Knowledge Creates Power: What's Behind Obama's Sudden Attempt to fire the AmeriCorps Inspector General?

Tuesday, June 16, 2009

What's Behind Obama's Sudden Attempt to fire the AmeriCorps Inspector General?

New info: See updates below for Walpin's "one-hour deadline" e-mail to the White House.

There are a number of unanswered questions today about President Obama's abrupt decision to fire the inspector general of the AmeriCorps program, Gerald Walpin. Obama sent letters to House and Senate leaders yesterday informing them that he was firing Walpin, effective 30 days from the date of the letters.
"It is vital that I have the fullest confidence in the appointees serving as Inspectors General," the president wrote. "That is no longer the case with regard to this Inspector General."

The 30 day requirement is important because last year Congress passed the Inspectors General Reform Act, which was designed to strengthen protections for IGs, who have the responsibility of investigating allegations of waste, fraud and abuse within federal agencies, against interference by political appointees or the White House. Part of the Act was a requirement that the president give Congress 30 days' notice before dismissing an IG. One of the co-sponsors of the Act was then-Sen. Barack Obama.

The Act also requires the president to outline the cause for his decision to remove an IG. Beyond saying that he did not have the "fullest confidence" in Walpin, Obama gave no reason for his action.

There are two big questions about the president's actions. One, why did he decide to fire Walpin? And two, did he abide by the law that he himself co-sponsored?

According to Republican Sen. Charles Grassley, a strong advocate of inspectors general, Walpin received a call from the White House Counsel's office on Wednesday evening. Walpin was told that he had one hour to either resign or be fired. Senate sources say Walpin asked why he was being fired and, according to one source, "The answer that was given was that it's just time to move on. The president would like to have someone else in that position." Walpin declined to resign.

Grassley fired off a letter to the president on Thursday saying that, "I was troubled to learn that [Wednesday] night your staff reportedly issued an ultimatum to the AmeriCorps Inspector General Gerald Walpin that he had one hour to resign or be terminated," Grassley wrote. "As you know, Inspectors General were created by Congress as a means to combat waste, fraud, and abuse and to be independent watchdogs ensuring that federal agencies were held accountable for their actions. Inspectors General were designed to have a dual role reporting to both the President and Congress so that they would be free from undue political pressure. This independence is the hallmark of all Inspectors General and is essential so they may operate independently, without political pressure or interference from agencies attempting to keep their failings from public scrutiny."

Grassley's version of events suggests that the White House first tried to muscle Walpin out of his job without having to go through the 30-day process. It was only when Walpin refused to resign that the White House then notified Congress of the president's intention to fire Walpin.

The bigger question is why the president is doing this and why he is attempting to do it so quickly. Senate sources now believe Obama is firing Walpin over Walpin's investigation of Kevin Johnson, a former NBA star and a prominent supporter of the president.

Johnson, now the mayor of Sacramento, California, started a non-profit organization called St. Hope. The group's mission, according to its website, is "to revitalize inner-city communities through public education, civic leadership, economic development and the arts." As part of its work, St. Hope received a grant of about $850,000 from AmeriCorps.

Last year, Walpin began an investigation of how Johnson's group spent the money. According to the Associated Press, "[Walpin] found that Johnson, a former all-star point guard for the Phoenix Suns, had used AmeriCorps grants to pay volunteers to engage in school-board political activities, run personal errands for Johnson and even wash his car." Walpin asked federal prosecutors to investigate. In April, the U.S. attorney in Sacramento, a Bush holdover, declined to file any criminal charges in the matter and also criticized Walpin's investigation.

That might suggest that St. HOPE was OK, and it was Walpin who was in the wrong. But at the same time prosecutors decided not to file any charges against St. HOPE, the U.S. attorney's office also entered into a settlement with St. HOPE in which the group also agreed to pay back about half of the $850,000 it had received from AmeriCorps.

In his letter to the president, Grassley defended Walpin's performance. "There have been no negative findings against Mr. Walpin by the Integrity Committee of the Council of the Inspectors General on Integrity and Efficiency (CIGIE), and he has identified millions of dollars in AmeriCorps funds either wasted outright or spent in violation of established guidelines," Grassley wrote. "In other words, it appears he has been doing his job."

The bottom line is that the AmeriCorps IG accused a prominent Obama supporter of misusing AmeriCorps grant money. After an investigation, the prominent Obama supporter had to pay back more than $400,000 of that grant money. And Obama fired the AmeriCorps IG.

UPDATE, 1:55 PM Friday:

There are a number of new developments since my post above was published. First, the White House is confirming that it decided to fire IG Walpin because of the Kevin Johnson/St. HOPE affair. In a letter sent Thursday night to Sen. Charles Grassley, White House counsel Gregory Craig cited a complaint lodged by the acting U.S. attorney in Sacramento, Lawrence Brown, accusing Walpin of misconduct in the St. Hope investigation. "The Acting United States Attorney for the Eastern District of California, a career prosecutor who was appointed to his post during the Bush Administration, has referred Mr. Walpin’s conduct for review by the Integrity Committee of the Council of Inspectors General on Integrity and Efficiency (CIGIE)," Craig wrote. "We are aware of the circumstances leading to that referral and of Mr. Walpin’s conduct throughout his tenure and can assure you that that the President’s decision was carefully considered." This is the White House's first public statement of its reason for firing Walpin.

In the referral which Craig mentioned, which was sent April 29, Lawrence Brown accused Walpin of conducting a biased investigation and seeking "to act as the investigator, advocate, judge, jury and town crier." Brown was particularly angry that Walpin's office had talked with the press at various times in the St. HOPE investigation. Brown asked AmeriCorps to investigate Walpin's behavior. In a stinging response, Walpin wrote that several of Brown's points were flat-out wrong.

More importantly, Walpin's response sheds light on the process by which St. Hope will allegedly return to the government about half of the $850,000 grant it received from AmeriCorps. Walpin accused the U.S. attorney's office of undermining Walpin's attempt at "suspension and debarment" -- that is, from taking action that prevents an organization that has engaged in misconduct from receiving any other federal money.

According to Walpin, the U.S. attorney's office resisted efforts to get St. HOPE to repay the money. Even though AmeriCorps inspector general officials had found "six specific instances of diversion and misuse of [AmeriCorps] grant funds," and even though Kevin Johnson never "submitted a single fact to dispute those findings," the U.S. attorney, according to Walpin, insisted that the settlement agreement forbid suspension or debarment.

Further, according to Walpin, even with the settlement agreement as it now exists, there is little hope the government will ever get any of its money back. "As St. HOPE is insolvent, the absence of any obligation imposed on…[Kevin Johnson], and the absence of any guarantee or security to ensure payment, makes the settlement a farce," Walpin wrote.

"Mr. Brown knows," Walpin concluded, "that the settlement agreement was carefully drafted so that no obligation is imposed on Mr. Johnson to pay to [AmeriCorps] a single penny of the amount supposedly to be paid to [AmeriCorps] by St. HOPE."
Walpin's response has led congressional investigators to want to know more about Brown, the acting U.S. attorney. I referred to him earlier as a "Bush holdover." That's not entirely accurate. Brown is now the acting U.S. attorney, and he was in the office during the Bush years, but he is a career official, not a Bush appointee. In the days to come, congressional investigators will be weighing Brown's claims versus Walpin's. A lot is going on with the story, and it is happening very quickly.

UPDATE, 4:55 PM Friday:

On Wednesday night, after the White House counsel's office called AmeriCorps inspector general Gerald Walpin on his cell phone to tell him he had one hour to resign or be fired, Walpin sent an extensive e-mail account of the call to the man who had phoned him, Norman Eisen, the Special Counsel to the President for Ethics and Government Reform. In the e-mail, Walpin explained that he would not make a decision in such a short period of time. He also noted that Eisen had said any appearance of a connection between Walpin's firing and recent conflicts over Walpin's handing of high-profile investigations was "coincidence." Here is the whole e-mail, sent from Walpin to Eisen at 7:32 p.m. on June 10:

My email responds to your telephone call to me while I was in a car driving on a highway, at about 5:20 p.m. I have now reached a destination and therefore can write you this email.

In your telephone call, you informed me that the President wishes me to resign my post as IG of CNCS [Corporation for National and Community Service, which includes AmeriCorps]. You told me that I could take no more than an hour to make a decision.

As you know, Congress intended the Inspector General of CNCS to have the utmost independence of judgment in his deliberations respecting the propriety of the agency's conduct and the actions of its officers. That is why the relevant statute provides that the President may remove the IG only if he supplies the Congress with a statement of his reasons--which is quite a different matter than executive branch officials who serve at his pleasure and can therefore be removed for any reason and without notification to Congress.

I take this statutorily-mandated independence of my office very seriously, and, under the present circumstances, I simply cannot make a decision to respect or decline what you have said were the President's wishes within an hour or indeed any such short time. As you are aware, I have just issued two reports highly critical of the actions of CNCS, which is presently under the direction of the President's appointee and, I am advised, someone with a meaningful relationship with the President.

Chairman Solomont and I have had significant disagreements about the findings and conclusions contained in these reports. It would do a disservice to the independent scheme that Congress has mandated--and could potentially raise questions about my own integrity--if I were to render what would seem to many a very hasty response to your request.

I heard your statement that this request that you communicated on behalf of the President and the timing of our reports and disagreement with the CNCS Board and management are "coincidence," as you put it on the phone, but I would suggest there is a high likelihood that others may see it otherwise.

I suspect that, when presented with the circumstances I have just discussed, the President will see the propriety of providing me additional time to reflect on his request. If however he believes that my departure is a matter of urgency, then he will have to take the appropriate steps toward ordering my removal, without my agreement.

Gerald Walpin

Below are my original posts and updates from Thursday night:

Some strange and potentially suspicious events tonight concerning the Obama White House and the AmeriCorps program. I've been told that on Wednesday night the AmeriCorps inspector general, Gerald Walpin, received a call from the White House counsel's office telling him that he had one hour to either resign or be fired. The White House did not cite a reason. "The answer that was given was that it's just time to move on," one Senate source told me tonight. "The president would like to have someone else in that position."

Inspectors General are part of every federal department. They are given the responsibility of independently investigating allegations of waste, fraud, and corruption in the government, without fear of interference by political appointees or the White House. Last year Congress passed the Inspectors General Reform Act, which added new protections for IGs, including a measure requiring the president to give Congress 30 days prior notice before dismissing an IG. The president must also give Congress an explanation of why the action is needed. Then-Sen. Barack Obama was one of the co-sponsors of the Act.

Now, there is the hurried attempt to dismiss Walpin, without the required notice or cause. After last night's call, Walpin got in touch with Congress, and it appears the White House has backed off, at least for now. This afternoon, Republican Sen. Charles Grassley, who is something of a guardian angel for inspectors general, fired off a letter to the White House about the affair.

"I was troubled to learn that last night your staff reportedly issued an ultimatum to the AmeriCorps Inspector General Gerald Walpin that he had one hour to resign or be terminated," Grassley wrote. "As you know, Inspectors General were created by Congress as a means to combat waste, fraud, and abuse and to be independent watchdogs ensuring that federal agencies were held accountable for their actions. Inspectors General were designed to have a dual role reporting to both the President and Congress so that they would be free from undue political pressure. This independence is the hallmark of all Inspectors General and is essential so they may operate independently, without political pressure or interference from agencies attempting to keep their failings from public scrutiny."

Grassley said he was "deeply troubled" by the Walpin matter and closed by asking the president "to review the Inspector General Reform Act you cosponsored and to follow the letter of the law should you have cause to remove any Inspector General."

UPDATE 1: I've been trying to discover the real reason for Obama's move, and it's still not clear. I'm told that it could be a combination of the normal tensions that surround any inspector general's office, or the president's desire to get his own people in IG positions, or a dispute over a particular investigation. "Bottom line," one source wrote, "getting rid of a tough, Republican-appointed IG who has been aggressively going after waste and fraud gives Obama a chance to replace that IG with a more compliant team player."
I'm also told that a number of inspectors general around the government have been expressing concerns to Congress recently about threats to their independence.

UPDATE 2: More information now, from the Associated Press. The White House is going ahead with firing Walpin. The firing apparently stems from Walpin's investigation of a non-profit group, St. HOPE Academy, run by Kevin Johnson, the former NBA star who is now mayor of Sacramento, California (and a big Obama supporter). "[Walpin] found that Johnson, a former all-star point guard for the Phoenix Suns, had used AmeriCorps grants to pay volunteers to engage in school-board political activities, run personal errands for Johnson and even wash his car," the AP reports. In April, the U.S. attorney declined to file any criminal charges in the matter and criticized Walpin's investigation. But at the same time Johnson and St. HOPE agreed to repay about half of the $850,000 it had received from AmeriCorps.

Bottom line: The AmeriCorps IG accuses prominent Obama supporter of misusing AmeriCorps grant money. Prominent Obama supporter has to pay back more than $400,000 of that grant money. Obama fires AmeriCorps IG.

By: BYRON YORK - Chief Political Correspondent/Washington Examiner
06/11/09 8:14 PM EDT

Update 11/15/09 - By now, it is likely that you’ve heard the story reported by Washington Examiner reporter Byron York that President Obama fired AmeriCorps Inspector General Gerald Walpin after the IG went after Sacramento Mayor and Obama friend Kevin Johnson. Glenn Beck (Fox News) had York on to explain the report this afternoon, which was followed up with an interview with Walpin to get his side of the story.

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