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WATCHING THE WATCHERS: THE NEED FOR

SYSTEMIC REFORMS AND INDEPENDENCE OF

THE STATE DEPARTMENT INSPECTOR GENERAL

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

APRIL 5, 2011

Serial No. 112–8

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

VACANT 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Harold W. Geisel, Deputy Inspector General, U.S. Department of State .... 8

Ms. Jeanette M. Franzel, Managing Director, Financial Management and 

Assurance Team, U.S. Government Accountability Office ................................ 25

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida, and chairman, Committee on Foreign Affairs: Prepared 

statement .............................................................................................................. 4

Mr. Harold W. Geisel: Prepared statement ........................................................... 11

Ms. Jeanette M. Franzel: Prepared statement ...................................................... 27

APPENDIX 

Hearing notice .......................................................................................................... 62

Hearing minutes ...................................................................................................... 63

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 65

(1)

WATCHING THE WATCHERS: THE NEED FOR 

SYSTEMIC REFORMS AND INDEPENDENCE 

OF THE STATE DEPARTMENT INSPECTOR 

GENERAL 

TUESDAY, APRIL 5, 2011

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The committee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Ileana RosLehtinen (chairman of the committee) presiding. 

Chairman ROS-LEHTINEN. The committee will come to order. 

After recognizing and the ranking member, my friend, Mr. Berman, for 7 minutes each for our opening statements, I will recognize any other members that want to seek recognition for a 1-

minute opening statement. We will then hear from our witnesses, 

and I would ask you to summarize your prepared statements for 

5 minutes before we move to the question and answer with members under the 5-minute rule. 

And without objection, the witnesses’ prepared statements will 

be made part of the record, and members may have 5 days to insert statements and questions for the record, subject to the length 

limitation in the rules. 

And the chair now recognizes herself for 7 minutes. Thank you. 

A robust and effective Office of Inspector General is Congress’ 

first line of defense against waste, fraud, abuse, and mismanagement. This committee and the State Department’s Inspector General must have a shared interest in ensuring that the State Department is managed effectively and efficiently to achieve our nation’s foreign policy goals. 

Now more than ever, given global developments and emerging 

threats, combined with economic challenges facing our nation, we 

must have a State Office of Inspector General that challenges State 

Department management to function with transparency and accountability. 

For over 30 years, the General Accountability Office has raised 

concerns about the independence and reliability of the Office of Inspector General for the Department of State. GAO first questioned 

the structural independence of the State OIG in 1978 when it 

pointed out the problem with appointing Foreign Service officers as 

inspectors general who then leave the State OIG office to become 

ambassadors for the Department. In short, how can they be trusted 

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ations when their career advancement hinges on the type of assessment they give to programs or peers? 

GAO noted that the revolving door was also an issue, even for 

lower level positions in which active Foreign Service officers are assigned to lead Embassies and consular post positions. Congress intended to remedy this problem in 1986 when the Inspector General 

position was made a Presidential appointment and when career 

members of the Foreign Service were specifically excluded from the 

pool of eligible candidates. However, as GAO noted in its 2007 report, this restriction has often been circumvented for extended periods when no permanent IG is chosen to serve and, instead, a Foreign Service officer holds the position in an acting capacity. 

Our committee has received a number of whistleblower complaints through our new Web site feature where whistleblowers alleged that, due to the revolving door relationship between State 

OIG and state management, adverse findings regarding contract 

management have been whitewashed, and managerial decisions regarding promotions, awards, assignments, and grievances were 

susceptible to arbitrary adjudications. 

The Project on Government Oversight (POGO), an independent, 

non-profit organization that investigates government misconduct, 

directly calls into question the objectivity of the State Department’s 

Inspector General’s office and of its leadership. Among other 

things, POGO questions the Ambassador’s personal times to Department management. 

Citing various e-mails it has obtained, POGO asserts that the 

Ambassador was doing just enough regarding state operations in 

Iraq to try to avoid losing jurisdiction to the Special Inspector General for Iraq Reconstruction, but not enough to identify and address 

the problems. 

This committee also received separate evidence of disturbing misconduct in State OIG criminal investigations. The committee’s review was triggered by a March 2010 referral sent by a Federal District Court judge who was disturbed by evidence that a State OIG 

investigation connected with a case before him had been seriously 

compromised. 

Our staff continues to look into these allegations. Whether real 

or perceived, compromise of independence is a serious problem for 

State OIG. In addition, GAO has long criticized State OIG for overreliance on inspections as an oversight mechanism. 

In its previous reports, GAO found State OIG inspection reports 

to be superficial and thin, lacking in quality assurance normally required of an OIG. Acknowledging that State OIG has had a requirement periodically to inspect every post, GAO recommended 

fuller use of audits instead. 

As our GAO witness will describe during her testimony, audits 

require more stringent requirements than inspections for documentation to support findings, and are subject to external peer review. This makes a significant difference regarding quality assurance. 

The recent reclassification of all audits conducted by the State 

OIG’s Middle East Regional Office provides a case in point. An external peer review conducted by the OIG of the National Aeronautics and Space Administration found numerous reporting defiVerDate 0ct 09 2002 11:00 May 05, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\FULL\040511\65626 HFA PsN: SHIRL
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ciencies that caused State OIG to reclassify all Middle East Regional Office audits from January 2008 to September 20, 2009, as 

inspections. 

State OIG has indicated that the Middle East Regional Office 

will be folded into its larger audit unit. However, the fact that the 

Middle East Regional Office performed so poorly in such a highrisk area is deeply troubling. 

I am particularly concerned with adequate oversight in this area, 

given the billions of dollars that will be at stake as operations in 

Iraq are transitioned from the Department of Defense to the Department of State. In preparation for this hearing, we asked GAO 

to determine whether State OIG is making progress toward implementing its longstanding recommendations. Your report indicates 

that actions are underway, but more needs to be done. We need 

confidence in the State OIG, and we will be vigilant in making sure 

that they continue to improve. 

And with that, I would like to yield time to my friend, my ranking member, Mr. Berman of California, for his opening remarks. 

[The prepared statement of Chairman Ros-Lehtinen follows:]

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Mr. BERMAN. Well, thank you very much, Madam Chairman. I 

appreciate your calling this hearing. Your opening testimony started out by referring to the State Department’s Inspector General as 

the first line of defense. My opening statement starts out referring 

to the Inspector General as the last line of defense against waste, 

fraud, and abuse at the State Department. Maybe it is an intermediate line of defense, but it is supposed to be a line of defense. 

Foreign Service officers, civil service employees, and, of course, 

the U.S. taxpayers should have absolute confidence that the IG’s 

office serves as an unassailable mechanism of accountability in the 

State Department. And, to my way of thinking, the office has often 

performed this function admirably. 

Nonetheless, as described by the chairman, a 2007 Government 

Accountability Office report flags a number of systematic concerns 

with the IG’s office. First, the rotation of Foreign Service officers 

in the IG’s office, a statutory legacy of the Foreign Service Act of 

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One could argue that FSOs bring unique expertise to State Department oversight, including an intimate knowledge of the way 

our overseas missions work—or don’t work—as the case may be. 

But this must be weighed against the concern that reliance on senior State Department personnel to conduct oversight creates both 

the image and the possibility of a conflict of interest. I would welcome the views of our witnesses on the role of FSOs in the IG’s office. 

Second, I am also interested in the views of our panelists regarding the balance between audits—the standard product of most IG 

offices—and inspections, the traditional focus of the State IG, based 

on its historical mandate to inspect foreign posts. 

The GAO report indicates that the State IG generally conducts 

about two inspections for every one audit. It also found that key 

management challenges, such as counterterrorism and information 

security, were overwhelmingly subject to inspections rather than 

audits. 

I understand that the IG incorporates elements of an audit into 

many inspections, but in many ways they are distinct products 

with different methodologies. Especially as the State Department 

assumes unprecedented roles and responsibilities in both Iraq and 

Afghanistan, including the management of massive contracts, to 

what extent should the IG place a greater emphasis on audits? 

Finally, the GAO expresses concerns about inadequate resources 

for the IG, a concern that I share. If this Congress is serious about 

eradicating waste and abuse, if it really wants to ensure effective 

oversight over funds, and if it genuinely wants to foster greater accountability over taxpayer dollars, we must ensure adequate 

resourcing of the IG’s office. 

I would note that the Continuing Resolution passed by my colleagues a few weeks ago would cut the State IG’s budget 17 percent below current operating levels, which will result in a hiring 

freeze and curtain oversight of operations in Iraq and Afghanistan, 

if that level of cut were to pass. I don’t understand why my colleagues would insist on cutting the budget of the very organization 

intended to ensure funds are well spent. 

Incidentally, and somewhat ironically, the CR also cuts the funds 

for the GAO, the organization that authored the report upon which 

this hearing is based. 

I commend the chairman for holding this hearing and look forward to the witnesses’ comments. And in an unprecedented act, I 

yield back the balance of my time, thereby making the first effort 

to cut waste. [Laughter.] 

Chairman ROS-LEHTINEN. Very well done, Mr. Berman. 

I would like to recognize Mr. Marino, if he would have a 1-

minute opening statement. 

Mr. MARINO. Thank you, Madam Chair, but I have no statement. 

Chairman ROS-LEHTINEN. Thank you, sir. 

Mr. Rohrabacher. 

Mr. ROHRABACHER. Well, I guess I am here to talk about the 

middle line of defense, seeing that we have the first line and the 

last line. 

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appropriation of funds. I think that what we have, Madam Chairman, instead is disillusionment because of policy. Policy leads us 

to a position. 

I think that a certain amount of corruption and a certain amount 

of waste and fraud is expected in any major operation in the midst 

of conflict. I have seen it since I was a young person in Vietnam, 

and I have seen it in every conflict I have been in since, just as 

collateral damage and the loss of civilian life is part of what happens in those type of deployments. 

But that doesn’t mean we should accept them, and we have to 

work against it. But it goes with the territory, and it is up to us 

to minimize that type of collateral damage and waste and fraud. 

But most important, it is up to us to have the right policy of government, to have the right policies, and I believe the United States 

Government has been engaged in economy-building instead of 

emergency and crisis aid. And that goes down to the very heart of 

the reason the American people are disillusioned, because that 

strategy cannot be successful, and it hasn’t been. 

So with that said, thank you, Madam Chairman. 

Chairman ROS-LEHTINEN. Thank you, Mr. Rohrabacher. 

Mr. ROHRABACHER. Looking forward to the hearing. 

Chairman ROS-LEHTINEN. Thank you. 

Mr. Higgins is recognized. 

Mr. HIGGINS. I don’t have an opening statement, Madam Chair. 

I will have questions during the question and answer period. 

Chairman ROS-LEHTINEN. Thank you, sir. 

Mr. HIGGINS. Thank you. 

Chairman ROS-LEHTINEN. Mr. Gallegly. Mr. Gallegly, if I could 

have your minute? 

Mr. GALLEGLY. I will yield to the gentlelady. 

Chairman ROS-LEHTINEN. Well, thank you. Just because my good 

friend, the ranking member, spoke about H.R. 1 and the cuts that 

we are making, and I just want to—and I hope we have some 

charts that are coming out soon about our plan for reviving the 

economy, which is straightforward. 

We are cutting job-destroying programs to help the economy 

grow, to empower employers to create jobs. We have had historic 

debt that is leading to historic tax increases, and we have got to 

stop that. And that is going to lead to historic high unemployment. 

And we have got—we are going to address this spending-driven 

debt crisis now. There is a lot of resistance to making sure that we 

don’t do it, but we are determined to. And I don’t think it is a coincidence that our national debt, our Federal spending, our bureaucratic regulatory costs, and unemployment have climbed to record 

heights at the same time. 

So we hope to create jobs, we hope to save our children from national bankruptcy, and so the way to do that is to stop spending 

money that we don’t have. And we hope to shrink the Federal 

budget, so that we don’t have to shrink the family budget. 

And with that, I would now like to recognize our witnesses, unless Mr. Deutch has an opening remark to make on the——

Mr. DEUTCH. Near perfect. 

Chairman ROS-LEHTINEN. Thank you very much. Pithy, great 

statement. We like that. 

8

And the chair and the ranking member, we are pleased to recognize and welcome today’s witnesses. Ambassador Harold Geisel is 

the Deputy Inspector General for the Department of State and 

Broadcasting Board of Governors. Ambassador Geisel has more 

than 25 years’ experience in senior management with the State Department. He joined the Department in 1970 and has since completed tours all across the globe, including Brussels, Oslo, Bern, everywhere, Rome, South Africa, Moscow. 

In ’94, he served as Acting Inspector General for the Department 

of State, and then, in ’95, held the position of Deputy Assistant 

Secretary of State for Information Management. In ’96, he went 

abroad again as Ambassador until ’99. And following his retirement 

from Foreign Service in 2001, the Ambassador served as Acting 

Deputy Assistant Secretary for Logistic Management. 

In 2008, he assumed the position of Deputy Inspector General, 

and has held that position ever since, which brings him to this 

meeting today. 

And next we will hear from Ms. Jeanette Franzel, the Managing 

Director for the U.S. Government Accountability Office, Financial 

Management and Assurance Team. She heads GAO’s oversight of 

financial management and auditing issues across the Federal Government. 

Ms. Franzel is an expert on the topic of audits and independence, 

oversees GAO’s work in developing and issuing government auditing standards, also known as the Yellow Book. The Yellow Book 

standards are widely used by the U.S. Government and also serves 

as a model for both private sector and governments around the 

world. 

Ms. Franzel also leads the development of GAO positions on proposed standards for the U.S. Auditing Standards Board, the Public 

Company Accounting Oversight Board, the International Auditing 

and Assurance Standards Board, and the Institute of Internal 

Auditors. 

Additionally, she provides technical expertise to GAO teams and 

external audit organizations on issues involving auditor independence, engagement design, methodologies, quality assurance, internal inspections, peer review, internal control and governance, in 

the public sector programs. 

We are glad to have you here. And I kindly remind our witnesses 

to summarize your statements for 5 minutes, and we will put your 

written statements into the record without objection. 

Ambassador, please proceed. 

STATEMENT OF MR. HAROLD W. GEISEL, DEPUTY INSPECTOR 

GENERAL, U.S. DEPARTMENT OF STATE 

Ambassador GEISEL. Thank you, Madam Chairman, Ranking 

Member Berman, and members of the committee, for the opportunity to testify today. 

Since being appointed by Secretary of State Rice during the summer of 2008, I have often told OIG employees that we have the best 

jobs in the Federal Government because we get paid to tell the 

truth. Our reports are the true objective measure of our independence and effectiveness. Our inspections of Embassies Baghdad, 

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struction in Baghdad, passport snooping, and the Christmas bomber, clearly show that OIG is independent, thorough, and responsive. 

The GAO report was issued in 2007. By the close of FY2010, the 

number of reports issued annually on my watch increased from 107 

to 157. Open investigations increased from 36 to 101. Subpoenas 

increased from zero to 25, and contractor suspension and debarment actions increased from zero to five. 

OIG has substantially expanded its oversight in critical areas, 

particularly in Afghanistan. We now have boots on the ground at 

five overseas locations. The Office of Investigations has 26 active 

investigations in the Middle East and Southwest Asia, 10 related 

to Afghanistan. 

President Bush nominated an IG several weeks after I arrived in 

June 2008. Although he was not confirmed, my top priority was to 

continue building OIG’s oversight capability and morale. I read 

GAO’s report and kept it on my desk because I valued its input. 

We have complied with GAO’s recommendations to establish an 

MOU with Diplomatic Security and include IT reports in our internal quality review process. Also, the Foreign Service Deputy Inspector General, DIG position, was abolished by me in January 

2011. Thus, any future DIG who becomes Acting IG will be a civil 

servant, not an FSO. 

However, we believe not considering civil servants with management careers would unduly exclude highly qualified candidates. 

OIG has reassessed the mix of audit and inspection coverage. Our 

methodology for investing resources now includes a risk management approach that ensures all congressional executive mandated 

audits and inspections are performed, and that our remaining audits and inspections cover high cost programs, key management 

challenges, and vital operations. 

Our Office of Audits reorganized in January 2010 to gain functional area expertise, contribute to an audit planning process that 

included high-risk/high-cost programs, and operate in a more efficient and accountable manner. 

In October 2011, our Middle East Regional Office, MERO, will be 

merged into the Office of Audits, easily making Audits the largest 

component of the State IG with more than 90 full-time employees. 

We anticipate that the number of audits will substantially increase 

after MERO is incorporated into Audits. 

Our inspections cover three broad areas that are consistent with 

Section 209 of the Foreign Service Act—policy implementation, resource management, and management controls. The IG community 

has long recognized that inspections are uniquely suited to provide 

timely feedback to program managers and to review highly technical matters. 

The inspection function is growing in number and size within the 

IG community, and the 2008 IG Reform Act acknowledges the inspection role of OIGs as separate from audits. 

Our mix of oversight coverage is effective because our offices 

complement one another’s efforts in an efficient manner. During 

each inspection cycle, teams examine a wide cross-section of issues 

at multiple posts and bureaus. When a team discovers an area that 

requires a drill-down audit or investigation, it is referred to those 

offices. 

10

For example, the Embassy Baghdad inspection team discovered 

an overtime issue that required additional oversight. An audit 

team followed the inspection and produced major findings and recommendations leading to better controls at the Embassy. 

Finally, there is an overriding need to use inspectors with the 

requisite experience, expertise, and Senate-confirmed ambassadorial status to lead inspections of overseas posts. 

Any potential concern is also mitigated by OIG’s transparency, 

vetting procedures, and recusal policies. Few of the inspection 

teams are led by active duty Foreign Service ambassadors, and inspection team leaders report to, and are rated by, the AIG for inspections, a member of the Senior Executive Service. Just 17 of the 

64 direct hire staff members currently employed in inspections are 

FSOs, and most retire after their assignments with OIG. 

In short, as Congress previously recognized, FSOs play an invaluable role in our inspections, which together with checks and 

balances outweigh any theoretical appearance of lack of independence. In sum, we believe OIG is in substantial compliance with 

GAO’s recommendations. 

Once again, thank you, Madam Chairman and Ranking Member 

Berman, for the opportunity to appear today. I would be pleased 

to take any questions you have at this time. 

[The prepared statement of Ambassador Geisel follows:]

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Chairman ROS-LEHTINEN. Thank you so much, Mr. Ambassador. 

Thank you, Ms. Franzel. 

STATEMENT OF MS. JEANETTE M. FRANZEL, MANAGING DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE TEAM, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. FRANZEL. Madam Chairman Ros-Lehtinen, Ranking Member 

Berman, and members of the committee, thank you for the opportunity to be here today to discuss the Department of State OIG. 

The State OIG has a critical responsibility to provide independent and objective oversight of the State Department. In 2007, 

we reported concerns about State OIG’s independence and effectiveness. Today, I will discuss our previously reported concerns and 

the current status of those concerns based on our follow-up work. 

In 2007, we reported concerns with two independence issues and 

three effectiveness issues. Regarding independence, our first concern dealt with the use of State Department management officials 

as Acting IGs. In order to help ensure the independence of the IG 

Office, we recommended that the State OIG work with the Secretary of the State to develop succession planning to help ensure 

independence in appointment of acting IGs. 

And in response, as Ambassador Geisel has said, the Acting IG 

recently abolished the Deputy IG position for Foreign Service, 

which will help ensure that any future Deputy IGs moving into an 

acting IG position will not be Foreign Service officers. 

The State Department has relied on acting IGs to provide oversight for over five of the last 8 years, since January 2003. Three 

of the acting IGs returned to significant management positions 

within the State Department. We realize that the appointment of 

a permanent IG is not within the control of State OIG. Nevertheless, the use of management officials as acting IGs is a concern, as 

one of the independence protections in the IG Act is that the IG 

is to be appointed by the President and confirmed by the Senate. 

Our second independence concern was with the use of Foreign 

Service officers to lead inspections of the department’s bureaus and 

posts. State OIG inspections are led by ambassador-level Foreign 

Service officers who often move through the OIG on rotational assignments, and then back into Foreign Service positions. 

We recommended that the IG develop options so that State OIG 

inspections are not led by Foreign Service officials. The State IG 

has stated that having Foreign Service officials with the rank of 

ambassador as team leaders is critical to the effectiveness of the 

inspection teams. Although the IG has put some safeguards in 

place, we continue to believe that a fundamental, structural, independence problem exists with this arrangement. 

As I mentioned, we also reported on three effectiveness issues. A 

serious effectiveness issue that we noted in our 2007 report was 

the State IG’s reliance on inspections, rather than audits, to provide oversight of the Department. By design, inspections do not 

provide the level of assurance or rigor that audits provide. 

State IG’s reliance on inspections resulted in gaps in the audit 

coverage of State Department’s high-risk areas and management 

challenges, including counterterrorism and border security, public 

diplomacy, and human resources. We recommended that the State 

26

IG reassess the mix of audit and inspection coverage, and in our 

recent update we have found that State IG is taking actions to 

strengthen its audit practice. But we recently continued to identify 

gaps in audit coverage in key areas, including foreign assistance, 

public diplomacy, and human resources. 

As I mentioned, the good news is that State IG has taken a number of steps to strengthen its audit practice and to plan for additional audit coverage. It has increased its resources dedicated to 

audits and reorganized the Office of Audits to align its oversight 

efforts with the Department’s mission and strategic priorities. 

Finally, State IG took actions to implement our two other recommendations, as Mr. Geisel explained, in the area of including IT 

inspections and its internal quality review process and developing 

a written agreement with the Bureau of Diplomatic Security to coordinate departmental investigations. 

In summary, we commend the OIG for the steps it is taking to 

build and strengthen its audit practice. We continue to emphasize 

the need for OIG to continually assess its mix of audit and inspections of the Department’s high-risk and management challenge 

areas. Frankly, this is a measure of the effectiveness of the audit 

practice on an ongoing basis, so we would encourage a continual reevaluation based on facts and circumstances and risk of the mix of 

audit and inspections on an ongoing basis. 

Second, we believe it is important for State Department to be 

headed by a permanent IG, appointed by the President, and confirmed by the Senate as envisioned by the IG Act. 

Finally, State OIG’s unique requirement to provide inspections of 

the Department’s bureaus and posts, and its need to use ambassador-level Foreign Service members as team leaders, presents 

both independence and resource problems for the OIG. There may 

be opportunities to revisit this particular requirement, which is in 

law, and whether some of these functions should be performed by 

State Department with more of an audit and oversight function of 

the inspections being performed by State OIG. 

So I think there is a tremendous opportunity here to revisit the 

requirements and perhaps develop a mechanism where OIG can be 

providing effective oversight, but perhaps State Department can 

take over some of the management function portions of the inspections. 

Madam Chairman, Ranking Member Berman, and members of 

the committee, this concludes my statement, and I would be happy 

to respond to any questions that you have. 

[The prepared statement of Ms. Franzel follows:]

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Chairman ROS-LEHTINEN. Well, thank you very much. You have 

both made some very good recommendations to our committee in 

order to streamline this process. 

Mr. Geisel, I wanted to ask you about the Horne v. Huddle case. 

And the U.S. Government recently spent 3 million tax dollars to 

settlement the Horne v. Huddle case. This has been a long-running 

lawsuit against a former senior U.S. diplomat who was accused of 

illegally eavesdropping on a DEA agent when they were both stationed in Burma. 

Because the Federal Judge in that case was disturbed by the evidence that the IG investigation into that matter had been compromised, he required that the congressional committees be notified before he would finalize that settlement. 

And there are serious allegations that the IG’s 1996 investigative 

report was altered and the investigator’s signature was forged in 

order to obscure the investigator’s original conclusion that the accused diplomat was guilty of eavesdropping, perjury, and obstruction of the IG investigation. And even the edited report notes that 

the accused diplomat’s contradictory statements were refuted by 

numerous Embassy employees and concludes that OIG investigation is ‘‘unable to dispel the suspicion of his misconduct.’’

So, Mr. Geisel, I would like for you to explain how the defendant, in that contentious $3 million illegal eavesdropping case, who was 

the subject of an OIG Inspector General inspection, investigation, 

that pointed toward possible perjury, who had been accused of unlawfully obstructing an OIG investigation, and who appears on 

OIG’s name check system as having been the subject of a special 

inquiry, gets hired to lead investigations for the Inspector General’s 

office in 2005, and stays on the payroll until after this committee 

began asking questions about these matters last summer? Would 

he ever have been hired for that position had he not been a senior 

Foreign Service officer? And doesn’t his employment at OIG indicate a problem overall? 

Ambassador GEISEL. Thank you, Madam Chairman. Of course, 

Mr. Huddle was hired in 2005, before I got to OIG. And my only 

direct——

Chairman ROS-LEHTINEN. I don’t mean this as a question about 

you. I am saying about the process of——

Ambassador GEISEL. Yes. 

Chairman ROS-LEHTINEN [continuing]. Who gets hired, who is 

doing the investigation. I am not saying it directs to you. 

Ambassador GEISEL. Thank you, Madam Chairman, and I appreciate that. He was hired in 2005 because a name check was done, 

and there was—he got a positive endorsement. All of that, I don’t 

want to guess what my predecessors did, because when I heard 

about the Judge’s memorandum I said he was never to be used 

again. 

And at the same time, as you mentioned, I referred the matter 

to your committee, and to the Senate’s committee, and my counterpart at the CIA did the same thing with her committees. 

Chairman ROS-LEHTINEN. If I could follow up, now, you, in your 

capacity, possess an extensive investigative record raising numerous doubts about this gentleman’s veracity. And the D.C. Federal 

Circuit Court noted in 2007 a seemingly impossibility that he acVerDate 0ct 09 2002 11:00 May 05, 2011 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 F:\WORK\FULL\040511\65626 HFA PsN: SHIRL
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quired his information through legal means, as well as his apparent lie to OIG investigations. Does this case compel you to review 

what you had been doing and how it should not be done in the future? 

And within 48 hours of the Horne v. Huddle settlement hitting 

the press, you had e-mail exchanges with the defendant and with 

a former OIG investigative supervisor who had been involved in 

that case. Would you be willing to provide your e-mail to and from 

these individuals to the committee, working with the committee, so 

that we could give parameters to our request, which I hope would 

be considered? 

Ambassador GEISEL. Madam Chairman, subject to our lawyers 

speaking to your lawyers, if there is any information that belongs 

to another agency, yes, we would be glad to show your staff those 

e-mails. 

Chairman ROS-LEHTINEN. Thank you very much. Thank you for 

that and that spirit of cooperation. 

I now would like to yield to Mr. Carnahan, the ranking member 

on the Subcommittee of Oversight and Investigations. 

Mr. CARNAHAN. Thank you, Madam Chair, for this hearing. It is 

I think very timely. I want to specifically raise the issue of our 

Government’s capacity to effectively oversee post-conflict reconstruction operations, given the significance of their funding, their 

deeply complex and challenging nature, and State’s principal and 

escalating role in Iraq and Afghanistan, respectively. With this 

shift from military-led operations in Iraq to State, State has taken 

on unprecedented size and scope of responsibilities. 

Last year, I chaired hearings on reconstruction efforts in both 

Iraq and Afghanistan. SIGIR Bowen’s testimony raised serious concerns about U.S. management and oversight practices, estimating 

at least $4 billion had been wasted in our stabilization and reconstruction programs alone. And in later testimony he emphasized organizational transitions in Iraq that have been the occasions of significant waste. 

As SIGIR draws down in its oversight efforts in Iraq, and as the 

U.S. prepares for similar military and civilian transitions in Afghanistan in the coming years, I would like to ensure that our 

oversight mechanisms are prepared to maintain strict audit and investigation efforts. 

Ms. Franzel, with State taking on these increased responsibilities, can you give your assessment of the State IG’s capacity to 

take on these added oversight tasks? 

Ms. FRANZEL. Well, first, let me just comment on the need for 

very good coordination between the various oversight entities involved. We have the Special IG for Iraq Reconstruction, Special IG 

for Afghanistan Reconstruction, the State IG, and the DoD IG. 

There is going to need to be some very seamless coordination between the oversight mechanisms in place to help ensure adequate 

coverage and adequate audit activity in these areas. 

I do find it disturbing what happened with the Mideast Regional 

Office within the State Department IG in that the audits all had 

to be reclassified to inspections, because those audits were found 

to be unreliable. Basically, in the peer review that occurred, in 

some of the OIG reports, the conclusions could not be supported. 

47

There wasn’t sufficient evidence backing up the conclusions in the 

audit reports. 

The IG office did acknowledge that and did convert the audits to 

inspections, which requires a much lesser standard for documentation and evidence, but, those offices need to be doing audit-level 

work. There is going to need to be significant cultural change and 

training to be sure that those offices are up to the task. 

Mr. CARNAHAN. Let me follow that up. Over 30 years GAO has 

expressed concerns over State IG’s insufficient independence from 

the Department. Have any of these issues of independence affected 

the IG’s ability to conduct effective oversight of operations in Iraq 

and Afghanistan? 

Ms. FRANZEL. We did not specifically look at that question, but 

I will say that the inspection load that is taken on by the State IG 

office does use a tremendous amount of resources, which then are 

not available to do audit work. And so we are thinking that there 

is probably a good opportunity at this point to take a look at that 

inspection function, which over the years has been debated. 

Is this a management function or an IG function? And perhaps 

there are certain aspects of that function that would be better done 

by management, because of the independence issues, but that at 

the same time would help free up resources for a stronger audit 

function within the OIG. And there are some specific legislative 

fixes that could be done to take this—I will call it a burden—from 

the IG. This can be done based on risk and where the IG needs to 

be placing resources based on what is happening around the world 

and within the State Department. 

Mr. CARNAHAN. I certainly would like to share those legislative 

ideas, but I want to get a question in to Ambassador Geisel. And 

that is, what is the IG doing to evaluate the effectiveness of the 

transition to state control in Iraq? How would you evaluate the 

transition so far? And how will these assessments be formulated 

into meaningful lessons that we can learn from going forward in 

Afghanistan? 

Ambassador GEISEL. Thank you very much for that question, sir. 

We have had an inspection, a compliance follow-up review, and I 

would say at least four major audits covering areas—audits and 

evaluations covering these same areas of concern in Iraq. 

I would note on inspections that 35 out of 64 of the independent 

offices of Inspector Generals have the inspection function. And I 

think the inspection function is extremely useful in identifying 

areas that our investigators and our auditors then drill down on, 

as I mentioned specifically in Iraq. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Carnahan. 

Mr. Marino of Pennsylvania. 

Mr. MARINO. Thank you, Madam Chair. 

Welcome, guests. Appreciate you being here. Ms. Franzel, I have 

at least 18 years of criminal investigation experience, civil, and 

also internal affairs. And I found out in my experience that I personally have a basic problem with investigating those individuals 

with whom I worked or had the slightest relationship with. 

Do you find that inherently dangerous in the situation that we 

have now where IG from State is investigating situations where 

there could be a compromise, there could be a bias? And not intenVerDate 0ct 09 2002 11:00 May 05, 2011 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 F:\WORK\FULL\040511\65626 HFA PsN: SHIRL
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tionally. Now, I have seen it, though, done intentionally, but we, 

as human beings, have a natural predilection to, how may I say, 

when we are on the fence, to protect our own. Could you respond 

to that, please? 

Ms. FRANZEL. Certainly. This situation inherently has a number 

of threats to the independence and integrity, and, again, not necessarily that this would be done intentionally by the people involved. In professional auditing literature that has really been accepted worldwide, there are a number of threats that are articulated, which I see coming out in this situation. 

The first is a self-interest threat. So if you have somebody moving through an IG office and back into another position, the threat 

that an interest will inappropriately influence an auditor’s judgment or behavior is there, because that inspector or team leader is 

looking for the next career opportunity. So there is a self-interest 

threat. 

There is also a self-review threat of reviewing offices and programs that an auditor or inspector was previously involved in. A 

recusal policy can be a safeguard, but not always a fully effective 

safeguard. There is a bias threat because of the familiarity of an 

auditor or an inspector with operations of an office. 

There is a familiarity threat, which is really the threat that due 

to a long or close relationship with management or personnel of an 

audited entity, an auditor will be too sympathetic to their interests, 

or simply too accepting of their work. And that is something that 

can happen unconsciously. 

There is an undue influence threat, again, which can come into 

play here, as well as a structural threat in terms of, what is the 

audit organization attempting to do? Is it part of a management 

function? And where is the placement of this function? So I see all 

of these threats coming into play in one fashion or another with 

this arrangement. 

Mr. MARINO. Ambassador, then, hearing what Ms. Franzel just 

stated, what do we do about these threats? What do we do to prevent this appearance of impropriety and make sure that we avoid 

these pitfalls? 

Ambassador GEISEL. Well, it depends on whether we are talking 

about inspections, audits—well, inspections and audits or criminal 

investigations. And as you pointed out, from your experience as a 

criminal investigator, that is the number one concern. 

Now, what I would say there is that our criminal investigators, 

once they find evidence of criminal wrongdoing, their work is thereupon directed by an assistant U.S. attorney, and everyone else is 

out of it. 

I would also say that, in general, we are—our investigators are 

really separated. 

Mr. MARINO. Please. 

Ambassador GEISEL. Yes. Our head of investigations is a longtime officer from DoD. The vast bulk of our investigators are from 

outside of the State Department, but even those that served in the 

Bureau of Diplomatic Security, they are completely separated. 

Now, for the inspectors and the auditors, we require them, and 

we train them to take it extremely seriously. We require them to 

sign a statement of independence before they begin any work. And 

49

when it comes to inspections or audits, we carefully choose members of the teams that have had no relationship with the post or 

the office. We have specific guidelines. 

And I know that for—we will not have a team leader who ever 

served at the Embassy or Bureau where she or he may have 

worked, if they are in the Foreign Service. The same is true of civil 

service, because where the vast bulk of our members of our office 

of inspections come from, if they have ever worked at an office that 

we are inspecting or auditing, they will not get the job period, and 

they will not be on the review of the job either. 

Chairman ROS-LEHTINEN. Thank you very much. 

Mr. MARINO. Thank you. 

Chairman ROS-LEHTINEN. Mr. Higgins of New York. 

Mr. HIGGINS. Thank you, Madam Chair. 

Ambassador, the municipal clerk offices throughout the nation 

has provided passport services to the State Department for many 

years, and as far as, you know, the record shows, without any problems relative to efficiency and relative to security. 

The Inspector General of the State Department has now issued 

a mandate to municipal clerk offices that the issuance of birth certificates and passports have to be done in separate facilities and 

separate personnel. Can you enlighten us as to why this is occurring? 

Ambassador GEISEL. I would be very glad to, sir. It is a matter 

of fraud prevention. Our July 2009 report of the inspection of passport services noted concerns about the vulnerabilities to fraud inherent in the passport application acceptance programs at acceptance facilities country-wide, as well as quality of the source documentation. 

The report also noted variation in the quality of the Department’s customer service manager’s oversight and training of acceptance agents. We made a series of recommendations to improve 

oversight and support of acceptance agencies, including closing an 

acceptance agency where an acceptance agent also issues birth certificates as soon as viable alternative locations for submitting passport applications exists. 

And the reason for that is a birth certificate is prima facie evidence of citizenship. If the same person—so there is no doublecheck. If the same person who issues the birth certificate can also 

accept the application for a passport, be that as it may, the vast 

bulk of acceptance facilities have separate windows and personnel 

for these two functions, although there may be a very few that cannot separate these functions. 

But I would be glad to offer, because our inspectors are supposed 

to work quickly, that the Office of Inspections will monitor the response to your letter to the Secretary and the impact of compliance 

with our own recommendations and report back to you, sir. 

Mr. HIGGINS. Yet there was a May 2009 Government Accountability Office report that was targeted toward the goal of recognizing vulnerability in the current policy relative to the issuance of 

both passports and birth certificates, and there was no reference to 

potential problems with that dual role continuing. 

50

So what was the—you mentioned a July report of the Inspector 

General. Does that reference the May 2009 Government Accountability Office report? 

Ambassador GEISEL. I will have to take that as a question for 

the——

Mr. HIGGINS. Who bears the responsibility for the cost associated 

with providing separate facilities? This would seem like a Federal 

mandate on the localities if the municipal clerk offices have to provide separate staffing and separate facilities for the issuance of 

documents where no identified problem has occurred previously. 

Ambassador GEISEL. Well, when we say ‘‘separate facilities,’’ we 

don’t literally mean a separate building. 

Mr. HIGGINS. What do you mean? 

Ambassador GEISEL. But we do mean that a separate person has 

to issue a birth certificate from a person who issues a passport. 

Mr. HIGGINS. But a separate facility within the same building. 

Ambassador GEISEL. A separate facility——

Mr. HIGGINS. Well, clarity on that issue——

Ambassador GEISEL [continuing]. Would literally mean another 

window. 

Mr. HIGGINS. Mr. Ambassador, clarity on that issue is pretty important relative to the efficient, secure, continued issuance of very 

important public documents. And these offices are typically supported by local taxpayers. And knowing what they are required to 

do by May 1st, and what they are not required to do, I think is 

very, very important. So I would ask that, you know, you try to 

clarify this for us and give us a sound basis from which the policy 

is being advanced, because I am not convinced that it is compelling. 

Ambassador GEISEL. That is absolutely my commitment to you, 

sir. 

Mr. HIGGINS. Thank you. 

Chairman ROS-LEHTINEN. Thank you, Mr. Higgins. Thank you, 

Mr. Ambassador. 

Dana Rohrabacher, the chairman of the Subcommittee on Oversight and Investigations, is recognized. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman. 

And, again, I find just the basis for a lot of the problems that we 

face and challenges in this arena that we face are inherent to the 

job that is being done overseas and whether or not the policy was 

right in sending people overseas or not. 

I find that a combination of blood and money, coupled with time, 

always tends to lead to a moral breakdown. And once you have a 

moral breakdown of people in the field, no amount of oversight and 

no amount of investigation is going to cure that. And, as I said, I 

saw that from the time I was very young, and I went through different things. 

I was not in the military, but I did spend considerable time in 

Vietnam and saw—I remember a day when the—it was reported—

I was visiting some doctors in Vung Tao, and it was reported that 

a landing craft had been captured by the enemy. And all of the 

supplies and the landing craft had been captured by the enemy, 

and I was dismayed, and I said, ‘‘Well, how many people were captured? Or how many people died? How many of our people were 

lost in this?’’ ‘‘Oh, no, and they all got away. They all got away. 

51

There wasn’t any casualties on our side, but the landing craft was 

captured.’’

Well, somebody sold the landing craft and all the supplies to the 

local enemy, and to say that I saw that up and down Vietnam was 

to put it mildly. And what had happened is, once we got in there 

and the corruption was evident on the other side at least, it broke 

down the morals of our own people, especially in the middle of seeing gore and blood, which almost none of us had seen before anyway, and that tends to shock the system. 

And we see the same thing beginning to happen in Afghanistan. 

You are there a long period of time. People are being killed. Money 

is being thrown at the problem, and tell me this isn’t a formula for 

the breakdown of any moral standards for anybody that we would 

send there. 

We just lost a man named Bill Young—I would like to put it in—

Bill Young was a brave, wonderful person, the son of missionaries 

early in the 1950s, served us very, very well in Vietnam, and he 

just passed away a couple of days ago. And Bill was operating out 

by himself, and he had given a certain amount of money to do the 

job, and he was out by himself with the mountain yards and the 

mountain people in that country, in Vietnam, and in Laos, I might 

add. Yet there were no audits or Inspector General visits, or whatever. 

Let me get to right now, to what we are facing right now. We 

have a huge challenge in Afghanistan, but yet it seems to be getting worse, in terms of heroin, the production of heroin. All of us 

know about it. Okay? Yet over the years the amount—production 

of heroin has gone up while we have been there, not down. 

And is this due to corruption or is this just part of a policy that 

we have had to let that happen? Yes, Mr. Ambassador. 

Ambassador GEISEL. You said is it due to corruption, or is it due 

to a policy? 

Mr. ROHRABACHER. Right. Would you just let this go on? 

Ambassador GEISEL. I think it is due to the fact that it has always gone on, as you said. I think that the Department—and we 

have audited efforts—the Department is making a great effort, but 

I don’t know if there is enough money in the world to stop what 

has always gone on in Afghanistan. I think the best we can do is 

try to control it, but I really am—I have to share your pessimism, 

sir. 

Mr. ROHRABACHER. Well, I don’t think I am a pessimist. I am actually, in the long run, an optimist. But if you have policy that puts 

our people in Afghanistan and says they are going to go out, and 

some of our military guys are out with sickles, you know, cutting 

down some poppies here, well, you know that some of the leaders 

of the government brother—maybe Karzai’s brother has another 

group of poppies over the hill that you can’t touch, if that doesn’t 

lead to moral breakdown, I don’t know what does. 

But then again, my point is, you can’t have a goal that is going 

to take a long time in the middle of a conflict. If it takes decades, 

you are going to have a breakdown in our system. Our system is 

basically on the integrity of our people, people like Bill Young and 

others, to do their job, and oversight and inspection, I certainly reVerDate 0ct 09 2002 11:00 May 05, 2011 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 F:\WORK\FULL\040511\65626 HFA PsN: SHIRL
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spect the job that you are doing, but sometimes I think you are 

faced with an impossible task. 

Ambassador GEISEL. What can I do except agree with you? Except I will be an optimist and say we are trying to do our 

darnedest, so it is not an impossible task. Let us call it——

Chairman ROS-LEHTINEN. Thank you very much. 

Mr. ROHRABACHER. Thank you. 

Chairman ROS-LEHTINEN. My good friend Ms. Wilson from Florida is recognized. 

Ms. WILSON OF FLORIDA. Thank you, Madam Chairman. 

Ambassador, how many Foreign Service officers serve in the IG’s 

office today? 

Ambassador GEISEL. There are 18 all told. 

Ms. WILSON OF FLORIDA. And what percentage of these offices 

compose the overall number of employees? 

Ambassador GEISEL. Less than 9 percent, ma’am. 

Ms. WILSON OF FLORIDA. Is it your view that the Foreign Service 

officers are necessary for inspections? 

Ambassador GEISEL. Yes, I believe they are very necessary for inspections. And as my colleague testified, their use is included in 

the Foreign Service Act. 

Ms. WILSON OF FLORIDA. How about for audits? 

Ambassador GEISEL. There are no Foreign Service officers in audits. 

Ms. WILSON OF FLORIDA. So, in essence, how do you assess the 

overall value of these Foreign Service officers? You assess them for 

us, please, their value. 

Ambassador GEISEL. I think that their value is crucial, because 

there are some things that you can’t really audit in an Embassy—

the political interaction with the host country, such things as your 

colleague just brought out on the issue of corruption in the local 

government, their services to American citizens, some of which can 

and are audited, but many which you can’t attach a number. And 

you need people who have the experience of working overseas to 

really be able to drill down and get evaluations. 

They also do one other thing. You know, I hate to say it, but 

some of these ambassadors overseas think they are pretty hot stuff. 

And the best way to deal with them is to have another ambassador 

walk in and call him or her by her first name and just say, ‘‘I know 

where you are at. I did this, too. And guess what? You are wrong.’’

Ms. WILSON OF FLORIDA. So, Mr. Ambassador, you feel that with 

the exception of the one, all of the recommendations have been 

complete and that we agree with all of those except for the one that 

deals with Foreign Service officers performing inspections. 

Ambassador GEISEL. Yes, ma’am. That is correct. We have some 

differences with respect to how much and what resources should go 

into which function, but essentially the only major difference of 

opinion would be the use of Foreign Service officers, ma’am. 

Ms. WILSON OF FLORIDA. And you truly feel that their value is 

imperative to perform this particular duty. 

Ambassador GEISEL. Absolutely. And I would point out that similar IGs in other agencies do it the same way. There are many retired military officers who work for the DoD Inspector General as 

inspectors. 

53

Ms. WILSON OF FLORIDA. So this is not unprecedented. 

Ambassador GEISEL. Hardly. 

Ms. WILSON OF FLORIDA. Thank you. 

Chairman ROS-LEHTINEN. Good questions. Thank you, Ms. Wilson. 

Ms. Ellmers of North Carolina is recognized. 

Ms. ELLMERS. Thank you, Madam Chairman, and thank you to 

our guests today. 

Ambassador, I have a question for you. The special Inspector 

General for Iraq is mandated with the oversight responsibilities of 

the Iraqi Relief and Reconstruction Fund, and the oversight there. 

It is slated for termination in 2013. Meanwhile, the State Department will assume current DoD programs and responsibilities. 

The State Department has requested that DoD allow the State 

Department to continue the use of the logistics civil augmentation 

program while acknowledging that the Foreign Service does not 

have the sufficient experience and expertise to provide oversight. 

What impact will the SIGIR’s termination have on State IG’s operations in Iraq? 

Ambassador GEISEL. Well, I am glad you asked that, because the 

first thing to understand is that the special IG for Iraq works with 

DoD and USAID and State appropriations. The DoD and USAID 

appropriations of course are far larger than the State appropriations. 

We have been coordinating with SIGIR, and we feel if there is 

sufficient funding we can absolutely assume the remaining oversight of State Department functions that SIGIR presently has. 

Ms. ELLMERS. Okay. Well, thank you very much. I yield back the 

remainder of my time. 

Chairman ROS-LEHTINEN. Thank you very much. 

Ms. Buerkle. 

Ms. BUERKLE. Thank you, Madam Chairman, and thank you this 

morning for this timely hearing and for both of our guests to be 

here today. 

My first question has to do with the permanent—finally achieving and having a personal Inspector General in the office. And I 

would like to ask Mr. Geisel if you think that—if the credibility of 

the office is damaged by not having a permanent Inspector General. 

Ambassador GEISEL. I think the best way to answer that question is twofold. First, I don’t have any control over the nomination 

of a permanent IG. That has to come from the White House. But, 

yes, I would like very, very, very much like to see a permanent IG. 

And I think the committee has rightly centered its target on the 

fact that there is no permanent IG. 

I think our work speaks very well for itself. Since I came in in 

2008, as I gave you the statistics, we have greatly—we have trebled our investigations, which—and we have doubled the number 

of investigators we had. But, yes, when all is said and done, there 

should be a permanent IG. 

Ms. BUERKLE. And what advantages would there be if we had a 

permanent IG? 

Ambassador GEISEL. I think it is what you said. Look, I have to 

tell people to look at the Web site. I would love for a permanent 

54

IG to say, ‘‘Look at the Web site, and in accordance with the law, 

our statutory Office of Inspector General is headed by an independent official who was nominated by the President and confirmed by the Senate.’’

I would add one last thing and that is that I hope that this time, 

as my great mentor at OIG was the IG who was appointed by 

President Reagan, he was our first independent IG, Sherman 

Funk, he had previously been the IG at Commerce, I hope that 

whoever is nominated will not be someone who doesn’t have any 

idea how the Office of Inspector General works, I hope it is somebody who has tremendous experience in the oversight community. 

Ms. BUERKLE. Thank you. Ms. Franzel, on page 8 of your prepared testimony, you detail the length of service by some of the acting IGs, since January 2003. Could you explain the significance of 

having seven acting IGs during this period of time? 

Ms. FRANZEL. Well, again, I think it just makes it very difficult 

for continuity of oversight at the Department. Also, with so many 

acting IGs, these acting IGs have been generally appointed by the 

State Department. I mean, certainly not appointed by the President and confirmed by the Senate as envisioned by the IG Act. So 

there hasn’t been good continuity. 

Some people have stepped up to take on the job, which is definitely necessary. But when you start looking at a time span of 8 

years, and 5 of those 8 years have been without a permanent IG, 

and there have been so many different acting IGs, and we certainly 

did see some operational breakdowns in the State IG office back 

when we were reviewing the time period that we were reviewing, 

and when we put out our 2007 report. So it did have a very detrimental impact on the State IG office. 

I think that a lot of actions have been taken to help strengthen 

the office, but it is time to have a permanent IG appointed by the 

President and confirmed by the Senate. 

Ms. BUERKLE. Thank you, Madam Chairman. I yield back. 

Chairman ROS-LEHTINEN. Thank you. If I could take the remainder of your time, Ms. Buerkle, because I wanted to ask Ms. Franzel 

if she could comment on Ms. Wilson’s question, which the Ambassador answered, but we didn’t get to hear from your point of view 

if you shared the Ambassador’s enthusiasm for the role of Foreign 

Service officers on the IG inspection teams. 

Ms. FRANZEL. Certainly. I would be happy to comment on that. 

And certainly this has been emphasized over the years, that in 

order to do these inspections in an effective manner there is a need 

for ambassador-level management to go in and head up these inspections. And if that is the case, I think it is a good argument for 

moving some of the inspection function into management, and then 

leaving some of the evaluation of the effectiveness of inspections to 

the IG. So I think there is a very compelling argument here for 

splitting out the function. 

IG offices use inspections very effectively, but I think that this 

is a rather unique requirement in that Section 209 of the Foreign 

Service Act requires State IG to inspect every post every 5 years. 

That requirement gets waived every year in the appropriations act, 

but the IG office has to continue with this work just in case in a 

subsequent year it is not going to get waived. 

55

So it is a tremendous workload, first of all. It does not give the 

IG office the flexibility to really do risk assessments and do a higher level analysis of the effectiveness of inspections of posts. I do 

think inspections of these posts is a very important function, and 

it probably should be headed up with management officials, but 

then that really begs the question of, where should that function 

be? 

Should it be in an IG office where independence is expected and 

demanded? Or should part of that be handed over to management 

to do their own self-inspections and self-assessments? It is a very 

common function for management to review the effectiveness of its 

own policies and inspections of policies and procedures through an 

internal inspection shop. And then, the IG could review that shop 

and the effectiveness of that as well as make recommendations 

going forward. 

So I accept Ambassador Geisel’s assertion that these folks are absolutely necessary for the leadership. I do, however, believe there 

are such significance structural threats with doing that in an IG 

office that it is probably also time to take a look at how this is 

functioning, and maybe relook at that requirement in Section 209 

of the Foreign Service Act. 

Chairman ROS-LEHTINEN. Yes, I agree with that. Thank you. 

Mr. Connolly of Virginia is recognized. 

Mr. CONNOLLY. Thank you, Madam Chairman. And welcome to 

the panel. A couple of months ago on a party line vote Congress—

the House of Representatives passed H.R. 1, the Continuing Resolution for the balance of the fiscal year, which I personally believe 

is one of the most radical documents passed by Congress in living 

memory. I think we considered almost 600 amendments, and we 

defunded everything from Planned Parenthood to cutting Head 

Start, one of the most effective preschool programs in the country, 

Public Broadcasting, on and on. 

But one of the cuts involved the function—150 function of the 

government, including I believe, Ambassador Geisel, the OIG office. 

Have you looked at the potential impact of those cuts if in fact they 

became law, and what they would do to your ability to function and 

carry out your mission? 

Ambassador GEISEL. Yes, sir, we have. Frankly, in the very short 

run, we could carry on. But overall we would have to start cutting 

back on our oversight, and, fair enough, we can do that, but of 

course OIGs usually pay for themselves quite a few times over if 

they are any good. That is what oversight organizations are supposed to do. 

So in the end, I think by cutting back on oversight, it might cost 

more money than was saved by the number of people who were cut. 

Mr. CONNOLLY. Well, it does seem a passingly odd thing. If we 

say we are concerned about waste, fraud, and abuse in the government, in the public sector, we would cut the very function that is 

charged with ferreting out what——

Chairman ROS-LEHTINEN. If the gentleman would yield. You do 

understand the contention of the chair that I believe that the OIG 

has not been doing a good job. So to throw more money at that office, in the way that it is currently structured, does not resolve any 

issues whatsoever. 

56

The gentleman can continue to make his point, but my point is 

they are not doing the job they are supposed to do. But the gentleman can continue. 

Mr. CONNOLLY. As the chairman knows, I respect her enormously, but I respectfully disagree with her on this matter. 

Ms. Franzel, you were shaking your head in the affirmative. 

Would you care to comment? 

Ms. FRANZEL. Yes, and I am going to comment on oversight activities in general. It is very dangerous to start cutting back on 

oversight activities—GAO, IGs, and others—simply because our 

function is to help identify cost savings for the government, assist 

the Congress, and report on fraud, waste, and abuse. 

Last year, for every dollar spent on GAO expenses, we brought 

back $87, so we saved $87 for every $1 we spent. I don’t think you 

want to start cutting back on those types of returns. And to the extent that we can make oversight in the IG community and other 

offices more effective, those types of numbers get even greater. So 

it becomes very difficult, and the effects are seen longer term because, yes, we can all survive in the short term, but when you start 

cutting back on oversight activities today, problems can erupt later. 

Mr. CONNOLLY. Well, does GAO believe that OIG is doing a bad 

job? 

Ms. FRANZEL. Well, as we discussed throughout the hearing, 

there have been some very difficult issues and problems at OIG, 

and we reported on those in 2007. There have been some positive 

activities to strengthen the audit function, which we see as positive 

and we are hoping for continual assessments to measure the effectiveness of those actions. They are not there yet, but we see some 

increases in audit oversight. 

There still remains a problem with trying to figure out the proper mix of resources dedicated to inspections. The use of ambassador-level officials to lead inspections seems to indicate that perhaps this is a function that is a management function rather than 

an IG function, and that is something that we need to sort out. And 

it just doesn’t seem properly placed in the IG office, because of the 

expectation for independence. 

Mr. CONNOLLY. Real quickly, you gave us a metric that for every 

dollar we invest in GAO, we reap a return of $87 saved in some 

fashion. What is the comparable metric, or do you know it, for 

OIG? 

Ambassador GEISEL. I believe the number that we use is $14, but 

I am very, very reluctant to throw out figures. This is one of the 

problems I have with the oversight community is sometimes people 

claim savings that are not really savings, or that could be in theory 

but that don’t pan out in reality. But I——

Mr. CONNOLLY. Well, Mr. Ambassador, my time is up. I know the 

chairman will indulge me for 5 more seconds, because of her—I 

have to say to you, if you are that reluctant, then you are going 

to face a 17 percent budget cut. You might want to get a lot less 

reluctant. 

My time is up. Thank you, Madam Chairman. 

Chairman ROS-LEHTINEN. I took up your time, Mr. Connolly. So 

if you would like more time——

57

Mr. CONNOLLY. No, I think we have had our say. Thank you, 

Madam Chairman. 

Chairman ROS-LEHTINEN. Okay. Thank you so much. 

Mr. Sherman of California. 

Mr. SHERMAN. Thank you. USAID had some reluctance to—the 

way I describe it—put the flag on the bag. That is to say, make 

it extremely clear to the recipients of U.S. aid that it was American 

aid. They wanted to make sure that they would feed people, even 

those who wouldn’t want to eat the food if it was ours, or those who 

wouldn’t want to distribute it if it was ours. 

How good a job are we doing making sure that everyone who distributes or receives U.S. aid knows that it is aid from the American 

people? Ambassador? 

Ambassador GEISEL. I would have to defer to the USAID IG, although I absolutely share your sentiments of course, sir. 

Mr. SHERMAN. Okay. Perhaps we could arrange to put that question to them, because there was such bureaucratic reluctance. How 

is the U.S. Government doing on following Buy America principles? 

Ambassador GEISEL. From the point of view of the State Department, very well. And I note that especially for the large contracts 

it is good. There are of course many circumstances, especially in 

combat zones, where we can’t always buy American, but, yes, I——

Mr. SHERMAN. Buy American principles are not Buy America, 

you know, straitjackets. I thank you for your reassurance on that. 

The next issue relates to those who grant visas abroad. This is 

absolutely unchecked ad hoc power without any accountability. And 

I would ask you, what are the statistics on, when they let somebody in the United States, does that person leave in accordance 

with their visas? But I know you can’t give me those statistics because the bureaucracy hates the concept of ever generating those 

statistics. 

So when you leave Disneyland, they know you have left. But 

when you leave the United States, somehow we can’t figure out a 

way to swipe your barcode. Is there any system by which visa officers are evaluated in terms of, are they being too tough? Are they 

being reasonable? Do most of the folks return according to their 

terms of your visa? Is there any process for evaluating those who 

grant visas? 

Ambassador GEISEL. Yes, there is. But as you pointed out, it is 

not adequate, because we are dependent on statistics generated by 

the Department of Homeland Security. 

Mr. SHERMAN. Or in this case not generated by the Department 

of Homeland Security. 

Ambassador GEISEL. I can’t comment. I can smile. 

Mr. SHERMAN. Thank you for your smile, which will be part of 

the record, and I yield back. [Laughter.] 

Chairman ROS-LEHTINEN. Let the record note that the gentleman 

had smiled. 

Mr. Rivera of Florida. 

Mr. RIVERA. Thank you very much, Madam Chairman. Thank 

you for being here today. 

I will start with Ms. Franzel, and I would like to ask how the 

GAO would characterize the IG’s audit coverage of high risk oversight areas. 

58

Ms. FRANZEL. In our 2007 review, we found some significant 

gaps, which concerned us, frankly. There were a lot of very important areas of State Department that were not being covered by audits of the State IG. We made a recommendation that they reassess 

the mix of audits and inspections. 

At the time, State Department IG disagreed with that recommendation, but since then some steps have been taken to increase the audit practice. We are still looking at a fairly light mix 

of audits to inspections, but it has improved. In 2009 and 2010, we 

were still seeing gaps in audit coverage in areas like coordinating 

foreign assistance, public diplomacy, and human resources. 

Now, in the Fiscal Year 2011 audit plan, we are seeing some audits come online in these areas. So I think this is an area to watch. 

There is still a tremendous amount of inspections going on. Part of 

it is because of the requirement that foreign posts be inspected 

every 5 years, but that requirement gets waived every year. 

But there still is a tremendous reliance on inspections in the Department, and inspections in and of themselves are not a bad 

thing. In fact, they are a very useful tool that IGs can use to quickly go out and survey a situation. But they should not be used to 

the exclusion of audits. 

Mr. RIVERA. Thank you very much. And a question to Ambassador Geisel, according to the project on government oversight, Ambassador, you recused yourself from an IG investigation of a contract award involving Undersecretary of State for Management 

Patrick Kennedy. Your recusal was apparently due to a perceived 

conflict of interest between yourself and Mr. Kennedy. What is the 

extent of your relationship with Undersecretary Kennedy that you 

elected to recuse yourself from this investigation? 

Ambassador GEISEL. I recused myself for approximately 3 weeks 

in what I would describe as an abundance of caution. I was very 

new to the job, and I was very keen to see—to have it seen that 

we were very independent. 

The fact is, it is the first time in my life that I have been criticized for recusing myself, which I always thought was doing the 

right thing. Be that as it may, I have known Mr. Kennedy for a 

very long time. I can’t say that we were—we are friends. In this 

30-some-odd years that I knew him, he has never been in my home, 

and I was only in his home once for the wake when his father 

passed away. But I was being very, very cautious. But I can’t say 

we were friends. 

And I think our work speaks for itself. Before I came, there were 

zero—we are talking about the heavy stuff now, because this was 

an investigation that I recused myself for 3 weeks from. 

We have vastly—we have trebled the number of investigations 

since I came on board. The number of subpoenas we have issued 

went from zero before I was there to 25. So, yes, I am glad you 

asked the question, but I feel very confident that I did the right 

thing, and that my recusal for that limited period of time was done 

in an abundance of caution to ensure our good name. 

Mr. RIVERA. And making sure, in terms of following up on the 

issue of abundance of caution, does the relationship prevent you 

from carrying out duties going forward? 

59

Ambassador GEISEL. None whatsoever, and, again, I would refer 

you to all of the reports that we submit to the committee. We try 

to be fair, and I like to say that I am the Department’s best friend, 

because I tell the Department what it needs to hear, not what it 

wants to hear. 

And so the fact is we have had no problem at all. I rarely see 

Mr. Kennedy, although when I need to speak to him I do. 

Mr. RIVERA. Thank you. 

Thank you, Madam Chair. 

Chairman ROS-LEHTINEN. Thank you so much. I thank the witnesses and the members. In closing, I would like to request that 

GAO provide the committee with the possible legislative ideas for 

addressing the issues raised by your testimony as Ms. Franzel 

mentioned earlier. 

Mr. ROHRABACHER. Madam Chairman? 

Chairman ROS-LEHTINEN. We would appreciate that. Mr. Rohrabacher. 

Mr. ROHRABACHER. Would you indulge me one more question? 

Chairman ROS-LEHTINEN. I love to indulge you. 

Mr. ROHRABACHER. The——

Chairman ROS-LEHTINEN. Indulge others as well, if they would 

like. 

Mr. ROHRABACHER. Quite often we have these construction programs and chaotic situations and such, and we are—and our people 

are instructed to hire locals, as many locals as you can, rather than 

having American companies come in and actually do the work 

themselves. 

Now, the Chinese have a totally different approach to providing 

someone some assistance. They bring their own people in and build 

the bridge themselves, and they—or the building, and, thus, they 

are—the Chinese are accountable all the way to the finished product, where we of course contract with local people and try to give 

people local jobs. 

What is your opinion on that in terms of the—one does lend itself 

to more corruption—our system—but maybe helps the local economy. How do we judge this? 

Ambassador GEISEL. I am the right person to ask, because I negotiated the conditions of construction agreement between us and 

China, where we built our Embassy in China and they built their 

new Embassy in Washington. The answer is, if you give us enough 

bucks, we absolutely and positively should do it the way the Chinese do it. 

But we are talking about huge amounts of money if it is going 

to be all Americans. But the reason that it should be all Americans, 

if we can afford it, is we will have much better security, which is 

why the Chinese do what they do. 

Mr. ROHRABACHER. Right. And less corruption. 

Ambassador GEISEL. Less corruption. But you have got to give us 

the bucks. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman. 

Chairman ROS-LEHTINEN. Thank you. Would any member like to 

be recognized before I recognize Mr. Chabot, who is our last member? 

[No response.] 

60

Thank you. Mr. Chabot is recognized. 

Mr. CHABOT. Thank you. I look forward to reading the testimony 

of the witnesses. I appreciate it very much. Thank you for holding 

this hearing. I had about eight things I just got finished doing and 

wanted to make the hearing here, but thank you very much for 

holding this, and I definitely will review your testimony. 

Chairman ROS-LEHTINEN. Thank you very much, and I thank the 

members for coming. I thank the panelists and the audience as 

well. And the committee is now adjourned. 

[Whereupon, at 11:29 a.m., the committee was adjourned.] 

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