SEC leasing deal was disastrous?, Grassley says

Tuesday, May 24, 2011

Sen. Chuck Grassley of Iowa today made the following comment on a new inspector general report saying the U.S. Securities and Exchange Commission faces a $94 million claim after it backed out of a deal to lease office space in Washington, D.C.  The report is available here.  Grassley has a longstanding interest in conducting oversight of agencies including the SEC to help make sure the agencies function well on behalf of taxpayers and in the SEC's case, investors as well as taxpayers.

"The report portrays the SEC's leasing operation as incompetent in just about every way.   The report says employees grossly over-estimated the amount of needed space, maneuvered around leadership's concerns, and even backdated a key document to justify their decision.  The taxpayers might be on the hook for nearly $100 million as a result of this mismanagement.  Everyone who's responsible needs to be held fully accountable.  The agency needs to get a handle on its leasing operation to make sure this kind of mess doesn't happen again."

"Holding Criminals Accountable: Extending Criminal Jurisdiction to Government Contractors and Employees Abroad"

Wednesday, May 25, 2011
 
      Mr. Chairman, thank you for holding today's hearing to discuss extending federal criminal law to government contractors and employees serving overseas.  This is an important topic given the increased use of government contractors by federal agencies in overseas operations, including Afghanistan and Iraq.  Holding any individual accountable for crimes is an important part of the Judiciary Committee's jurisdiction. 
 
      I think we all would agree that anyone who commits a crime should be held accountable and that bringing criminals to justice is one of the most important roles of government.  However, extending the long arm of American criminal law is an issue that should not be done without significant consideration and caution. 
 
      Chairman Leahy and I have worked together in the past to ensure that government contractors are not given a free pass to commit crimes or to defraud the government from resources that are entrusted to our country by other nations.  We worked together in 2008 on the Wartime Enforcement of Fraud Act that would have tolled the statute of limitation on fraud offenses that occurred in a war zone. 
 
      We also worked together to amend the False Claims Act to ensure that funds that were under the trust or administration of the United States government were protected from fraud and abuse.  That fix was necessary to address a loophole created by the courts in the Custer Battles decision where Iraqi funds administered by the U.S. government were subjected to fraud.  This was a damaging loophole because it essentially said that contractors were free to defraud the government as long as the money was from a foreign country that entrusted the U.S. government to administer it.  Ultimately, we closed that loophole in the Fraud Enforcement Recover Act which was signed into law by President Obama.
 
      Today's hearing is no less important because criminal acts committed by U.S. citizens and contractors abroad could threaten our foreign relations.  As such, it is right for us to examine the ways we can bring these criminals within the reach of the law.  Legislation extending the reach of U.S. criminal law to contractors was introduced in the 110th and 111th Congresses.  Both times, that legislation failed to clear both chambers and was never signed into law. 
     
      Chief among the concerns with the legislation was the lack of a clear exception for contractors that were employed by the intelligence community.  In 2007, President Bush issued a Statement of Administration Policy citing concerns with legislation expanding extraterritorial jurisdiction over contractors and citing concerns with the impact on national security activities and operations.  Similar concerns held up legislation in the last Congress as well. 
 
      I think there is a lot of merit to extending our criminal law to civilian contractors and employees abroad.  However, we must make sure that this is done in a manner that is narrowly tailored to the specific problem and is not overly broad.  Further, we must ensure that we do not harm critical national security and intelligence operations abroad.  Those concerns should be addressed in a proper forum and not necessarily aired in public.  However, in the limited scope we can address that topic in a public forum, I intend to ask some questions about what a carve-out for the intelligence community should look like. 
 
      I also want to know about how many new resources the Department of Justice will require to implement investigations and prosecutions under a proposed expansion of extraterritorial jurisdiction.  Given the current fiscal situation of the federal government, I am concerned that reallocating resources from one side of the Justice Department to another could limit other investigations and prosecutions. 
 
      I look forward to hearing the testimony of the witnesses, asking some of these important questions, and working with the Chairman and members of the committee on this important topic.  Thank you.   
 
Immigratio?n-B-1 Visa Program Used to Avoid Requiremen?ts of Other Programs

Wednesday, May 25, 2011
 
Senator Chuck Grassley released the following comment after receiving a response to his April 14, 2011 inquiry to the departments of State and Homeland Security about the use of the B-1 visa program by employers to recruit foreign workers who are then not subject to the cap and the prevailing wage requirements of the H-1B program.  The response by the State Department said the agency is working with the Department of Homeland Security to eliminate or amend the B-1 in Lieu of H-1B policy in the Foreign Affairs Manual.  Grassley is still waiting for a response from the Department of Homeland Security.
 
"It appears the B-1 visa program has become a subterfuge for companies wanting to avoid the cap and wage requirements of the H-1B visa, so it's good to see the State Department acknowledge the need for greater fraud prevention in the visa approval process as well as changes to policies that incentivize employers to go around the H-1B program in the Foreign Affairs.  The State Department's efforts are a step in the right direction, but more work will be needed in this area to ensure the integrity of our visa programs.  This includes the ability for the department to maintain accurate statistics that will help us understand how we can better close loopholes to make sure that American workers are given first priority for jobs."   
 
The State Department's response to Grassley can be found by clicking here.  Below is a copy of the text of Grassley's April 14th letter to the departments of State and Homeland Security.
 
For Immediate Release
Thursday, April 14, 2011
 
Grassley Concerned That Companies are Using B-1 Visa Program
to Circumvent H-1B Requirements
 
            WASHINGTON - Senator Chuck Grassley is asking for a thorough investigation by the Departments of State and Homeland Security of the B-1 visa program and the use of this visa program by employers to recruit foreign workers who are then not subject to the cap and the prevailing wage requirements of the H-1B program.
 
            "When unemployment remains at a staggering 8.8 percent, we should be focusing our oversight efforts on employers who are taking advantage of the system and importing foreign workers to the detriment of Americans," Grassley said. 
 
            In his letter to Secretary of State Hillary Clinton and Secretary of Homeland Security Janet Napolitano, Grassley questioned the "B-1 in lieu of H-1B" policy currently in place.  He wrote, "Under this low threshold (of the B-1 visa), a company could import workers via the B-1 business visitor visa and evade the H-1B visa cap and prevailing wage requirements that would otherwise apply to such workers so long as the workers could show that their paychecks were still coming from the foreign company." 
           
            Grassley also referenced a formal complaint against Infosys that details how Infosys management in India decided to use the B-1 business visitor visa program to get around H-1B program restrictions.  The plaintiff alleges that Infosys was importing foreign workers as B-1 business visitors under the guise of attending meetings rather than working for a wage as an employee of a U.S. company, which is forbidden under the statute and regulations governing the B-1 visa program.
 
Grassley argues that American workers should be given first consideration by companies looking to import foreign workers.  Grassley has led the effort to close loopholes and enact reform in the H-1B visa program.  He has introduced legislation in previous Congresses to reform the H-1B and L visa programs and is planning on introducing a bill again in the 112th Congress.
 
            Here is a copy of the text of Grassley's letter.  A signed copy can be found here.
 
April 14, 2011
 
The Honorable Hillary Rodham Clinton
Secretary
U.S. Department of State
2201 C Street NW
Washington, D.C. 20520
 
The Honorable Janet Napolitano
Secretary
U.S. Department of Homeland Security
245 Murray Lane, Mailstop 0150
Washington, D.C. 20528-0150
Dear Secretary Clinton and Secretary Napolitano:
 
I'm very concerned about fraudulent actions that at least one foreign-based company has allegedly been taking in order to get around the requirements and U.S. worker protections of the H-1B visa program, and more generally, about provisions in current guidance to visa adjudicators that actually authorize such evasion of Congressional intent. 
 
On February 23, 2010, a U.S. employee of Infosys Technologies Limited, Inc. ("Infosys") filed a complaint in the Circuit Court of Lowndes County, Alabama, alleging that his employer was "sending lower level and unskilled foreigners to the United States to work in full-time positions at Infosys' customer sites in direct violation of immigration laws."  The plaintiff described ways that Infosys, one of the top ten H-1B petitioning companies, had worked to "creatively" get around the H-1B visa program in order to bring in low-skilled and low-wage workers, resulting in visa fraud against the U.S. Government.
 
Infosys, by its own admission, is an "H-1B dependent employer."  Under the Immigration and Nationality Act, H-1B dependent employers must take good faith steps to recruit U.S. workers and to offer them compensation that is at least as great as that required to be offered to H-1B nonimmigrants.
 
The formal complaint against Infosys details how Infosys management in India decided to use the B-1 business visitor visa program to get around H-1B program restrictions.  The plaintiff alleges that Infosys was importing foreign workers as B-1 business visitors under the guise of attending meetings rather than working for a wage as an employee of a U.S. company, which is forbidden under the statute and regulations governing the B-1 visa program. Under section 101(a)(15)(B) of the Immigration and Nationality Act, a B-1 visa holder may not come to the U.S. "for the purpose of...performing skilled or unskilled labor."  Under State Department regulations, a B-1 visa holder may not engage in "local employment or labor for hire."  If the allegations against Infosys are substantiated, American workers will have been hurt by this company's fraudulent actions, and the integrity of both the B-1 and H-1B visa programs will have been compromised.
 
More troubling than the illegal ways a company can get around the H-1B program's restrictions using the B-1 visa program are the legal ways companies can use the B-1 visa program to defy the intent of Congress.  For example, the State Department's Foreign Affairs Manual (FAM) currently authorizes the granting of B-1 visas to foreign workers who should otherwise be seeking H-1B visas in cases where the worker is employed by a foreign company and is coming to the U.S. to work at a U.S. client of that foreign company.  Specifically, the FAM states that to qualify for such B-1 in lieu of H-1B visas, "the employee must customarily be employed by the foreign firm, the employing entity must pay the employee's salary, and the source of the employee's salary must be abroad."  Under this low threshold, a company could import workers via the B-1 business visitor visa and evade the H-1B visa cap and prevailing wage requirements that would otherwise apply to such workers so long as the workers could show that their paychecks were still coming from the foreign company.  I believe a thorough review of the "B-1 in lieu of H-1B" provision in the Foreign Affairs Manual is warranted by both of your Departments, especially at a time when American workers are vying against foreign workers for employment in this country.
 
In light of the allegations against Infosys, and the potential for other employers to abuse the B-1 visa to get around the H-1B visa program, I would appreciate your cooperation to get to the bottom of the situation.  I would also like information about how the B-1 visa is being used by employers and processed by consular officers, including the following:
 
Statistics with regard to the numerical distribution of B-1 visas, including which employers are using them, how many B-1 visas are petitioned for and approved each year, and the lengths of time a visa holder remains in the United States on a B-1 visa.
 
The number of "B-1 in lieu of H-1B" visas issued each year for the past five years, including the posts where such visas were issued, the U.S. companies hosting such workers, and the foreign companies paying the worker's salary.
 
How does the Department of State verify an employer's claim that a B-1 visa holder will attend a meeting, convention, or other business appointment in the United States? 
 
What actions, if any, are being taken against employers who abuse the B-1 visa program?  Will the Departments consider barring such employers from any visa program if found guilty of misusing the visa system?  Will the Departments cease to approve visas for Infosys until the lawsuit in Alabama is settled?  If not, what additional oversight and/or actions will be taken until the Infosys lawsuit is finalized?
 
What is the legal basis for the State Department's policy known as "B-1 in lieu of H-1B"?  The Immigration and Naturalization Service, in 1993, proposed a regulation to eliminate the "B-1 in lieu of H" category citing inconsistency with Congressional intent.  Will the Department consider changes to the Foreign Affairs Manual so that this means of entry is not abused?  Will the Department consider eliminating this provision altogether?  How does the Department of Homeland Security feel about this State Department policy today? 
 
My hope is that your Departments will cooperate to make sure that the B-1 visa program is not being abused by employers who wish to get around the annual caps and prevailing wage requirements imposed by the H-1B visa program.  I look forward to your review of the issues I have raised, and would appreciate a response to my questions no later than April 28, 2011. 
 
                                                            Sincerely, 
 
                                                            Charles E. Grassley
                                                            United States Senator