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Eye on the EPA: EPA’s Evolving Story on McCarthy’s Role in Beale Fraud
January 22, 2014

Concerned about the Obama Administration's growing inability to take responsibility for issues that would cast them in a negative light, the Committee on Environment and Public Works (EPW) Republicans have researched and analyzed the Administration's evolving characterization of the U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy's role in uncovering fake CIA agent, John C. Beale, who stole from and defrauded the Agency for over 20 years.  Indeed, when all the facts are on the table, it is clear that McCarthy "uncovered" and reported Beale's fraud only after attempting to pass the buck to others at EPA and after mismanaging an office that enabled Beale's fraud to continue unabated for years.

Harry Truman famously had a sign on his desk, which read, "The Buck Stops Here."  This was a signal to the American public that the ultimate responsibility of running the federal government was his alone and that he would not seek to "pass the buck" in an attempt to avoid blame when things went wrong.  In sharp contrast to Truman's clear demarcation of responsibility, the current occupant of the White House and his top advisors are constantly seeking to pass the buck.  This lack of leadership is on full display at the EPA as the Agency scrambles to recover from the embarrassment of Beale's fraud and theft, now a national story.  While the argument has been put forward that he is solely culpable for his outrageous lies and fraud, it appears that those responsible for supervising him and his work during the height of his misconduct have gone to great lengths to absolve themselves of any associated responsibility.  In short, the buck stops anywhere but at their desk.

Beale's Fraud under McCarthy's Supervision

Before the President nominated McCarthy to head the EPA, she served as the Assistant Administrator of the Office of Air and Radiation (OAR) from 2009 to 2013.  While McCarthy was aware of Beale's frequent absences and lack of work product, she never adjusted Beale's pay or discontinued the unauthorized retention incentive bonuses,[1] which made Beale the highest paid employee in OAR during her tenure.[2]  Despite the fact many at EPA "knew" of his work at the CIA, which ostensibly compromised his cover, McCarthy continued to believe that his work at the CIA remained so sensitive that he could not share any details of his mission or his covert travel, which EPA paid for.  According to the EPA Office of Inspector General (OIG), the amount of time Beale missed due to "CIA work" from 2008 to 2013 was equivalent to approximately $350,000 of his EPA wages.[3]

McCarthy, Not Exactly a "Hero"

While Beale's story seems too absurd to believe, the Administration has characterized McCarthy's role as that of a "hero," giving her credit for allegedly being the first to report suspicions of Beale's fraud.  EPW Chairman Barbara Boxer (D-Calif.) granted the Administration a secure, first public forum to discuss Beale's fraud at a hastily arranged briefing, which was designed to preempt a more thorough hearing scheduled in the House of Representatives the next day.[4]  At the briefing, Chairman Boxer asserted that McCarthy was a "hero" for being the first at EPA to report her suspicions of Beale. The OIG eagerly agreed and explained that McCarthy referred her suspicions to the Office of General Counsel (OGC) "on or around November 1, 2012."[5] 

However, in reality, McCarthy was not the first person at EPA to suspect something was wrong.  Rather, Beale's personal assistant reported her concerns over his excessive travel and voucher claims years prior to McCarthy; however, her supervisors intentionally chose to ignore her.[6]  EPW Committee Republicans also learned that the OIG reported problems with Beale's pay as early as June 2010.[7]  When McCarthy finally got around to elevating concerns over Beale, she inappropriately referred it to the OGC and not the OIG, which the OIG claims ultimately harmed their investigation.[8]

OAR Involvement

In addition to McCarthy's personal ineptitude in managing what was becoming a larger problem than the inappropriate actions of one employee, it is striking to note that three of her Deputy Assistant Administrators, including Beale, are implicated in his fraud, as well as additional questionable actions.[9]  Former Deputy Assistant Administrator of OAR, Robert Brenner, was and remains Beale's close friend and, in fact, recruited Beale to work at EPA.[10]  Additionally, Brenner personally authorized Beale's retention bonuses without proper documentation[11] and vouched for him when others questioned his suspicious behavior.  According to another report issued by the EPA OIG, Brenner accepted an illegal $8,000 discount on a Mercedes from a lobbyist, while he was working on regulations that directly affected the lobbyist's client.[12]  The Committee has attempted to gain Brenner's assistance in unraveling his role within Beale's fraud and has questioned his illegal behavior, but Brenner has refused to cooperate with Congress.[13]  Deputy Assistant Administrator for OAR Beth Craig also facilitated Beale's fraud by approving his time and attendance and travel vouchers.[14]  Craig's role in the Beale saga is currently under further administrative review by the OIG. 

McCarthy Looked the Other Way

On December 20, 2013, Deputy Administrator Bob Perciasepe sent an email to all EPA employees stating, "[b]y now you are most] likely aware that the end of this [Beale] episode was brought about by the alertness and diligence of current Administrator McCarthy."[15]  Yet, the facts show that McCarthy ignored obvious warnings signs and failed to take reasonable actions for more than two years, which allowed Beale to continue collecting unearned salary and benefits.  In fact, EPA officials wrote an entire report entitled "John Beale Pay Issues" in July 2010, which McCarthy was aware of by at least January 2011.[16]  Despite recommendations to cancel Beale's bonuses, McCarthy halted the internal review and permitted the unauthorized bonuses to continue.[17]

Both McCarthy and Perciasepe attended Brenner and Beale's joint retirement cruise in September 2011, and it appears McCarthy assumed Beale's pay issues were conveniently resolved thereafter.  Unfortunately for the American taxpayer, McCarthy never confirmed whether Beale had actually completed his retirement paperwork, so while Beale stopped showing up at EPA, for a year and a half longer he continued to collect a paycheck, along with a 25% retention bonus for literally doing nothing for the Agency.  An OAR official notified McCarthy in March 2012 that EPA was still paying Beale the erroneous bonus and his full salary.[18]  At that time, McCarthy was also aware that Beale was erroneously receiving bonus payments that for multiple years elevated his salary to exceed the statutory cap for officials at his pay grade,[19] making Beale one of OAR's highest paid employees,[20] and Beale had not physically been in the office or performed any work for over six months.[21]  Despite these troublesome facts, McCarthy took no assertive action and instead deferred to advice from other EPA officials.

Six more months passed before McCarthy referred the Beale matter to the OGC - sixteen months after she attended his retirement party.  Three more months passed before McCarthy authorized the cancelation of Beale's bonuses - making it a total of twenty-five months after she first learned of Beale's pay issues.  Around this time, the issue was finally referred to the OIG for investigation, which prompted criminal prosecution by the Department of Justice.  Yet, McCarthy permitted Beale to voluntarily retire in April 2013, allowing him to receive full pension benefits.

With the facts and timeline in place, it looks like in reality, McCarthy was reluctant to take responsibility for her office and the actions of her direct reports, relied on Beale's retirement to settle a complicated and controversial matter, and above all, avoided taking action in the face of inescapable conclusions.  In light of all this, it is difficult to see how or why McCarthy would be heralded as a "hero" in the biggest scandal in the EPA.

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[1] Office of Inspector Gen., Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Pay Issues, Report No. 14-P-0036 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211-14-P-0036.pdf.

[2] Briefing by Office of Inspector Gen., Envt'l Prot. Agency, to Staff, S. Comm. on Env't & Public Works (Dec. 11, 2013).

[3] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (testimony of Patrick Sullivan), available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

[4]EPA IG on the Beale Investigation: Briefing Before the S. Comm. on Env't & Public Works, 113th Cong. (Sept. 30, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=606e5ec4-c45e-fe6c-d779-4f03d617a304.

[5] EPA IG on the Beale Investigation: Briefing Before the S. Comm. on Env't & Public Works, 113th Cong. (Sept. 30, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=606e5ec4-c45e-fe6c-d779-4f03d617a304.

[6] EPA IG on the Beale Investigation: Briefing Before the S. Comm. on Env't & Public Works, 113th Cong. (Sept. 30, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=606e5ec4-c45e-fe6c-d779-4f03d617a304.

[7] Office of Inspector Gen., Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Pay Issues, Report No. 14-P-0036 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211-14-P-0036.pdf.

[8] EPA IG on the Beale Investigation: Briefing Before the S. Comm. on Env't & Public Works, 113th Cong. (Sept. 30, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=606e5ec4-c45e-fe6c-d779-4f03d617a304.

[9] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (questioning by Rep. Jordan), p. 53-54, available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

[10] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (testimony of Patrick Sullivan), available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

[11]  Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (testimony of Patrick Sullivan), available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

[12]  Office of Inspector Gen., Envtl. Prot. Agency, Director/OP AR-Robert D. Brenner Short-Form Report of Investigation, available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=303a7639-f9e4-43f1-acc8-cae962bee9e0.

[13]  Letter from Sen.Vitter, Ranking Member, S. Comm. on Env't & Public Works, to Robert Brenner (Sept. 9, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=217e820c-2b03-424f-b309-fc5f2ca844b0; Letter from Sen. Vitter, Ranking Member, S. Comm. on Env't & Public Works, to Justin V. Shur, Counsel to Robert Brenner (Oct. 15, 2013), available at http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f9c5c880-7194-422b-9b51-9839d6d60a90

[14] See Office of Inspector Gen., U.S. Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Travel, Report No. 14-P-0037 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211014-P-0037.pdf; Office of Inspector Gen., U.S. Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Pay Issues, Report No. 14-P-0036 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211-14-P-0036.pdf.

[15]  Email from Bob Perciasepe, Dep. Adm'r, Envt'l Prot. Agency, to Envt'l Prot. Agency Workforce (Dec. 20, 2013, 4:28:22 PM).  

[16] Office of Inspector Gen., U.S. Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Pay Issues, Report No. 14-P-0036 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211-14-P-0036.pdf.

[17] Briefing by Office of Inspector Gen., Envt'l Prot. Agency, to Staff, S. Comm. on Env't & Public Works (Dec. 11, 2013).

[18] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (statement of Patrick Sullivan), available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

[19] See Office of Inspector Gen., U.S. Envt'l Prot. Agency, Early Warning Report: Internal Controls and Management Actions Concerning John C. Beale's Pay Issues, Report No. 14-P-0036 (Dec. 11, 2013), available at http://www.epa.gov/oig/reports/2014/20131211-14-P-0036.pdf.

[20] Briefing by Office of Inspector Gen., Envt'l Prot. Agency, to Staff, S. Comm. on Env't & Public Works (Dec. 11, 2013).

[21] Secret Agent Man? Oversight of EPA's IG Investigation of John Beale: Hearing Before the H. Comm. on Oversight & Gov't Reform, 113th Cong. (Oct. 1, 2013) (testimony of Patrick Sullivan), available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85907/pdf/CHRG-113hhrg85907.pdf.

 





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