Issa and Grassley: Top ATF Official in Operation Fast and Furious Remains on Extended Paid Leave while Simultaneously Employed by Major Financial Services Company

WASHINGTON - Sen. Chuck Grassley and Rep. Darrell Issa have asked the Acting Director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to explain how a top ATF official involved in Operation Fast and Furious, Bill McMahon, can remain on paid leave while simultaneously drawing an additional six figure salary from a major financial services company.  Given McMahon's extensive involvement in the leadership failures of Operation Fast and Furious, Grassley and Issa sought a detailed explanation of why the Justice Department would approve this special arrangement for McMahon.

"Under any reading of the relevant personnel regulations, it appears that ATF management was under no obligation to approve this sort of arrangement," wrote Issa and Grassley. "Given McMahon's outsized role in the Fast and Furious scandal, the decision to approve an extended annual leave arrangement in order to attain pension eligibility and facilitate full-time, outside employment while still collecting a full-time salary at ATF raises a host of questions about both the propriety of the arrangement and the judgment of ATF management."

The letter continues: "ATF has essentially facilitated McMahon's early retirement and ability to double dip for nearly half a year by receiving two full-time paychecks?one from the taxpayer and one from the private sector.  Moreover, ATF did not wait for the Office of Inspector General to complete its report on Fast and Furious before approving the arrangement.  This is in sharp contrast to the posture the agency has taken with whistleblowers like Special Agent John Dodson, who is told he must wait until the Inspector General's report is complete before the agency will even consider his simple request for a statement retracting the false statements made about him by agency leadership."

The text of their letter is available here and embedded below.  The first part of the final report on the joint Congressional investigation of conduct in Operation Fast and Furious is available here. The report presents evidence detailing numerous errors and decisions by ATF officials and the Arizona U.S. Attorney's Office that led to serious problems - including inter-agency communication failures between ATF, DEA, and FBI.

Here is a copy of the text of the letter.

August 21, 2012

Mr. B. Todd Jones

Acting Director

Bureau of Alcohol, Tobacco, Firearms, and Explosives

99 New York Avenue, NE

Washington, DC 20226

Dear Acting Director Jones:

It has come to our attention that ATF's former Deputy Assistant Director for Field Operations, William McMahon, has recently obtained full-time employment in the private sector while remaining a full-time employee in ATF's Office of Professional Responsibility.  In addition to retaining his position at ATF, McMahon is also serving as Executive Director of the Global Security and Investigations Group at J.P. Morgan in the Philippines.  A senior ATF official confirmed McMahon's status during a phone call last week.  This unusual arrangement is apparently designed to allow Mr. McMahon to reach retirement eligibility while on extended leave for four or five months and simultaneously begin a second career before separating from government employment.

Our most recent joint staff report on Operation Fast and Furious, released on July 31, 2012, scrutinized the role McMahon played in the operation.[1] We detailed his failure to supervise the activities of the Phoenix Field Division during Fast and Furious, his admitted failure to read important documents he was responsible for authorizing, and his false testimony regarding his role in authorizing applications for wiretaps in the case.[2] Despite these failings, ATF not only continues to keep him on its payroll, but also has authorized him to take several months of annual leave while earning a six-figure salary from ATF and an even larger salary at the same time working in the private sector.

While the legality of McMahon's outside employment and leave arrangement may arguably be unclear, the fact that ATF management chose to authorize it is not.  Under any reading of the relevant personnel regulations, it appears that ATF management was under no obligation to approve this sort of arrangement.  Given McMahon's outsized role in the Fast and Furious scandal, the decision to approve an extended annual leave arrangement in order to attain pension eligibility and facilitate full-time, outside employment while still collecting a full-time salary at ATF raises a host of questions about both the propriety of the arrangement and the judgment of ATF management.

On July 18, 2012, we wrote to you regarding your message in "ChangeCast #8: Choices and Consequences" and the chilling effect it might have on future whistleblowers.  While we appreciated the clarification you provided after we raised concerns, this decision regarding McMahon appears to send the opposite message of the one you said you intended in that ChangeCast.  Rather than imposing consequences for his admitted failures, the ATF appears to be rewarding McMahon.  Through this unusual arrangement, ATF has essentially facilitated McMahon's early retirement and ability to double dip for nearly half a year by receiving two full-time paychecks?one from the taxpayer and one from the private sector.  Moreover, ATF did not wait for the Office of Inspector General to complete its report on Fast and Furious before approving the arrangement.  This is in sharp contrast to the posture the agency has taken with whistleblowers like Special Agent John Dodson, who is told he must wait until the Inspector General's report is complete before the agency will even consider his simple request for a statement retracting the false statements made about him by agency leadership.

This is not the culture of change that you promised to bring to ATF.

In light of McMahon's outside employment at J.P. Morgan, please answer the following questions to help us better understand how this could have occurred:

1)      5 C.F.R. § 3801.106(b)(1) prohibits "outside employment that involves ...  litigation, investigations, grants, or other matters in which the Department of Justice is or represents a party, witness, litigant, investigator or grant-maker."  Accordingly, what steps, if any, did ATF take prior to approving the arrangement to ascertain whether McMahon's position at J.P. Morgan would involve any "litigation, investigations, grants, or other matters in which the Department of Justice is or represents a party, witness, litigant, investigator or grant-maker?"

2)      If no such steps were taken, why not?

3)      If such steps were taken, please describe the determination ATF made regarding the prohibition in 5 C.F.R. § 3801.106(b)(1)(iii) and the basis for ATF's determination in detail.

4)      If ATF determined that McMahon's work at J.P. Morgan would be prohibited by 5 C.F.R. § 3801.106(b)(1)(iii), was the prohibition waived in accordance with section 3801.106(b)(2)?

5)      If the prohibition was waived, what were the grounds for the waiver?

6)      What is the current employment status of William McMahon at ATF?

7)      When is William McMahon eligible for full retirement benefits from ATF?

8)      When will William McMahon officially leave ATF?

9)      Who at ATF gave final approval of McMahon's employment with J.P. Morgan?  On what date was this approval given?

10)  On what date did McMahon's outside employment commence?

11)  How much ATF sick leave has McMahon used while being employed at J.P. Morgan?

12)  How much ATF sick leave does McMahon have remaining?

13)  How much ATF annual leave has McMahon used while being employed at J.P. Morgan?

14)  How much ATF annual leave does McMahon have remaining?

15)  On how many other occasions in the last three years has ATF authorized a similar arrangement involving (a) approving annual leave extending over several months, (b) an employee not yet eligible to retire prior to commencing annual leave, (c) approval of full-time employment while on annual leave, and (d) a career field where the employee's experience at ATF is directly related to the outside employment and can be reasonably seen as a motivating factor in the hiring decision?  For each prior similar instance, please provide a detailed explanation of the circumstances and the reason for authorizing the arrangement.

16)  When did you first become personally aware of McMahon's employment at J.P. Morgan?

17)  Do you approve of this particular outside employment arrangement?

In addition, please provide the following documents:

18)  All internal documents and communications relating to McMahon's scheduled separation from ATF, including memos, e-mails, and hand written notes, including, but not limited to, communications with ATF's designated agency ethics official.

19)  All internal documents relating to McMahon's outside employment at J.P. Morgan, including memos, e-mails, and hand written notes, including, but not limited to, communications with ATF's designated agency ethics official.

20)  A detailed timeline of the involvement of the ATF Office of Chief Counsel regarding McMahon's employment at J.P. Morgan.

21)  A full copy of ATF's personnel manual, including, but not limited to, policies regarding sick leave, annual leave, and outside employment.

22)  Detailed information regarding McMahon's time and attendance at ATF, including records from the WebTA program, from August 1, 2011 until the present.

Please provide the requested documents and your detailed responses to these questions as soon as possible, but no later than 5:00 p.m. on September 4, 2012.  When producing documents to the Committee on Oversight and Government Reform, please deliver separate production sets to both the Majority Staff in Room 2157 of the Rayburn House Office Building and the Minority Staff in Room 2471 of the Rayburn House Office Building.  The Committees prefer, to the extent possible, to receive documents in electronic format.

The Committee on Oversight and Government Reform is the principal oversight committee of the House of Representatives and may at "any time" investigate "any matter" as set forth in House Rule X.  The Senate Judiciary Committee's jurisdiction includes, inter alia, oversight of the Department of Justice and the agencies under the Department's jurisdiction.  An attachment to this letter provides additional information about responding to the Committees' request.

If you have any questions concerning this matter, please contact Tristan Leavitt of Senator Grassley's staff at (202) 224-5225, or Henry Kerner of Chairman Issa's staff at (202) 225-5074.  We look forward to receiving your response.  Thank you for your prompt attention to this matter.

Sincerely,

____________________________   ______________________________

Darrell Issa, Chairman                       Charles E. Grassley, Ranking Member

Committee on Oversight and                            Committee on the Judiciary

Government Reform                         U.S. Senate

U.S. House of Representatives

Enclosure

cc:           The Honorable Elijah E. Cummings, Ranking Member

U.S. House of Representatives, Committee on Oversight and Government Reform

The Honorable Patrick Leahy, Chairman

U.S. Senate, Committee on the Judiciary

The Honorable Michael E. Horowitz, Inspector General

U.S. Department of Justice

Washington, D.C. - House Judiciary Committee Chairman Lamar Smith (R-Texas) and Senate Judiciary Committee Ranking Member Chuck Grassley (R-Iowa) today sent a letter to Department of Homeland Security Secretary Janet Napolitano expressing concern about the Department's plan to grant deferred action and work permits to illegal immigrants, particularly with regard to how the President's directive will be implemented without a serious plan to combat fraud and abuse.  Both Chairman Smith and Ranking Member Grassley have repeatedly asked for more information on how the Department will detect fraud and verify documents provided, but no assurances have been provided to Congress thus far.

Below are excerpts from the letter to Secretary Napolitano. To read the full letter, click here.

"We are very concerned about the Department of Homeland Security's plan to grant deferred action to individuals here illegally, particularly with regard to how the President's directive will be implemented without a serious plan to combat fraud and abuse. While potentially millions of illegal immigrants will be permitted to compete with American workers for jobs, there seems to be little if any mechanism in place for vetting fraudulent applications and documentation submitted by those who seek deferred action ... It's distressingly clear that the administration plans to press the replay button for the large-scale fraud from the 1986 amnesty.

"Department officials indicated to Committee staff that they would not use fraud prevention and detection measures that you consider "too expensive" or "time consuming", or that would "unduly impact" USCIS's other responsibilities.  This attitude blatantly demonstrates that the Department has little regard for preventing fraud, especially since the law allows the Department to impose fees for the benefit of deferred action.  The illegal immigrants themselves, rather than the American taxpayer or legal immigrants, should bear any expense associated with the program.

"For the sake of preserving the integrity of our immigration system and ensuring that the process is not riddled with fraud, we would like to understand the Department's rationale for not placing in removing proceedings illegal immigrants denied deferred action and for attaching confidentiality provisions."

Tuesday, August 7, 2012

WASHINGTON - Senator Chuck Grassley has asked Secretary of the Department of Homeland Security Janet Napolitano about allegations of mismanagement and spending abuse by the Chemical Facility Anti-Terrorism Standards program (CFATS).

"Serious claims have been made about the operation of this program," said Grassley.  "The Secretary said earlier this year that things had been fixed, but that doesn't appear to be the case.  If the allegations are true, there's been a systemic failure of this security program and nearly $500 million has been wasted."

The CFATS program was created in 2007 to determine risk factors for chemical facilities and mandate and assess security plans for high-risk facilities.

Grassley asked Napolitano about the program in April, following a report that said problems within CFATS were so severe they posed a measureable risk to the program, when she appeared before the Senate Committee on the Judiciary.

Since then, a whistleblower has provided more details about the Department of Homeland Security's management of the program, including allegations that CFATS assigned employees to non-existent field offices, allowing employees to work from home while claiming on paper to be located in phantom CFATS field offices.  Grassley said one byproduct of this was that employees often lived in low locality-pay areas while claiming duty stations in high locality-pay areas and receiving higher pay, as a result.

Allegations also included routine procurement by CFATS of tactical and field equipment for which the program had no use.  In addition, a high level official in the Department of Homeland Security allegedly refused to report information about the abuses to the Inspector General.

In a July 30, 2012, letter to Napolitano, Grassley asked for detailed information about the program.  He asked for a response by Monday, August 13.  Click here to read the letter.

Senator Chuck Grassley issued the following comment about the inclusion today of a one-year extension of the wind-energy tax credit in The Family and Business Tax Cut Certainty Act of 2012 reported by the Committee on Finance.  The overall package includes an amendment written by Senator Grassley and accepted this morning as part of the modified proposal of Committee Chairman Max Baucus.

Grassley comment:

"The wind-energy production tax credit is designed to level the playing field for this renewable resource against coal-fired and nuclear electricity generation.  The credit has been successful in developing clean, renewable, domestically produced wind energy and the jobs that go along with it.  The one-year extension approved today would make the credit effective for producers for one more year.  In the face of an effort to end this incentive, I persuaded committee leaders to include the extension in a way that keeps it at full value and that puts the wind-energy production tax credit in a strong position for the floor debate this fall.  No single energy tax incentive should be singled out over others, energy-related and not, before a broad-based tax reform debate.  Congress and the President need to take up tax reform to make American business more competitive with lower rates, a broader tax base, and a simpler code.  Until tax reform is undertaken, workers and employers need certainty in existing tax law."

Description of the Grassley amendment to The Family and Business Tax Cut Certainty Act of 2012:

Extend for one year, through December 31, 2013, the section 45 production tax credit for wind which expires on December 31, 2012.  Modify placed-in-service date for wind to a "begin construction" rule.

Background information:

Senator Grassley authored the legislation that created the wind-energy production tax credit in 1992 and has won passage of extensions a number of times.

Today, wind-energy production supports 75,000 American jobs and drives as much as $20 billion in private investment.  During the last five years, 35 percent of all new electric generation in the United States was wind.  There are nearly 400 wind-related manufacturing facilities in the United States today, compared with just 30 in 2004.