brought in to reestablish 
the trust and confidence of the people, and to restore the morale of 
the many hardworking and dedicated employees of that office. There is a 
tremendous responsibility that comes with being Treasury IG. And we in 
Congress need to make sure every effort is made to maintain the 
public's confidence in their law enforcement agencies. That's why I 
think this decision to step aside must be made.
  I thank the Chair. I yield the floor. I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________