- The Washington Times - Wednesday, June 6, 2001

The Office of Inspector General of the Department of Defense has lost its legal audit authority because it falsified documents to pass a 2000 peer review, The Washington Times has learned.
The fraudulent peer review went unnoticed until a whistleblower and an anonymous letter alerted the office of Sen. Charles E. Grassley, Iowa Republican.
In a letter to Defense Secretary Donald H. Rumsfeld, Mr. Grassley cited information from the General Accounting Office (GAO) and an internal review by a "senior official within the IGs audit chain of command" that accused the highest levels of the IGs office of "tampering with audit materials to alter the outcome of a peer review required by law."
In the May 22 letter, obtained by The Times, Mr. Grassley called the matter "a major integrity violation" and said that according to GAO standards, the automatic result is that "the IGs office has lost its accreditation as a government audit authority."
Mr. Rumsfeld has not yet installed his own management team at the Pentagon and its inspector generals office.
The Grassley letter states that the whistleblower had led him to contact the General Accounting Office and ask them to "examine the results of both the 1997 and 2000 peer reviews." Mr. Grassley also notified the Presidents Counsel on Integrity and Efficiency.
In an interview with The Times, Gaston Gianni Jr., vice chairman of the council, confirmed that his agency had examined the matter and said that "work papers were fabricated" in the peer review.
The peer review process is "a critical, independent quality-control check" created by Congress, that occurs every three years to ensure that the inspectors general are conducting proper audits and evaluations of the government agencies they oversee.
According to Mr. Grassleys letter, the peer reviews were conducted by the inspector general for tax administration at the Treasury Department (TIGTA), which asked to look at eight audit reports from the Pentagon inspector generals office.
In August 2000, TIGTA "believed that all the materials examined met or exceeded established audit standards."
But the anonymous letter to Mr. Grassley, which also was sent to TIGTA, the IG office, Republican Sen. John W. Warner of Virginia and others, stated that there was "peer review fraud at the DoD Inspector General."
The letter also charged that the assistant inspector general for auditing, Robert Lieberman, and one of his deputies Jay Lane, "knew the fraud was being perpetrated,but looked the other way."
Acting upon Mr. Grassleys request, the GAO sent the Senate Finance Committee a report that the Iowa Republican said "substantiated most of the allegations" in the anonymous letter.
In his letter to Mr. Rumsfeld, Mr. Grassley states that the GAO determined that when the Treasury IG "identified the eight audits selected for review, officials in the [Defense] IGs office realized that one report" on what it called the Defense use of "pseudo-Social Security numbers … would never measure up" and that a preliminary review showed "at least 47 known deficiencies."
Mr. Grassley said that instead of submitting that report, "a decision was made to destroy all the original work papers and to re-create an entirely new set.
"Senior IG officials apparently ordered the staff to sign and backdate the new working papers as if they had been prepared at the time of the original audit," Mr. Grassley said.
The effort, Mr. Grassley said, "required extensive use of overtime and cost an estimated $63,000."
Susan Hansen, Defense Department spokeswoman, would say only that "the secretary of defense has received the letter and will respond to Senator Grassley after appropriate review of the letter."
Mr. Grassleys letter calls the current situation "totally unacceptable" and says "the DoD IG must be subjected to another Peer Review as soon as possible — and earn a passing grade."
Mr. Gianni described the matter as "one of the priority matters to be resolved."

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