Kempthorne urged to take action against OST officials
The Bush administration promoted a trust reform official earlier this year despite questions about his relationship with a contractor, according to an internal investigation made public on Wednesday.

Jeff Lords failed to disclose his personal relationship with the partner of an accounting firm that did more than $40 million in business with the Office of the Special Trustee for American Indians, the Interior Department's Inspector General said in a report. In addition to accepting meals and drinks from the contractor and engaging in "extensive outside social activity" with the firm, Lords stayed at the home of the partner in violation of federal regulations, according to the investigation.

The meals, drinks and social activity -- which included regular golf outings and out-of-state trips -- were first reported by the Inspector General in May 2006. In response, Special Trustee Ross Swimmer reprimanded Lords and two other top officials and ordered the trio to undergo ethics training.

But the reprimand and training apparently did little to change the ethical culture at OST. Lords waited five more months after the May 2006 report to recuse himself from matters dealing with the contractor, yet he "continued to improperly influence the award of contracts" to the firm, the investigation determined.

"It appears that no amount of ethics training will bring about lessons learned when it comes to the relationship of OST officials to this particular contractor," Inspector General Earl E. Devaney wrote in a letter to Interior Secretary Dirk Kempthorne.

The reprimand and training, however, appear to have helped Lords further his career. After serving as a director at OST, he was promoted to serve as one of three deputy special trustees at the agency in January of this year.

"Absent meaningful corrective action, the OIG will be continuously called upon to investigate these issues," Devaney's letter stated. "We cannot continue to dedicate our scarce resources to a problem that rebuffs solution."

Despite Devaney's harsh words, the U.S. Attorney's Office in New Mexico declined to prosecute Lords, who works for OST in Albuquerque. The contractor in question -- Chavarria, Dunne & Lamey -- was based in Albuquerque and has since been acquired by Clifton Gunderson, one of the largest accounting and consulting firms in the nation.

Lords admitted he accepted lodging from Brian Lamey, one of the partners in CD&L, a situation that was independently verified by investigators who interviewed John Berrey, the chairman of the Quapaw Tribe of Oklahoma. "The Chairman said Lords asked him to keep this information confidential," the report stated.

Federal regulations prohibit government employees from accepting gifts such as lodging from contractors. Lords failed to report that he accepted lodging in his annual financial disclosure statement, the Inspector General said.

Berrey also reported a new twist in the relationship and told investigators that Lamey moved into Lords' residence for a period of time. Lords, however, denied the allegation and Lamey failed to submit to a face-to-face interview with the Inspector General after initially agreeing to do so.

Between 1998 and 2007, CD&L was awarded more than $44 million in contracts by OST and the Bureau of Indian Affairs, according to another report also made public yesterday. One contract was repeatedly modified by OST over a seven-year period, eventually growing to $6.6 million before it was finally closed in 2005.

When an OST auditor questioned whether CD&L was delivering on the contracts, he was told to "shut up and mind [his] own business," according to the Inspector General. Other OST employees said they felt pressured to award work to the firm by Lords and two other top officials.

"In short, our audit found that CD&L has been the beneficiary of 'time and material' contracts which are so poorly written and monitored that contracting officials were unable to substantiate that deliverables were received," one of the reports stated. "We found one contract in which CD&L was fully paid without providing all deliverables, and we found pervasive irregularities in sole-source contracting."

Besides Lords, investigators uncovered problems with the actions of another deputy special trustee at OST. Margaret Williams "violated procurement regulations" by allowing Lamey to edit one of the contracts his firm was being awarded, the Inspector General said.

The U.S. Attorney's Office, however, declined to prosecute Williams.

This isn't the first time senior management at OST have come under fire. A January 2007 report from the Government Accountability Office found that the second highest-ranking official received nearly $250,000 in awards and bonuses even though the agency has failed to complete its trust reform goals.

Kempthorne, a former governor of Idaho, took over Interior in May 2006 and promised an ethics overhaul. Department officials faced repeated questions about their relationships with lobbyists, leading to a prison sentence for former deputy secretary J. Steven Griles.

Inspector General Reports:
Investigative Report: Chavarria, Dunne & Lamey (July 2008) | Audit Report: Chavarria, Dunne & Lamey (July 2008) | Management Advisory: Chavarria, Dunne & Lamey (July 2008) | Allegations Concerning Senior Officials of the Office of Special Trustee for American Indians (May 2006)

Ross Swimmer Memo:
KRQE Investigation (June 22, 2007)

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Swimmer admits 'mistakes' by top OST officials (7/31)
Ethics issue behind us, Swimmer tells OST (06/27)
OST one of worst places to work in government (5/1)
OST officials rewarded despite questionable record (1/17)
OST pressed on timetable to complete trust reform (01/09)
Accounting firm defends social relations with OST (07/27)
OST contract tied to favors to top officials (7/25)
OST officials awarded $6.6M contract to friends (7/24)