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ASSESSING THE STATE DEPARTMENT INSPECTOR

GENERAL

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

NOVEMBER 14, 2007

Serial No. 110–79

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on November 14, 2007 ...................................................................... 1

Statement of:

Krongard, Howard J., Inspector General, U.S. Department of State .......... 138

Letters, statements, etc., submitted for the record by:

Krongard, Howard J., Inspector General, U.S. Department of State, prepared statement of ........................................................................................ 141

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut:

Prepared statement of ............................................................................... 136

Staff report ................................................................................................. 17

Waxman, Chairman Henry A., a Representative in Congress from the

State of California, prepared statement of ................................................. 5

(1)

ASSESSING THE STATE DEPARTMENT

INSPECTOR GENERAL

WEDNESDAY, NOVEMBER 14, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10:15 a.m., in room

2154, Rayburn House Office Building, Hon. Henry A. Waxman

(chairman of the committee) presiding.

Present: Representatives Waxman, Cummings, Watson, Braley,

Norton, Lynch, Higgins, Yarmuth, McCollum, Hodes, Sarbanes,

Welch, Shays, Platts, Cannon, Issa, McHenry, and Foxx.

Staff present: Phil Schiliro, chief of staff; Phil Barnett, staff director; Kristin Amerling, chief counsel; David Rapallo, chief investigative counsel; Theodore Chuang, deputy chief investigative counsel; David Leviss, senior investigative counsel; Margaret Daum and

Steve Glickman, counsels; Christopher Davis, professional staff

member; Earley Green, chief clerk; Teresa Coufal, assistant clerk;

Caren Auchman, press assistant; Ella Hoffman, press agent;

Leneal Scott, information systems manager; Kerry Gutknecht and

William Ragland, staff assistants; David Marin, minority staff director; Larry Halloran, minority deputy staff director; Jennifer

Safavian, minority chief counsel for oversight and investigations;

Keith Ausbrook, minority general counsel; John Brosnan, minority

senior procurement counsel; Steve Castor, A. Brooke Bennett, and

Emile Monette, minority counsels; Nick Palarino, minority senior

investigator and policy advisor; Patrick Lyden, minority parliamentarian and member services coordinator; Brian McNicoll, minority

communications director; Benjamin Chance, minority clerk; and Ali

Ahmad, minority deputy press secretary.

Chairman WAXMAN. The meeting of the committee will come to

order.

This year, our committee has given a special focus to two areas:

finding waste, fraud, and abuse, and examining how to make Government effective again. Today’s hearing on the performance of

Howard Krongard, the State Department’s Inspector General,

bridges both of these fundamental issues.

Just as Congress tries to do its job of oversight, we set up inspectors general for many of the departments and agencies to do the

job of trying to stop abuse, waste and fraud of taxpayers’ dollars,

and to make sure that the Government is working more effectively.

When we look at the State Department actions in Iraq, we look

at the reason for this whole hearing. As we examine the construction of the new Baghdad embassy, the oversight of Blackwater, and

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corruption in the Iraqi government, seven current and former officials in the Inspector General’s Office expressed concerns about Mr.

Krongard’s own oversight of the State Department.

These officials, and others who spoke with the committee during

our investigation, raised fundamental questions about Mr.

Krongard’s judgment, actions, and effectiveness. They described

their serious concern about his inadequate oversight of the construction of the Baghdad embassy, his failure to assist the Justice

Department’s investigation of Blackwater for arms smuggling, his

refusal to pursue charges of procurement fraud implicating

DynCorp, his intervention in the investigation of Kenneth Tomlinson, and his lack of independence in auditing the State Department’s financial statements.

The committee was told that due to Mr. Krongard’s abusive management style, the Office of the Inspector General is bleeding people right and left. What these officials told the committee is summarized in a staff report I am releasing today, and, without objection, it will be made part of the official record.

One of Mr. Krongard’s key responsibilities is providing oversight

for the State Department’s construction of the new Baghdad embassy. In a previous hearing, we learned that the project will cost

$144 million more than projected, is far behind schedule, and has

potentially life-threatening construction deficiencies. There are also

allegations that the building’s contractor, First Kuwaiti, was involved in labor trafficking. When Mr. Krongard heard that his staff

might investigate this issue, he sent them an e-mail that said, as

one official described it, ‘‘Cease and desist all work. I am taking

care of this.’’

Mr. Krongard conducted his own personal and unprecedented investigation of this potential scandal. According to Mr. Krongard, he

interviewed six employees who had been handpicked by First Kuwaiti. He questioned them without a translator present and took

virtually no notes. Mr. Krongard then concluded that there was no

evidence that First Kuwaiti had committed human rights violations.

The reaction of Mr. Krongard’s senior staff to this investigation

is remarkable. Mr. Krongard’s deputy said the effort was ‘‘unorthodox, didn’t comply with any standards, and was the furthest thing

from an investigation.’’ Another official warned that Mr. Krongard’s

investigation ran the risk of inadvertently ruining a future prosecution.

The former head of Mr. Krongard’s audit division told us that the

report ‘‘would never pass muster in my organization and in any IG

investigation that I have ever worked in.’’ She also said, ‘‘It is an

embarrassment to the community.’’ A special agent was even more

blunt, calling Mr. Krongard’s report ‘‘an affront to our profession.’’

Given the strong condemnations from the professional staff in

the Inspector General’s Office, this incident alone would justify today’s hearing. Unfortunately, it is not an isolated incident. In fact,

I don’t believe it is even the most serious allegation raised against

Mr. Krongard. In the course of our investigation, Mr. Krongard’s

investigators told us he placed First Kuwaiti off limits to investigation. They said he refused to pursue credible complaints about

fraud, waste, and abuse in the embassy project, and rejected proVerDate 11-MAY-2000 14:37 Nov 03, 2008 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\44738.TXT KATIE PsN: KATIE
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posals to audit the construction process during construction so that

problems could be addressed as they happened.

When the Justice Department wanted to investigate these matters, it asked Mr. Krongard for cooperation. He refused repeatedly.

In one instance, Mr. Krongard e-mailed his staff ‘‘stand down on

this and do not assist.’’ In one mind-boggling sequence, Mr.

Krongard, against the advice of his most senior staff, insisted on

meeting ‘‘a person of interest’’ in an investigation involving the embassy without assistance of counsel or investigators. Three days

after meeting with Mr. Krongard, the potential suspect canceled

the scheduled meeting with audit officials and left the United

States.

Shortly after that, Mr. Krongard insisted on meeting with another potential suspect during a trip to Iraq. This time, his senior

staff not only advised him to cancel the meeting, but asked the

Justice Department to instruct Mr. Krongard not to conduct haphazard witness interviews. Despite the additional warning from the

Justice Department, Mr. Krongard met with the individual. When

he returned to Washington, he wanted to debrief his investigators

on his meeting. The agents were worried that the information

might taint them and ruin any credible investigation. They specifically asked Mr. Krongard not to share his impressions with them,

but he ignored their request and sent one of the agents an e-mail

summarizing his conversation with the potential suspect.

Well, none of these actions make any sense. When the Justice

Department asked for cooperation, Mr. Krongard refused. When

they warned him that his freelance investigations would jeopardize

potential prosecutions, he ignored that. When his own staff tried to

advise him on proper investigative procedures, he ignored them.

If the reports the committee has received from the Justice Department and the Inspector General’s senior staff are accurate, Mr.

Krongard has acted with reckless incompetence.

And the questions about Mr. Krongard’s performance aren’t limited to the embassy in Baghdad. The Justice Department sought

Mr. Krongard’s cooperation as it investigated reports that a large

private security contractor was smuggling weapons into Iraq. Instead of cooperating, Mr. Krongard apparently created a series of

obstacles to the inquiry. One of Mr. Krongard’s aides told our committee: ‘‘There was absolutely no justifiable investigative management or any kind of reason for us to stop that investigation.’’

The Justice Department shares that view and told the committee: ‘‘At this juncture, we cannot determine all of the ramifications

of the IG’s conduct, but some of his actions have certainly impacted

the investigation. For reasons that remain unclear, the line IG

agents have been forced to funnel requests within their own agency

through a congressional and public relations official. This is not the

usual practice. The Inspector General also issued a statement,

without advanced cooperation with Department attorneys, confirming the existence of this investigation, which is inconsistent with

our law enforcement interests.’’ That was from what the Justice

Department told our committee.

Well, the Justice Department has advised us that ‘‘Mr.

Krongard’s action resulted in a cumbersome and time-consuming

investigative process and added multiple layers to our investigative

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efforts.’’ As of this last Friday, the Justice Department still has not

received the State Department materials it has requested.

As Mr. Krongard revealed through some ill-advised comments,

the company implicated in the weapon smuggling is Blackwater.

We have now learned that Mr. Krongard’s brother, Buzzy

Krongard, serves on Blackwater’s advisory board. We have also

learned that Mr. Krongard concealed this apparent conflict of interest from his own deputy, even as he remained actively involved in

monitoring the Justice Department’s criminal investigation.

In the course of today’s hearing, we will also examine allegations

about Mr. Krongard’s actions regarding investigations into

DynCorp and its subcontracts, his decision to allow the State Department to replace unfavorable financial audits with favorable

ones, his contact with Kenneth Tomlinson to alert him to a possible

investigation of wrongdoing, and his management approach to the

Inspector General’s Office.

It is a staggering list of allegations from Mr. Krongard’s own

staff. In committee interviews and depositions, the Deputy Inspector General, the Assistant Inspector General for Investigations, the

Assistant Inspector General for Audits, their deputies, and the

counsel to the Inspector General, along with many others, all criticize Mr. Krongard or his performance. And a long list of top officials, including an Assistant Inspector General for Investigations,

a Deputy Assistant Inspector General for Investigations, a Deputy

Assistant Inspector General for Audits, the head of the Office for

Information Technology Valuations, and a counsel to the Inspector

General have all resigned since Mr. Krongard became Inspector

General in 2005. As one current senior official told us, ‘‘Joining Mr.

Krongard’s office was the worst mistake of my life.’’

Now, I know that the Republicans on this committee take a different view on this matter. Today’s hearing and Mr. Krongard’s

testimony will help us sort through the facts. I think we all understand the preeminent role the State Department now has in Iraq.

The Department has to be operating on all cylinders if we have any

hope of achieving real and lasting political reconciliation in Iraq.

Countless lives and billions of dollars are at stake. There is no

margin for error. That underscores why Mr. Krongard’s office is so

essential, why it needs to meet the highest standards and why this

hearing is so important.

I want to now recognize Mr. Shays, who is sitting in for Mr. Tom

Davis, the ranking member of the committee, and is acting on his

behalf, and I want to yield him time for his statement.

[The prepared statement of Chairman Henry A. Waxman follows:]

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Mr. SHAYS. Thank you, Mr. Chairman.

Mr. Krongard, welcome to Congress. I just want to say, before I

read my statement, you have been trashed by this committee. They

sent a 14 page letter to you and released it to the press. All were

accusations and allegations, and now you have a time to respond.

Regretfully, there aren’t as many Members on our side of the aisle

here yet, but I am sure this committee will be fair to you, and I

want you to take every one of those allegations and deal with them

as you will.

Here we go again: oversight by accusation and personal attack.

Today, the committee is not assessing the State Department Inspector General, as advertised. We will not be conducting an evidence-based appraisal of Inspector General [IG], Howard Krongard

or the office he runs. Instead, we will ask to focus on a litany of

salacious allegations in the futile hope loud repetition will do what

exhaustive investigation so far has not: confer legitimacy on

unproven conclusions. It is another sad example of the majority’s

high-profile, low-proof approach to oversight that yields far more

rancor than reform.

This so-called investigation also confirms an unfortunate penchant by the committee to leap to politically convenient conclusions

before looking carefully at witnesses who happen to be saying what

the majority wants to hear. One whistle-blower at a previous hearing turned out to have a past so checkered his motives and veracity

were highly suspect. But easily discoverable evidence undermining

his credibility was overlooked in the committee’s unseemly haste to

advance its anti-administration narrative.

Here, again, information from several whistle-blowers forms the

basis of the chairman’s charges that the State IG interfered with

ongoing investigations out of political loyalty to the State Department and the White House, censored damaging inspection and

audit reports, and prevented investigations into allegations of

wrongdoing in Iraq and Afghanistan.

But in responding to questions on the record after those allegations had been made public, not one of the so-called whistle-blowers

had any direct evidence to support claims of political manipulation.

Nor did they provide information to substantiate the alleged dereliction of duty by the IG. They disagreed with the IG’s judgment,

but that alone does not make those judgments wrong or corrupt.

One whistle-blower said his conclusions about Mr. Krongard’s political leanings was nothing more than a hunch.

It is telling none of those whistle-blowers will testify today. Their

absence speaks volumes about the lack of substance behind this investigation, but their response to specific questions about the chairman’s charges are contained in a Republican staff report being released today. That report attempts to bring some balance to this

discussion of how the State Department Office of Inspector General

operates under Mr. Krongard. I ask that be made part of the hearing record today.

Chairman WAXMAN. Without objection, that will be the order.

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Mr. SHAYS. That more balanced view has to include the fact the

State Department IG has been institutionally weak and conflicted

for many years due to limited funding, the demands of a mandatory global embassy inspection program, and a prolonged turf

struggle with State diplomatic security services over fraud enforcement.

Add to that dysfunctional mix Krongard’s mercurial, some might

even say abrasive, management style, and the stage was set for

complaints by disgruntled investigators to be amplified and exploited as political fodder.

When you get right down to it, Mr. Krongard’s personal style

seems to be the only issue here today. But earlier this year the

Government Accountability Office recommended a broad reassessment of State IG staffing, greater use of audits over inspections,

and other steps to protect the IG’s essential independence. Those

should be the questions pursued by this committee, questions about

capacity and performance, not water cooler gossip and personality

conflicts.

No inspector general should have his or her basic integrity and

critical independence undermined by political second-guessing here

in this Congress or in the executive branch. I hope we can move

beyond these shallow, drive-by assaults on political targets and

focus this committee’s considerable resources and reputation on addressing the deeper challenges to effective and efficient Government.

[The prepared statement of Hon. Christopher Shays follows:]

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Chairman WAXMAN. Thank you, Mr. Shays.

Without objection, all Members will be permitted to enter opening statements into the record.

We are going to hear from Mr. Krongard. I want to ask unanimous consent that the questioning be started off with 10 minutes

controlled by the chairman and 10 minutes controlled by Mr.

Shays.

Mr. Krongard, we want to welcome you to our hearing today. It

is the practice of this committee that all witnesses that testify do

so under oath, so I would like to ask you if you would rise and

please raise your hands.

[Witness sworn.]

Chairman WAXMAN. The record will indicate that the witness answered in the affirmative.

You have given us a prepared statement, and that will be made

part of the record in full. We would like to ask you, if you would,

to give us your oral presentation. We will have a clock that will indicate when 5 minutes are up. There will be a yellow light indicating the last minute and then a red when 5 minutes is up, but I

will not enforce the 5-minute rule. We do want to hear from you.

We would like to ask you to be mindful of the time constraints so

all Members will have an opportunity for questions.

Mr. SHAYS. Mr. Chairman.

Chairman WAXMAN. Yes, Mr. Shays.

Mr. SHAYS. Given that he is the only witness and you have a litany of charges, I do hope you will be very generous in allowing him

to make his comments.

Chairman WAXMAN. I think that makes sense, and we will certainly do that.

Mr. SHAYS. Thank you.

Chairman WAXMAN. Mr. Krongard.

STATEMENT OF HOWARD J. KRONGARD, INSPECTOR

GENERAL, U.S. DEPARTMENT OF STATE

Mr. KRONGARD. I had planned to stay pretty close to the 5-minutes, so I will not go much over it, but thank you, Chairman Waxman, Congressman Shays, members of the committee.

I come before you today voluntarily and anxious to respond to inaccurate allegations regarding my performance as Inspector General of the Department of State.

By way of background, prior to May 2005, I had never been involved in Government service. I was a lawyer for 40 years in the

private sector, with 23 years experience as counsel for Big Eight

and Big Six international accounting firms, where I analyzed and

defended many audits. Based on my experience, I was asked, in

2004, without seeking it or even being aware of it, to take on the

job of Inspector General at the State Department. That position

had been vacant for some time.

At 65 years of age, I came to office with no aspiration for any

further position and with no agenda other than to do the best job

I could of carrying out the specific mission prescribed for me by

senior management at the State Department at that time, namely,

to restore the capabilities of an IG office that had fallen into disrepair and was known to have dissension and rivalries, and to

139

make it more efficient, more professional, and more relevant to a

dynamic post-9/11 world environment.

In view of the allegations that I have politicized the office, have

acted from partisan political ties, and believe my foremost mission

is to support the Bush administration, I should point out that I

have never had any political ties whatsoever. I have never been involved in any political party activities; I have never worked in a

political campaign; I have never been a major contributor to any

one party; and I do not recall even making a political contribution

since the year 2000. When I was considered for and offered the IG

job, I had never met or spoken to the President or any other person

in the White House. And even today, after 21⁄2 years in office, with

the exception of a person I had known from working for a volunteer

organization long before coming to Washington, I still have never

met or spoken with the President or any other person in the White

House.

Mr. Chairman, at the time I was awaiting the confirmation process and had the natural apprehension as to whether I should take

on a job I knew very little about, I read your persuasive report on

the politicization of the inspectors general and I thought I was very

much the kind of person you were looking for.

In the course of carrying out my mission to restore the capabilities of OIG and to make it more efficient, professional, and relevant, I sometimes clashed with a minority of people in OIG who

were resistant to change, who had grown comfortable with a

leaderless organization, or who may not have had the high level of

skills or commitment needed in today’s changing environment.

These clashes were unfortunate, but I need to emphasize that I

never allowed them to affect my judgment as to which jobs were

to be undertaken or where resources should be allocated.

A recurring theme in the allegations leveled at me is that I have

impeded investigations that agents in OIG wanted to conduct. I

want to say in the strongest terms that I have never impeded any

investigation. Without getting into the specifics of any particular

investigation, suffice it to say there are many times when experience and capabilities, benefits to be achieved, likelihood of success,

availability of other investigative bodies to do the same work, available resources, both financial and human, and possibly conflicting

parallel proceedings have to be weighed in determining whether a

particular investigation proposed by someone in INV or OIG can or

should be undertaken and, if so, when. I have tried to make these

determinations as best I can, with the objective of making OIG as

effective, efficient, and relevant to the current world as I can. Expecting to be informed of investigations undertaken by OIG, asking

for useful work plans to support them, and taking care to avoid

conflicts and coordinate efforts with other work being done by others, both inside and outside OIG, does not constitute obstruction.

With respect to the allegations of trafficking in persons at the

new embassy compound, I did what I thought was best in those circumstances. I went to the Multi-National Force-Iraq Inspector General, the recognized leader in the field of inspecting camps in Iraq,

and I urged them to add the new embassy compound construction

worker camp to the many worker and guard camps they were already inspecting. The work MNF-I IG did was significantly more

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extensive than my own, but it corroborated my preliminary observations. I believed then, and I believe now, that MNF-I IG was objective, experienced, and the most efficient and effective way for

OIG to test the credibility of the many allegations to determine

what, if any, further work was appropriate. MNF-I IG has taken

great offense at the mischaracterization of their work, and I share

their feelings.

In closing, let me share with you what I wrote to every member

of OIG on May 2, 2007, the second anniversary of my swearing in:

‘‘As I begin my third year, I urge each of you to reflect on what

we have accomplished under very difficult circumstances, to take

pride in your work and view each product you participate in as

going out with your name on it, and to give me your support as

we go forward.

I also ask you, frankly, to make an effort to reduce some of the

static that interferes with the harmony we would like to achieve.

We have enough challenges to focus on without spending energy in

rivalries between functional offices, the front office and staff, and

Foreign Service and Civil Service, or in rumoring, back-biting, and

complaining. Obviously, some of that is unavoidable human nature,

especially in Government and in any limited resource environment.

Nevertheless, let’s do our best to keep this to a minimum, to recognize things will never be perfect, to understand that all decisions

cannot please all people, and, most of all, to keep our eye on the

ball that keeps us all here: to make OIG, the State Department,

BBG, and the Federal Government better places, more efficient organizations, and more effective in accomplishing their objectives.’’

Thank you, sir, and I would be pleased now to respond to any

questions the committee may have.

[The prepared statement of Mr. Krongard follows:]

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Chairman WAXMAN. Thank you.

Mr. KRONGARD. Sir, I would make a comment, if I could, because

one thing just came up that really does bother me, and that was

an allegation concerning my brother. I can tell you very frankly I

am not aware of any financial interest or position he has with respect to Blackwater. It couldn’t possibly have affected anything I

have done because I don’t believe it. And when these ugly rumors

started recently, I specifically asked him. I do not believe it is true

that he is a member of the advisory board that you stated, and that

is something I think I need to say.

Chairman WAXMAN. OK. Thanks.

Well, Mr. Krongard, I gave an opening statement and in it I

summarized a number of significant issues that I wanted to discuss

this morning. But I want to start by asking you about new information we have received regarding a series of conflicts you have

had with the Department of Justice.

On January 18, 2007, the Justice Department requested assistance from your office investigating allegations of construction problems at the new Baghdad embassy. According to John DeDona, the

head of your investigations division, the Justice Department was

seeking assistance in obtaining contract files, contract records, payment invoices, and inspection reports. But on January 23rd, you directed your investigators to stand down on this and not assist.

The committee asked the Justice Department about this and

they told us they called you personally to ask for assistance in locating contract documents and locating and interviewing witnesses.

The Justice Department informed the committee that you gave

them different reasons for your refusal. First they said you claimed

there were other pending matters involving First Kuwaiti. What

other matters involving First Kuwaiti were you referring to?

Mr. KRONGARD. Sir, at that time, both myself and MNF-I IG had

conducted our onsite work and were in the course of preparing reports, and I told the representative of the Justice Department of

that work and I did tell him that I obviously couldn’t control the

timing of his work, but I said that if that could wait until those

two pieces of work were completed and the reports issued, it would

preserve the independence of those without possibly suggesting

that either MNF-I IG or myself was in any way affected by——

Chairman WAXMAN. Those reports were about labor trafficking.

Mr. KRONGARD. And that is what——

Chairman WAXMAN. What the Justice Department asked you

about was information about contracting, possible criminal actions

with regard to the contracting itself.

Mr. KRONGARD. Sir, I differ with that. The scope of work that the

person from the Justice Department called me about—and I believe

some of this is under seal, so I am a little bit—it is hard for me

to express other than the scope was far broader than what you

have just said and did include the trafficking issues.

Chairman WAXMAN. You are talking about your investigation is

under seal or the Justice Department?

Mr. KRONGARD. No, his, the Justice Department’s.

Chairman WAXMAN. OK, but you told the Justice Department

you couldn’t give them the contracting information and cooperate

with their investigation on contracting abuses that might involve

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criminal activities because you were doing your own investigation.

Your own investigation was on labor trafficking and, therefore, you

didn’t want to give them the information on the other issue until

you completed your investigation. Is that your position?

Mr. KRONGARD. No, sir, it is not. There were actually three

things that the Justice Department was talking about. They were

talking about conducting interviews, having representatives from

my staff conduct interviews for or with them; they were talking

about obtaining documents from the State Department; and they

were talking about these issues regarding the conduct of the workers at the new embassy compound, which, by the way, was the essence of what started their work. Their work expanded from that.

With respect to——

Chairman WAXMAN. Let me read to you something that came out

in our report that I want you to react to. One internal e-mail sent

in January 2007 reported that the Justice Department was seeking

help from the Inspector General in investigating billing for work

done improperly or incompletely, theft of materials and labor, and

alleged corruption of a State Department official overseeing contract performance. Now, that should have been a high priority.

They are looking at criminal actions, they want your help, and you

are telling them, no, I can’t help you, I have other things going on.

According to the committee’s investigation, you had already refused to allow your investigators to open a case. There were no audits underway and we could identify no other investigation at the

time this Justice Department request was made. The Justice Department also informed the committee that you said this was not

the sort of thing the Office of Inspector General did, and it would

be a conflict for the OIG to be investigating those complaints and

conducting a law enforcement investigation.

Is it your position that there is some provision of law that prohibits your office from assisting the Justice Department?

Mr. KRONGARD. Sir, you have made a lot of statements. I wonder

if I could—I was trying to write down ones. Can I comment as I

have them?

Chairman WAXMAN. Well, my question to you that I want you to

answer is do you believe there is some prohibition in law from your

cooperating with the Justice Department and helping them when

they are asking for your assistance?

Mr. KRONGARD. Absolutely not. In fact, I try and cooperate with

the Justice Department as much as I can, and I applaud their efforts. What happened here, as soon as we were able to find out

what it was they were doing and segment what we could and

couldn’t assist them with because of resource and other qualifications, I did do exactly what you have just asked, and I gave them

the Deputy Assistant Inspector General for Audits, together with

another person, that were given to them to work with them to accomplish the very objectives they wanted to accomplish.

Chairman WAXMAN. Well, your own investigators had a different

view. This is how one of your investigators responded to the news

that you had refused the Justice Department request: ‘‘Wow. As we

all know, this is not the normal and proper procedure. When looking at the IG Act, DOJ and PCIE guidelines, and the OIG community as a whole, we are supposed to work under the direction of the

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USAODOJ. I am stunned. I hope you documented the orders that

were provided to you. Wow.’’

In fact, the committee has identified at least three other occasions in which the Justice Department came back to you and asked

for assistance on this investigation. In May, the Justice Department sought your assistance obtaining invoices and inspection

records on whether blast-proof walls in the embassy had been constructed properly. In June, the next month, the Justice Department

sought your assistance obtaining documents pertaining to another

First Kuwaiti contract. And in July the Justice Department requested assistance in getting a copy of two cables mentioned in a

front-page article in The Washington Post regarding construction

problems at the embassy. In all of these cases you refused their requests.

You have also apparently resisted the Justice Department’s efforts to investigate whether Blackwater was engaged in arms

smuggling in Iraq. On July 10th, John DeDona sent an e-mail notifying you that his office would be working with the Justice Department on this. John DeDona works at your Office of Inspector General. The next day you ordered Mr. DeDona and his team to stop

immediately. You then directed Mr. DeDona to arrange a personal

briefing for you from the Justice Department and you told him he

could not proceed in any manner until the briefing takes place.

After you received that briefing, you agreed to allow one of your investigators to assist, but you then assigned your congressional and

public relations director to oversee his actions, although she had no

law enforcement background. You described her as your alter ego

and directed her to provide you with operational awareness.

You halted an investigation, demanded a personal briefing from

the Justice Department, assigned your congressional affairs director to keep tabs on the investigation. Do you agree that these steps

were highly unorthodox?

Mr. KRONGARD. No, sir, I do not. You have made a lot that is

very hard for me to respond. Let me take the last one first, which

is I believe you used the name Blackwater. In early July, Stuart

Bowen, the Special Inspector General for Iraq Reconstruction,

asked for the assistance of my office in conducting an audit of two

Blackwater contracts. We agreed to do that and we were already

beginning. The initial cooperation that we were rendering was the

collection of data, the collection of information——

Chairman WAXMAN. Do you feel that helping Mr. Bowen meant

that you shouldn’t be helping the Justice Department?

Mr. KRONGARD. Sir, let me finish, if I can. I think, yes, I do, until

it is cleared up.

I came in, actually, I believe it was the following morning, after

Mr. Bowen and I had completed all of our arrangements for the cooperation, and at 7:30 a.m., I found an e-mail from Mr. DeDona

telling me for the first time of an investigation that was long down

the road in which our investigators were assisting U.S. attorneys

in a criminal investigation of two Blackwater contracts.

And when I looked at the papers, they were the exact same two.

They have a string of numbers, about nine letters and numbers

long. They were the exact two contracts that we were already assisting a civil audit, and I was immediately concerned that for us

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simultaneously to be assisting a criminal investigation into the

exact same two contracts that we were already assisting a civil

audit into raised questions of parallel proceedings which needed to

be de-conflicted before one infected or contaminated the other.

Chairman WAXMAN. Well, let me interrupt you by saying that

what you are talking about was an audit of contracts. This was a

totally different matter, a criminal investigation into arms smuggling. And the Justice Department says they still haven’t received

the documents they were seeking 4 months ago through your office.

This is how the Justice Department summarized your actions: ‘‘At

this juncture, we cannot determine all of the ramifications of the

IG’s conduct, but some of his actions have certainly impacted the

investigation. For reasons that remain unclear, the line IG agents,

who have broad power to obtain documents and other evidence relevant to any investigation they are conducting, have been forced to

funnel requests within their own agency through a congressional

and public relations official, and this is not the usual practice.’’

So it seems to me you are making a lot of judgments as to who

ought to get information and help from your office, and it seems

to me you have given a very low priority to the Justice Department

involving criminal actions that they are investigating and deciding

whether to pursue.

Mr. KRONGARD. Sir, I have a different view of what happened.

First of all, the contracts were exactly the same two contracts;

those were the contracts that the criminal investigation was going

forward with. No. 2, I did not institute a delay. I said immediately.

That e-mail that has been floating around for a long time cuts off

the part that says until I can get a briefing from the AUSA, and

I made myself available immediately by telephone. I did not expect

them to come up to visit me. I didn’t expect anything other than

an immediate phone call so I could tell them of these conflicts that

I was facing, because I needed to have them know.

Now, as far as what they have said or what someone has said

they said, I don’t know. I can only go by what they said to me. And,

sir, after that meeting, I received a letter from the chief of the

criminal division of that U.S. Attorney’s Office in which he said:

‘‘Thank you for taking the time to meet with deputy criminal chief

so-and-so and me earlier this week when we were in Washington.

We appreciate the frank exchange of views and information. We

will remain cognizant of the issues you raised and will work closely

with you and your staff to move this matter forward in the most

expeditious way possible. Your decision to allow your case agent to

continue to work on this matter will make that much easier. Again,

thank you for your time and interest in this matter. With kindest

regards, I am.’’

Sir, I think that I helped de-conflict the issue. I made available

to them the best young investigator I had, and this idea that I put

a congressional and public affairs person in charge is simply untrue. What happened was the data collection assistance that was

being rendered for SIGIR was being done by the person who normally does the data collection. That happens to be the person who

is the congressional and public affairs person.

Since the same contractual materials was being sought by the

U.S. attorney in the other matter, I said to her and to him she can

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just make double copies of what she is making for SIGIR and give

it to you. So she was not doing any investigative—I had the special

agent who was assigned to them doing that—and her role was simply collecting and gathering data.

Now, as to whether that has been produced, I really don’t know.

I put into the process a program to obtain those materials. I suspect, as usual, that there are concerns from Diplomatic Security,

which is the resident agent for these papers, and what gets shown

and what gets produced, but I really don’t know whether it has

been produced or not. I know that this person has been working

hard to satisfy the concerns and needs for information of both the

SIGIR and the U.S. Attorney’s Office, and those were my instructions.

Chairman WAXMAN. Thank you, Mr. Krongard.

I am going to turn over the time now to Mr. Shays, but I do want

to point out what you have said to us contradicts what almost everybody else has said.

Mr. Shays.

Mr. SHAYS. Thank you.

Mr. Krongard, the chairman has given you time to answer questions, but when he throws five charges at you at once, you would

have to be a genius to remember all of them, and I just hope that

people in this hearing room don’t make the assumption because

you didn’t deal with five charges at once and respond to them, that

they don’t have answers.

We tried to figure out what are the accusations of this committee, so we are going to have questions about partisan Republican

motivations, too close to the State Department allegations, financial statement audit, the embassy compound, the Karl Rove charge,

censors of inspector reports, weapons smuggling matter, counterfeit

computers, financial audit, refusal to produce documents, the travel

charge, abrasive management style; and in the end I think it is

going to come down to your management style.

But let me just go through—even though you had it in your

statement, I want to go through and at least deal with one of these

issues and get it off the table, and then we will get on to the next,

and I want to deal with the allegations of a partisan Republican

motivation.

First, to what extent do you believe your mission at IG is to support the Bush administration?

Mr. KRONGARD. Absolutely not, sir.

Mr. SHAYS. To what extent have you been involved in politics or

contributed any money to a political campaign during your adult

life?

Mr. KRONGARD. I have not been involved in any political activities. I have given contributions, which, according to the records

that have been made public—and I think they are accurate—I have

not made any contribution ever to the current President or since

2000. Prior to that——

Mr. SHAYS. My understanding is the last contribution you gave

was to Bill Bradley.

Mr. KRONGARD. I may have made a contribution in the course of

attending a function put on by the Republican Senatorial CamVerDate 11-MAY-2000 14:37 Nov 03, 2008 Jkt 000000 PO 00000 Frm 00153 Fmt 6633 Sfmt 6633 C:\DOCS\44738.TXT KATIE PsN: KATIE
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paign, I believe something like that. I think I attended one of their

functions.

Mr. SHAYS. Before 2000?

Mr. KRONGARD. It was before 2000.

Mr. SHAYS. Have you ever met or spoken to President George

Bush or any of his senior staff?

Mr. KRONGARD. No, sir.

Mr. SHAYS. You have never met him?

Mr. KRONGARD. No, sir.

Mr. SHAYS. And you have never spoken to any of his senior staff?

Mr. KRONGARD. I don’t know where senior cuts off, but there is

a person who recently joined who I had known long ago when we

were both on the board of a nonprofit public awareness entity, and

I knew him then. I have not seen him, but he is——

Mr. SHAYS. Do you have any relationship or connection with

other people in the Bush administration?

Mr. KRONGARD. No, sir, none.

Mr. SHAYS. Have you ever been to a White House function at any

time during this Bush administration?

Mr. KRONGARD. Sir, I don’t think I have ever been in the White

House except as a tourist.

Mr. SHAYS. Do you have any relationships or connections with or

financial interests in State Department contractors which might be

the subject of an OIG work?

Mr. KRONGARD. No, sir, I do not.

Mr. SHAYS. When making decisions about the work of the OIG,

have you ever taken political considerations into account?

Mr. KRONGARD. No, sir, I have not.

Mr. SHAYS. When making decisions about the work of the OIG,

have you ever been influenced by a desire to protect the Bush administration?

Mr. KRONGARD. No, sir.

Mr. SHAYS. When making decisions about the work of the OIG,

have you ever been influenced by a desire to protect a particular

company?

Mr. KRONGARD. No, sir.

Mr. SHAYS. Do you have any idea why someone would allege that

you have any political motivation or that you are corrupt, or both?

Mr. KRONGARD. Yes, sir, I do have reasons to believe why people

would do that.

Mr. SHAYS. And in a short sentence or two, explain what you

think they are.

Mr. KRONGARD. Well, sir, it is no secret that I came into—I took

on a mission to come in and try and repair something that had

been in a bad way. I knew from the beginning that was going to

put me into conflict with some people who were resistant to

change, were resistant to what I was trying to accomplish, and I

did make some enemies. And the people that have been interviewed by this committee are not the entire OIG and they are not

the universe, and while the large percentage of their sample may

be very much against me, there are people in the OIG who supported what I did.

Mr. SHAYS. OK, let me say that was the basis for the chairman’s

14-page letter, and the reason why we are releasing this document

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is those individuals came before our committee and we questioned

them. So we say the partisan political affair allegations, did you

have any awareness of those before they were outlined in this letter? I mean, well, I can’t say no, I can’t really answer that.

Further questions: do you believe the Inspector General’s mission

is to support the Bush administration? I could not say that, no. We

asked no direct evidence, not that I know of. I have no knowledge

one way or the other.

This is what these individuals were all saying to these questions,

these allegations they made. Then, when we put them under

oath—and the reason they are not here is they would be put under

oath. So you have had to deal with, frankly, you have had to deal

with gossip, not people willing, under oath, to make these charges.

I would like to yield the balance of my time to Mr. Issa.

Mr. ISSA. I thank the gentleman.

I am going to pick up a little bit there. Now, you were general

counsel to Deloitte, right?

Mr. KRONGARD. Yes, sir.

Mr. ISSA. And it is pretty tough to be the pinnacle of an organization like that, filled with career auditors and accountants and lawyers, isn’t it?

Mr. KRONGARD. It is a challenge.

Mr. ISSA. These are smart people who sometimes do a good job,

but, if they don’t, they are certainly very good at explaining themselves when they don’t do a good job, isn’t that true?

Mr. KRONGARD. Truthfully, yes.

Mr. ISSA. OK. So you have kind of undersold yourself a little bit

ago. You talked about 40 years of not having the right experience,

but it seems to me like the selection of you for this job and your

acceptance made you uniquely qualified to oversee career auditors

who either do a good job or do a good job of telling people they do

a good job.

Mr. KRONGARD. Yes, sir.

Mr. ISSA. When you arrived, essentially, was the latter more

true, that there were a lot of people who were very good at explaining how good they were, but the results at the State Department

over literally decades had been abysmal when it came to accountability? Wasn’t that true?

Mr. KRONGARD. I think that is fair.

Mr. ISSA. OK. During your tenure, one of the things that the

chairman has repeatedly come back to, in July, was the not yet occurred, but the possibility of cost overruns on the Iraq embassy,

even though it is on time and on budget and, in fact, there are blue

dots everywhere where they are fixing the things that the contractor didn’t do. Wouldn’t you say that when it came to auditing by

anybody, that auditing a large project in a combat zone was a

unique task that, at best, sending people over there would have

had a limited ability to really get to the bottom of it? I mean, you

made a decision not to essentially let auditors endlessly go over

there to look at a building but, rather, made them focus on shortcomings and limited their trips to Iraq, isn’t that true?

Mr. KRONGARD. To be very candid, sir, it was in some ways the

reverse. I wanted auditors to go. I instituted three jobs which required auditors to go. I am talking about auditors now, not invesVerDate 11-MAY-2000 14:37 Nov 03, 2008 Jkt 000000 PO 00000 Frm 00155 Fmt 6633 Sfmt 6633 C:\DOCS\44738.TXT KATIE PsN: KATIE
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tigators or inspectors. And in each case the jobs had to be cut short

or canceled because the auditors refused to go to Iraq.

Mr. ISSA. Because——

Mr. KRONGARD. I did not have auditors willing to go to Iraq.

Mr. ISSA. Because, in fact, it is a combat zone.

Mr. KRONGARD. Yes, sir.

Mr. ISSA. You know, I am going to make a quick statement, and

one that is not intended to help you or hurt you, but Iraq is a

unique situation. We haven’t had an ambassador in charge of a war

zone in modern history. We normally leave a general in charge of

a war zone and bring the Ambassadors in when the conflict is over.

If we did what we had done in every other situation, this embassy

would be built under the Corps of Engineers and the State Department wouldn’t have oversight. Isn’t that sort of a historic fair statement?

Mr. KRONGARD. It predates me, but it confirms my understanding, yes.

Mr. ISSA. Would it surprise you to know that a few hundred feet

from here a building of a lesser size is going to costs more money?

The Capitol Visitors Center has been 7 years plus in the making;

was already underway when September 11th hit; is not finished

today; will not be done for a year; will be at least 31⁄2 years; no

combat zone, with the possible exception of the change in administration here; but, in fact, that it is a half billion dollars and, to be

candid, they won’t tell us why it takes a year after completion before there is any chance of occupancy.

Would you say that the Capitol Visitors Center and the embassy

in Iraq have some similarities, or is it in fact that the embassy in

Iraq, in spite of everything—being in a combat zone, being impossible to get auditors and investigators and so on to want to go to—

that, in fact, it appears at this point to be like any large construction project and simply is going through the making the vendor do

their job after the fact? And we are not talking about the human

trafficking, I am just talking about the project itself.

Mr. KRONGARD. As far as I know, I don’t know anything different. I don’t know much since I was last there in September, but

as of September that seemed like a fair comparison.

Mr. ISSA. OK, the only reason is this is our third hearing where

that center is the center of attention, and it is sort of amazing that

something which, as far as we know, is still on time and on budget

is investigated, while the Capitol Visitors Center seems to be beneath investigation, as it is beneath the Capitol.

My time is disappearing quickly, but you have had a tough job.

You have had a style that has been accused of being abrasive, but

you appear to have made some change. I want to give you an opportunity, though, to talk about the two seats that are not there

today, the two Justice Department people who would make unofficial, unsworn statements and then not be here to answer questions.

I don’t want you to disparage them, but I want you to talk about

what you believe the correct role is of your investigations versus

their investigations; where you assist and where you continue

doing your own investigations, because that seems to be the legitimate subject here, of when do you simply stand down and hand everything to them, and when do you continue your investigations.

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Mr. KRONGARD. Sir, if I can just correct. The Justice Department

information, as I know, came through last night. I heard about it

for the first time last night. So when you are talking about the two

empty seats, I am not sure if you are talking about the investigators from my staff who were the principal motivators or whistleblowers, whatever it is, or the Justice Department people. I am not

aware that the Justice Department is disparaging me.

Mr. ISSA. Mr. Chairman, could we have those records made part

of the record so that we could actually have all of us see the actual

accusations that you alluded to in your statement? I think it is certainly of public interest.

Chairman WAXMAN. I want to inform the gentleman that the

Justice Department provided the Republican staff with the same

information that was provided to us, so you have the same information.

Mr. ISSA. Mr. Chairman, then can I, without objection, submit it

for the record?

Chairman WAXMAN. We will take it under submission. There are

some issues the Justice Department raised with both of our staffs.

Mr. ISSA. So you are objecting to it going into the record, even

though it has been alluded to here, Mr. Chairman?

Chairman WAXMAN. Well, I will—I don’t want to object, but I

don’t want to agree to it, so I will temporarily object and we will

consider to review the matter.

Mr. ISSA. Thank you. I will let the gentleman continue.

Mr. KRONGARD. I will try and answer the Justice Department in

generalities, because there are some specific investigative concerns

that I believe the Justice Department has. And this will go back,

in part, to what the chairman was saying before. I never refused

the Justice Department assistance at any time. I asked for them

to tell me what it was they needed and I wanted to tell them the

parallel proceedings that I was involved in. I wanted to make sure

that I had the resources. Remember, the Justice Department is

used to dealing with agencies around Government that have large

numbers of investigators. At any one point in time I have something like 7, 8, 10, 12 total investigators.

I was shocked, when I came into this office, to learn that of the

29 members or 28 members of the PCIE, which include agencies

like TVA and Railroad Retirement Board and things that you don’t

think of as being law enforcement agencies, the State Department

OIG ranked 23rd in the number of investigators. I came in to an

organization that historically was audit and inspection focused by

law. The Foreign Service Act of 1980, which mandates the OIG to

inspect on a 5-year cycle all embassies and missions around the

world, 275 of them. So investigations takes approximately 10 percent of our personnel and 10 percent of our resources.

So in dealing with the Department of Justice, I had to make sure

that they understood that we had limited experience, limited resources, and if a person was already working on one Justice Department matter when we were doing, on these very same things,

three and four—the new embassy compound had at least three different Justice Department divisions doing investigations. So when

I spoke to them, I was trying to de-conflict, coordinate, and make

sure that the resources were available.

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Now, granted——

Chairman WAXMAN. Mr. Krongard, Mr. Shays has a quick question of you, then we are going to move on.

Mr. KRONGARD. Sure.

Mr. SHAYS. I just want to clarify one point. So the issue about

cooperation with Justice, Justice was actually asking that some of

your personnel be directed under their management to almost, in

a sense, detail them with the Justice Department for a period of

time?

Mr. KRONGARD. Not almost. In the one that we are talking about

regarding the major contractor, that person was, in effect, assigned

to them. And as I understand one of their complaints last night,

they are very upset that person who, again, is one of my best people and the only person that had been willing to go to Iraq, has

taken on another assignment.

Mr. SHAYS. So you were basically objecting to losing one of your

seven people and wondering, I would think, why they couldn’t detail their own people, instead of your people, when you only have

seven.

Mr. KRONGARD. Well, the latter. I was wondering why they

couldn’t detail their own. But it wasn’t that I was concerned about

detailing them; I was happy to help, and the letter I read to you

says that I did that. The problem was when another investigation

has come up and that gentleman has gone to Iraq, I understand

that they are now unhappy that he has left their investigation to

do a different investigation.

Mr. SHAYS. It is called opportunity cost.

Mr. KRONGARD. Sorry?

Mr. SHAYS. It is called opportunity cost. If you have used a person one way, you can’t use them somewhere else.

Thank you, Mr. Chairman.

Chairman WAXMAN. Well, that, of course, is a leading question

you were just asked, but it seems to me if you have people working

on the issue that Justice Department is seeking information about,

you should share the information with the Justice Department,

rather than say they have to go through your congressional liaison

person before they have any contact with the people who are doing

the work for the OIG.

I am going to move on to others.

Mr. ISSA. Mr. Chairman.

Chairman WAXMAN. I am going to move on to others. The time

has expired. But I do also want to make one other comment. We

have had complaints from the Republicans that we don’t have the

people to testify before our committee here to testify again. All of

the witnesses that testified under oath in the depositions were subject to cross examination by the Republican lawyers, as well as our

staff, and we are going to be releasing the transcripts of those

depositions. So it isn’t that we didn’t have those witnesses here to

testify again.

Mr. SHAYS. Mr. Chairman, why wouldn’t you have them come before the committee so the public could hear their responses and we

could ask them questions? They are the ones who made the allegations.

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Chairman WAXMAN. The people that made the allegations were

subject to cross examination; they testified under oath. If they——

Mr. SHAYS. Not before this committee.

Chairman WAXMAN. If the gentleman would permit. They testified before this committee’s deposition under oath. If they lied

under oath, they are subject to criminal penalties, and that should

just be understood.

Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Mr. Krongard, it is good to see you. I note two very interesting

things: that you speak very much about de-conflicting, so you have

a sensitivity to conflicts, obviously; and, second, I note that before

the chairman asked you questions, but after your statement, you

gave us some additional information about your brother, Buzzy

Krongard, and what you said is, to your knowledge, he had no financial interest and he did not sit on the board of Blackwater, is

that correct?

Mr. KRONGARD. Yes, sir.

Mr. CUMMINGS. Well, let’s look at that real quickly. One of the

biggest scandals to hit the State Department in recent memory has

been the lack of accountability for Blackwater USA. Last month,

the Secretary of State testified before this committee that for more

than 4 years there has been a hole in the law that allows

Blackwater to escape criminal liability for killing innocent Iraqi civilians. Just today, papers reported that Federal agents investigating the September 16th episode, in which Blackwater security personnel shot and killed 17 Iraqi civilians, have found that at least

14 of the shootings were unjustified and violated deadly force rules

in effect for security contractors in Iraq.

Your role as Inspector General is to investigate waste, fraud, and

abuse in the State Department, but your office has not completed

any investigation into Blackwater activities. Although there is a

Justice Department investigation underway, you have taken several unorthodox steps that delayed or impeded that investigation,

such as requiring a personal briefing from the Justice Department

and requiring all investigative documents to go through your congressional affairs director.

I am trying to understand why you are so reticent about investigating Blackwater. I would like to show you a letter the committee obtained and ask you to comment on it. This letter was sent

from Erik Prince, the CEO and Founder of Blackwater. He shared

that letter on July 26, 2007. Mr. Prince sent this letter to Alvin

‘‘Buzzy’’ Krongard, your brother. The letter invites him to serve on

Blackwater’s Worldwide Advisory Board. This is what Mr. Prince

says. He says—and this is Mr. Prince to your brother, the one that

you said isn’t involved with Blackwater. He says, ‘‘Being a member

of the Blackwater Worldwide Advisory Board will provide you with

a stellar opportunity to continue to support security, peace and

freedom. Your experience and insight would be ideal to help our

team determine where we are and where we are going.’’

Mr. Prince’s letter goes on to explain that the main purpose of

the board is to provide leadership advice about the path the company should follow.

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Now, here is a second document. This is a September 5th e-mail

that Erik Prince sent to your brother. It says, ‘‘Welcome and thank

you for accepting the invitation to be a member of the board.’’

My question is this: Did you know that your brother, Buzzy

Krongard, is on Blackwater’s advisory board?

Mr. KRONGARD. Sir, I dispute that. As far as I know, that is not

correct. This is—you asked me to comment on this letter. Sir, my

brother served honorably as a captain in the U.S. Marine Corps.

He served as the Executive Director of the CIA. He has been involved in a lot of activities involving security, so it is no surprise

that someone like Erik Prince would invite him to continue to support security, peace, and freedom.

There is nothing in here that suggests that my brother accepted

this July 26th invitation. What you have now shown me is an email from Erik Prince to a large number of people that I assume

were all people who received this. I don’t see anything in here that

suggests my brother accepted or attended, and, as far as I know,

he did neither.

Mr. CUMMINGS. Well, let me go on, then, because I do think the

letter indicates that he did accept. But, Mr. Krongard, this is one

of the most high profile issues facing the State Department, and

your testimony today is that you didn’t know your own brother is

on the Blackwater board. I find that very difficult to believe.

Let me ask you this. Mr. Krongard, do you know where your

brother is this week? Do you know?

Mr. KRONGARD. No, sir, I don’t.

Mr. CUMMINGS. According to this e-mail, Mr. Prince invited your

brother to be at a board meeting to discuss strategic planning, and

this meeting is taking place right now in Williamsburg, VA, this

week, as we speak. Staff contacted the hotel to speak to your brother and the hotel confirmed that he was scheduled to be there. Did

you know that?

Mr. KRONGARD. No, sir, I do not.

Mr. CUMMINGS. So, now, if your brother is a board member,

which you said he is not, but if he is, would you consider—I know

you are sensitive to conflicts. Would you agree that you should

recuse yourself from anything dealing with Blackwater investigations?

Mr. KRONGARD. Yes, sir, and that was why—first of all, by the

nature of my brother’s work, you should understand that we have

never discussed his work or my work. So I had no reason to even

think that he had any involvement with Blackwater. But when

these things surfaced, I called him and I asked him directly. He

has told me he does not have any involvement, he does not have

any financial interest. If you are telling me that he does, absolutely

I would recuse myself.

Mr. CUMMINGS. You will recuse yourself?

Mr. KRONGARD. Absolutely.

Mr. CUMMINGS. Immediately.

Mr. KRONGARD. Absolutely.

Mr. CUMMINGS. Thank you.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. McHenry.

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Mr. MCHENRY. I thank the gentleman for being here today. This

is just another series of what I refer to as drive-by oversight. You

were before this committee in July, I believe. Five months later you

are brought back to rehash the very same questions you were

asked in July. Thank you for your patience.

But, again, there are numerous accusations just in the chairman’s opening statement leveled at you. What is interesting is, if

these accusations, which were laid out in July, if any of this stuff

the chairman believes or the majority believes is true, then this

committee is called Oversight and Government Reform. In the previous Congress it was Government Reform. Just a matter of emphasis between the two parties. So this committee has been all

about oversight in committee hearings like this, but there has been

no recommendation from this committee in this Congress for any

type of government reform to fix these accusations and these problems.

So let me go a little further here. There are accusations about

Blackwater. Is there an inspector general that deals with Iraq?

Mr. KRONGARD. Yes, sir, SIGIR.

Mr. MCHENRY. A Special IG for Iraq.

Mr. KRONGARD. Yes, sir.

Mr. MCHENRY. Does the Special IG—and I know there are a

number of issues related to this, but does the Special IG look into

accusations about Blackwater?

Mr. KRONGARD. Yes. As I said before, he is conducting an audit

with our assistance of some Blackwater contracts, the same ones

that are the subject of the criminal investigation.

Mr. MCHENRY. Does that Special IG also deal with the embassy

in Iraq?

Mr. KRONGARD. In some ways, yes; in some ways, no. It depends

on what the issue would be.

Mr. MCHENRY. OK. All right. But we have had testimony from

a number of different folks. There are between 10 and 12 entities

that are dealing with the issues pertaining to the embassy, is that

correct?

Mr. KRONGARD. Yes, sir.

Mr. MCHENRY. To ensure that the product is delivered, correct?

Mr. KRONGARD. Yes.

Mr. MCHENRY. All right. What is the contract that is being used

right now for the building of the embassy, is it a fixed price contract?

Mr. KRONGARD. There are eight principal contracts. I think all of

them were fixed price. And to get back, if I can use a second of

your time to tell the chairman that was saying, back in January

there were no audits, we actually did. I had requested an audit,

that is still in process, of the manner in which those contracts were

let and whether they complied with Federal contracting law and

regulations, and that audit has been going on since, I believe, January.

Mr. MCHENRY. All right, thank you. In regards to the U.S. embassy, how much oversight and investigation is too much? You

know, when you have 10 to 12 different entities doing the same

thing, do you think that there is this tipping point? You know, one

of your assistant inspector generals that Mr. Shays mentioned is

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John DeDona. He was deposed and he said there were 10 to 12 different entities pursuing embassy-related issues.

Now, it would seem to me that there was some true need for government reform here when you have 10 to 12 different groups looking at similar, if not the same, thing. Is there some level of streamlining that we should look at?

Mr. KRONGARD. Sir, I hesitate to tell you how to—you are so

much better at doing your job than I am.

Mr. MCHENRY. Fourteen percent of the American people agree.

Mr. KRONGARD. At the end, sir, there are two things I can suggest that have to do with Government reform in this area, but I

don’t want to take your time on that.

Mr. MCHENRY. No, absolutely. Go right ahead.

Mr. KRONGARD. Well, some of you may be aware that the Subcommittee on International Organizations, Human Rights, and

Oversight of the Committee on Foreign Affairs had a hearing about

a week or 10 days ago also concerning my office, and I did a

lengthy response to them, and in the course of that I did make

two—I won’t call them suggestions, but I raised two issues that I

do think need to be considered, and they were things that had

bothered me from the day I took this office. The first was the Foreign Service Act of 1980, which mandates the inspections of embassies around the world and has historically created my office as an

inspection-oriented office first, an audit-oriented office second, and

almost as an afterthought, an investigatory body. In fact, the committee reports of the Foreign Service Act of 1980 are replete with

statements about how unique this office was and how different it

was from the normal IG office, which was audit and investigation.

So that was one thing I suggested be considered.

The second thing I have been puzzled about and I suggested in

my letter to Mr. Delahunt that be considered is why BBG does not

have its own inspector general, because all of the time that people

talk about the resources that I have as Inspector General of the

State Department, I am also Inspector General of the Broadcasting

Board of Governors with worldwide issues for them, and I don’t get

a single extra penny or person to do that. And Corporation for Public Broadcasting has an IG and other comparable bodies have an

IG, so I just think maybe this committee would consider that as

well.

Chairman WAXMAN. Thank you.

Mr. McHenry, your time has expired.

Ms. Watson.

Ms. WATSON. I want not thank you, Mr. Chairman, and I want

Mr. Krongard to know I take my position on this committee very

seriously. I was a member of the State Department, did head up

an embassy, and we need to put a laser beam on the activities in

our embassies around the globe. If your brother is currently at the

hotel in Williamsburg, VA, sitting on the board, would you repeat

that you would recuse yourself?

Mr. KRONGARD. Immediately.

Ms. WATSON. OK. Then maybe you want to do it today.

Mr. KRONGARD. Recuse myself from anything having to do with

Blackwater, yes. I mean, I wouldn’t step down.

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Ms. WATSON. Blackwater. Yes, that is what I am referring to. He

is sitting on the Blackwater. I understand he is in the hotel; he has

checked in the hotel. You might want to followup on that.

Mr. KRONGARD. Well, if he is there for that meeting as a member

of that committee. He may be there to tell them he is not joining.

I don’t know.

Ms. WATSON. OK, now, remember you are on the record.

Mr. KRONGARD. Yes, ma’am.

Ms. WATSON. OK. And you know what today’s date is.

Mr. KRONGARD. Yes.

Ms. WATSON. OK. Will you recuse yourself from any inquiries,

audits, or investigations your office conducts regarding Blackwater?

Mr. KRONGARD. Absolutely.

Ms. WATSON. OK, we have it on the record.

Now, your office has faced major setbacks in retention and recruitment during your tenure as Inspector General, and maybe it

is because they were incompetent, and that is what this committee

is all about. We try to sort out what is fact from what is fiction

and gossip. We seek the truth, and the truth has no (R) or (D) or

(I); the truth is the truth. So don’t feel you are being badgered. We

are asking you so you can tell us what your truth is as you know

it.

Now, since you became IG in 2005, a significant number of your

senior managers have resigned: the Assistant IG for Investigations,

the Deputy Assistant IG for Investigations, the Deputy Assistant

IG for Audits, the head of the Office for Information, Technology,

and Counsel to the IG; and the head of the Audit Division told our

investigators the rate of turnover in his division is 20 percent to

30 percent per year. Can you comment on that and can you get us

closer to what the facts really are?

Mr. KRONGARD. Yes, and thank you for allowing me to speak the

facts. The facts are that when I came into office, of the seven assistant inspector general level positions, five were vacant. This is

nothing new. This office has been in disrepair. I think one of the

good things I have done is to bring some good people in to the Office, and the people that I have brought in, for example, you talk

about counsel.

I believe we are talking about the same person. That person was

a wonderful person to come in. He was so well suited, it took me

a couple of months to entice him to come. He came, he joined us,

and he left in about 6 or 8 weeks for two reasons: one, we were

not able to give him a permanent SES position. The State Department did not have or could not give me an SES position for someone who came from a comparable SES position. So we had to do

a temporary kind of thing.

Second, when he realized that one of his major assignments was

to oversee the investigations group, which is the group that is the

subject matter of much of this, he decided that he did not want to

serve in that capacity, especially in a temporary IG position. So my

loss of my counsel was a great loss to me.

Losing the AIG for Investigations and the Deputy AIG for Investigations, again, is in part why we are here. They are two gentlemen that I lost confidence in. I think for good reason. I don’t think

it is necessary to go into this. But I finally, after 2 years, conVerDate 11-MAY-2000 14:37 Nov 03, 2008 Jkt 000000 PO 00000 Frm 00163 Fmt 6633 Sfmt 6633 C:\DOCS\44738.TXT KATIE PsN: KATIE
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fronted each of them with my loss of confidence. I asked each of

them if they would stay at the same pay grade and do the kinds

of things they had originally trained to do in special-agent-incharge positions or some other position of their choice, but to give

up their management positions as assistant and as deputy——

Ms. WATSON. All right, let me just interrupt you because my

time is almost up.

Mr. KRONGARD. Sure.

Ms. WATSON. It is being said about your leadership and the Department which you head that your actions have created an abusive and hostile environment that led to low morale and the staff

to exiting, and there are many statements that we have. I don’t

have time to read because we have to go to the floor and vote. But

can you describe for us—and I think the Chair might allow us an

intermission to go and vote——

Chairman WAXMAN. Get his response, then we are going to

break.

Ms. WATSON. All right, thank you.

Mr. KRONGARD. And, again, thank you for——

Ms. WATSON. Can you describe for us what those comments really mean? What was so hostile about the environment?

Mr. KRONGARD. Let me say, in all honesty, that my experiences

in my prior life to this, the 40 years in the private sector, my athletic experiences, all the things I have done in life really didn’t prepare me well for what I found in OIG, and I have not handled it

as well as I wish I could have handled it. I was used to, as one

of the gentlemen said before, professionals. I never even worked for

a corporation. I have only worked for four professional partnerships, two of the leading accounting firms in the world and two of

the leading law firms in the world, where the trust among partners

was very strong, and when you could count on what they would

say. And if you needed to disagree with someone, everyone understood that you had the same mission, to make the product of the

firm better. So there wasn’t the personal affront when you tried to

change what somebody was doing or correct it.

That didn’t prepare me for what I found where people didn’t

have the same level of trust with each other; where there were

great rivalries between offices within our organization, between the

Foreign Service people and the Civil Service, and I found myself

particularly unable to deal with situations where I didn’t think I

was being dealt with honestly and fairly, where I was being given

answers that were implausible. And, in response, yes, I have been

brusque; I have been shrill; I have been hard on people. I think

abusive may be strong because I don’t intend to abuse anybody——

Ms. WATSON. OK, let me get to—I have to go, but if I send you

these statements, would you respond to them in writing? I will

send you the statements. I would like to get the response in writing.

Thank you so much, Mr. Chairman.

Chairman WAXMAN. Thank you, Ms. Watson.

Mr. Krongard, we have four votes on the House floor. We are

going to recess until 12:10. I think we will be ready at that point

to reconvene the hearing. So we are going to stand in recess.

[Recess.]

161

Chairman WAXMAN. The meeting of the committee will come

back to order.

I would like to now recognize Mr. Platts.

Mr. PLATTS. Thank you, Mr. Chairman. I would like to yield my

time to Mr. Shays.

Mr. SHAYS. Thank you.

Mr. Waxman, I need to confirm with your own staff, and you

may want to consult with them, but, first off, we would have a conceptual disagreement about witnesses that have come before the

staff to respond to questions and whether that is adequate to constitute information to this committee. I think people who make

charges should have to face the public and should have to face committee members. But you said that these individuals were sworn

in, and I think that is an incorrect statement. The OIG whistleblower named in your September 18th letter and three others making allegations against the IG were not deposed. They were not

under oath when questioned by committee staff; they were simply

interviewed and the interview was transcribed. They were not

sworn. That is my understanding, and I think you said they were

sworn and that it should be adequate. If they were sworn in, I

would like to have that confirmed, but I would like the record corrected if they were not sworn in.

Chairman WAXMAN. If the gentleman would yield to me, I am

looking to see if my staff could further inform about this matter,

whether the witnesses were sworn in.

[Pause.]

Chairman WAXMAN. As I understand it, we did a combination.

Some were depositions and some were interviews.

Mr. SHAYS. Could——

Chairman WAXMAN. If I might finish. But even if it were an

interview, someone testifying in an interview was subject to examination by the Republican staff, and if they lied in an interview it

would be also a violation of criminal law in impeding and obstructing an investigation by Congress.

Mr. SHAYS. Would the staff review the OIG whistle-blowers

named in the September 18th letter and the three others making

allegations against the IG? We understand were not deposed and

were not under oath. I would like to have them give us the names

of each of these individuals, if they would, and tell us which ones

were under oath and which weren’t. My understanding is none of

them were under oath.

Chairman WAXMAN. Well, I think you make a reasonable request, and we will provide for the record the people that were giving depositions and whether they were under oath in a deposition,

or whether they were being interviewed, which, to me, also requires them to tell the truth or to be subject to criminal charges.

Mr. SHAYS. Well, Mr. Krongard is under oath, sworn in publicly,

and he has to face the music publicly, and I think it is an outrage

that these individuals, I do not believe, were under oath and I don’t

believe they have to face the public or the questions that we have.

So let me now ask you about a financial statement audit. Isn’t

it true that the State Department did not have a so-called clean financial statement at the time of the Office of Management and

Budget’s deadline for the Department’s annual financial statement

162

last year? Would that fact be clear to anyone who assessed the

statement?

Mr. KRONGARD. Yes, sir, there was.

Mr. SHAYS. Isn’t it true that you disagreed with just about all of

your audit staff by allowing the Department additional time to provide some necessary information in the hopes of achieving an unqualified opinion, and can you explain?

Mr. KRONGARD. Yes, sir. First of all, let me make it clear that

the OIG does not conduct the audit of the Department’s financial

statements; there is an independent outside auditing firm that has

been doing it for just about ever, I suppose, and the role of the OIG

is limited to providing administrative and technical support.

When——

Mr. SHAYS. So let me just—I understand that you asked for the

advice of officials from the Office of Management and Budget and

the Government Accountability Office as to the priority of allowing

the Department to provide information after the OMB deadline.

Can you explain their response?

Mr. KRONGARD. Their response agreed with the course of action

that we took, and I would add——

Mr. SHAYS. That you suggested.

Mr. KRONGARD. Yes, sir. Could I just add that the American Institute of Certified Public Accountants was also consulted and

agreed?

Mr. SHAYS. When the clean audit was finalized in mid-December

of last year, did you remove any trace of the qualified unclean opinion and replace it with a clean opinion, or did you make clear that

the qualified report initially submitted on November 15th had been

subsequently revised?

Mr. KRONGARD. It was the latter, with the result that the State

Department was hit twice with the bad news, the first report and

the second report.

Mr. SHAYS. So the bottom line is you didn’t protect the administration by waiting to get a clean report, you affirmed what was suspected.

Mr. KRONGARD. Yes, sir, that is correct.

Mr. SHAYS. Finally, would you agree that there is a benefit in

providing full, fair, and accurate information to the general public

regarding the finances of the Federal Government, rather than

simply making available the information that exists on November

15th, a sometimes arbitrary, but nevertheless useful, end of the

year deadline imposed on agencies for submitting financial information?

Mr. KRONGARD. That states my concern perfectly.

Mr. SHAYS. Thank you.

Mr. KRONGARD. Sir, could I make a statement?

Chairman WAXMAN. Well, if it is in answer to a question; otherwise, we are going to move on. Well, I don’t want to be unfair to

you, so go ahead and make your statement.

Mr. KRONGARD. Yes.

Chairman WAXMAN. Ordinarily, your statement time was for

your statement.

Mr. KRONGARD. Well, this is in response to something I think

you found important.

163

During the break, I did contact my brother. I reached him at

home; he is not at the hotel. But I learned that he had been at the

advisory board meeting yesterday. I had not been aware of that,

and I want to state on the record right now that I hereby recuse

myself from any matters having to do with Blackwater.

Chairman WAXMAN. I see. You indicated you had called your

brother to ask him earlier whether he was on the board and he told

you he wasn’t.

Mr. KRONGARD. That was about 6 weeks ago, and I was not

aware. And this board meeting happened yesterday, and I found

out just during the break that he had in fact attended yesterday.

Chairman WAXMAN. OK, thanks.

Mr. Lynch.

Mr. LYNCH. Thank you, Mr. Chairman and ranking member.

I had some other questions about construction at the embassy,

but I am going to let those go. Mr. Krongard, this change in your

testimony that you are describing now, the discussions with your

brother, is troubling and it raises a number of questions. I just

want to be straight here. Earlier, you testified that you had spoken

with your brother and he assured you that he was not on

Blackwater’s board. That was the testimony you made earlier. Now

you have testified that he changed his mind, but he didn’t bother

to tell you, and I have some questions about the timing of all these

conversations.

I have a document here, and I believe you have been shown it

as well. This is an e-mail. I will let you get it first. It is an e-mail

to Erik Prince, the CEO of Blackwater, from Gary Jackson, the

Blackwater official who was setting up the advisory board for

Blackwater. He is discussing who the likely candidates are for

board members and he says, ‘‘Your list, I think, is Buzzy, General

Grange.’’ The significant thing about this—Buzzy is referring to

your brother. The significant thing about this e-mail is it is dated

June 10th. So this e-mail shows that Erik Prince had your brother,

Buzzy, on his short list for this board of advisers for Blackwater

at least 6 weeks before the formal invitation was sent on July 26th.

Is that correct?

Mr. KRONGARD. I don’t know. I can’t speak for this e-mail.

Mr. LYNCH. Well, let me ask you this. When did you have your

first conversation with your brother about whether he was affiliated with Blackwater?

Mr. KRONGARD. I only had one. And I should make clear, as I

tried to say, I am not my brother’s keeper and we do not discuss

our business with each other.

Mr. LYNCH. No, no, no, but you are a witness here and you have

testified in the past, and you have this body relying on your testimony.

Mr. KRONGARD. And my testimony, I stand by it.

Mr. LYNCH. So if you are not your brother’s keeper, you need to

say we don’t know or something like that.

Mr. KRONGARD. I didn’t say——

Mr. LYNCH. You can’t say my brother is not on the Blackwater

board.

164

Mr. KRONGARD. As far as I knew, that was a correct statement

then. It turns out it was the best knowledge that I had based on

the only one conversation I had, which was——

Mr. LYNCH. OK, when was that? When was the date of your conversation with your brother about him being on the Blackwater

board?

Mr. KRONGARD. It was probably about 5 or 6 weeks ago. I can’t

tell you exactly when it was.

Mr. LYNCH. Five or 6 weeks ago.

Mr. KRONGARD. Early October, I guess. And that is a guess.

Mr. LYNCH. And during that conversation what did he say?

Mr. KRONGARD. The principal focus of the conversation was the

rumor that was out at that point that he had——

Mr. LYNCH. No, no, what did your brother say? That would be

relevant to your testimony here.

Mr. KRONGARD. That is what I am trying to say.

Mr. LYNCH. OK, please.

Mr. KRONGARD. The principal focus of that conversation was the

rumor that he had a significant financial interest or a financial interest in Blackwater. So the principal focus of our conversation was

did he have a financial interest, and he assured me he did not.

Mr. LYNCH. Did he say he was approached by Blackwater?

Mr. KRONGARD. He may well have said he was approached by

Blackwater, but, again, he is approached by a lot of people, so that

didn’t surprise me.

Mr. LYNCH. Did he say he was taking some type of position with

them?

Mr. KRONGARD. No.

Chairman WAXMAN. Would the gentleman yield?

Mr. LYNCH. Six weeks ago would have been after the date that

he received the formal invitation to sit on the board, is that correct?

Mr. KRONGARD. That is correct. I don’t know that he had accepted at that time or not. I just don’t know.

Mr. LYNCH. And it is actually in October. You are talking—well,

I am trying to do this in reverse, but that would be after the date

he accepted the position in September. You are saying you had this

conversation with him in October. So he would have already been

sitting on the board and——

Mr. KRONGARD. I don’t know that, because all I see is that the

first meeting of the board was yesterday. So I don’t see anything

that suggests——

Mr. LYNCH. I see where this is going.

Mr. Chairman, I would just recommend that we ought to subpoena Buzzy and get him in here and testify as to his conduct and

his conversation with his brother. Thank you. I yield back.

Chairman WAXMAN. Would you yield to me? The gentleman has

completed his questioning?

Mr. LYNCH. I yield back, yes.

Chairman WAXMAN. If you would yield to me.

Did you tell your brother why you called him? Did you tell him

that you were being called on as the Inspector General for the

State Department to look into actions by Blackwater and you wantVerDate 11-MAY-2000 14:37 Nov 03, 2008 Jkt 000000 PO 00000 Frm 00168 Fmt 6633 Sfmt 6633 C:\DOCS\44738.TXT KATIE PsN: KATIE
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ed to make sure that you didn’t have anything that would amount

to an appearance, even, of conflict of interest?

Mr. KRONGARD. Yes. But the only thing that I knew that had

been rumored was a financial interest. I didn’t know anything

about a board——

Chairman WAXMAN. But you told him why you were asking.

Mr. KRONGARD. Yes.

Chairman WAXMAN. And he said that there was no reason for

you to worry, in effect.

Mr. KRONGARD. That was what I took from it.

Chairman WAXMAN. And then he never bothered to call you back.

Mr. KRONGARD. No.

Chairman WAXMAN. Have you had a difficult relationship with

your brother?

Mr. KRONGARD. No. We have gone to great lengths to keep our

professional experiences separate because of his position and because of my position.

Chairman WAXMAN. Ms. Foxx.

Ms. FOXX. Thank you, Mr. Chairman.

It is my understanding that Chairman Waxman has stated you

interfered with an ongoing investigation into the conduct of Kenneth Tomlinson, the head of Voice of America, by passing information about the inquiry to Mr. Tomlinson. Can you tell me did you

specifically instruct your secretary to fax to Mr. Tomlinson’s office

confidential information from a whistle-blower, or did you simply

ask your secretary to send Mr. Tomlinson the congressional inquiry

received by your office?

Mr. KRONGARD. To be factual, it is neither of those. I had no contact, never had any contact at all, either by fax, phone, or otherwise, with Mr. Tomlinson. I asked my assistant to fax the letter to

Brian Conniff, the executive director of the Broadcasting Board of

Governors, not to Mr. Tomlinson. And as soon as I learned the inadvertent event that took place, I took steps to recover that immediately.

Ms. FOXX. Did you at any point discuss this congressional inquiry

with Karl Rove?

Mr. KRONGARD. I have never met, spoken to, or been in the presence of Karl Rove in my life.

Ms. FOXX. Did Karl Rove ever insert himself into your office’s investigation into the allegations against Mr. Tomlinson?

Mr. KRONGARD. I have never heard of any such insertion.

Ms. FOXX. Do you believe that the accidental leak of the whistleblower allegations had a detrimental impact on your office’s effectiveness in investigating the claims against Mr. Tomlinson?

Mr. KRONGARD. I don’t believe so, and I would have no reason

to believe so, because when you really get down to it, the information in there had been in the general public, had been subject to

investigations already. The date of that was 2003. That in no way

is meant to be an excuse for doing it because it was totally inadvertent and it shouldn’t have happened, but as to whether it had

any impact, I have no reason to believe it had any impact. I also,

after it happened, told the Congressman in question what had happened, and he didn’t think it was any big deal either.

166

Ms. FOXX. Mr. Chairman, I would like to ask Mr. Krongard to

explain a bit, if he will, on a comment you made earlier when I was

here, about your experience in coming into this job in comparison

with your experience in the private sector, when you talked a little

bit about the problem in the offices where people didn’t seem to

work as a team, where there was competition. I don’t think that

people appreciate enough the differences——

Mr. KRONGARD. I have thought a lot about this, obviously, in the

two-plus years I have been here. I would divide it into two things,

at least in my case, a culture clash and an expectations gap. And

they are two slightly different things. In the culture clash, I

brought with me the experience that people could be openly critical

of each other, just as teammates are and partners are, with the

idea of making the product better. And let me hasten to say I am

not saying that the people in the private sector—I have been accused of saying people in the private sector are better or worse.

That is not the case.

But in the private sector, in the partnership, the professional

partnership environment, you have clients that are paying for the

time and you have huge professional liability if a product is less

than perfect. Those two things militate in favor of spending enormous amount of time to getting to a high level of care in your confidence in the product. I mean, I am talking about 99 percent care.

Because there is no client paying in the Government and because

you don’t have the individual liability, there is less of a threshold

for care; it isn’t the 99 percent that I was accustomed to. So I came

with an expectation that people would really exchange freely criticism, there wasn’t pride of authorship, and that the whole objective

was for the firm to have a better product. Those things did not

stand me well because a lot of what I did was resented.

I will give you another naivete on my part. I honestly believe, because of my training in the private sector, when you signed a legal

opinion or an auditor’s report, the quality went in before the name

went on. It was your responsibility to be absolutely certain of what

you were saying and using the firm’s name. So I believed that all

of the reports, the 100-plus reports that are issued each year by my

office, that they went out over my signature, I really believed that

I had a personal responsibility. I stayed up hours reading every one

of those and then making comments on them. Well, that really surprised a lot of people and it annoyed a lot of people.

So I did have discussions with the people in my office and I recognized that I was expecting too much. But I also recognized that

the work product of OIG was in fact below where it should be, particularly in the eyes of our constituents. The history in the OIG

was they really talk to themselves and they talk to the State Department and they talk to the Ambassadors, and that is who they

were writing the reports for. I viewed our constituency as the Hill,

OMB, many other people, and we needed to be more responsive to

their needs, to have reports that were readable and understandable

by them.

So I used the expression, when I talk to my staff from time to

time about this, let’s meet halfway. I know I am expecting too

much, but I think you have to do better. And now that quote, let’s

meet half way, has somehow been turned against me as if it is

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something wrong. I still believe that concept. I know that I was

being too hard. I know I was expecting too much. I know that my

background led me to be demanding, and that was not always well

received, particularly in an organization where I was specifically

retained by the management of the State Department at that time

and told, Howard, this is what we expect of you. This organization

has not been responsive to the needs of the Department in this

complex world, and we need some changes and we need your leadership.

Ms. FOXX. Mr. Chairman, I would just like to say that, in a nutshell, I think he has pointed out what I have observed over and

over and over again in these hearings and in my experience in Federal Government, that there is very little accountability and very

little sense of responsibility for producing an outstanding result.

Our Federal Government is broken. I think you have pointed this

out again. It is broken because of the lack of intensity that we have

throughout to do things right. We saw it in FEMA and Katrina, we

see it everywhere, and somehow we have to get some accountability

set up for individual members of this Federal Government so they

are held accountability.

We have put this man on the block——

Chairman WAXMAN. The gentlelady’s time has expired.

Ms. FOXX [continuing]. And we are not doing anything to anybody else.

Chairman WAXMAN. The gentlelady’s time has expired.

The Chair now recognizes Mr. Higgins.

Mr. HIGGINS. Thank you, Mr. Chairman, for this very constructive and substantial oversight of a very important issue.

Mr. Krongard, the U.S. embassy in Baghdad is the most expensive embassy ever built; $600 million in contracts to build this embassy were awarded to First Kuwaiti Trading and Contracting Co.

In July, this committee held a hearing in which General Charles

Williams, the Director of Overseas Building Operations for the

State Department, testified that ‘‘the project is on schedule and on

budget.’’ But the embassy did not open on time and has now been

delayed indefinitely due to serious construction problems, including

hundreds of violations of contract specifications and fire safety

codes, as well as problems with electrical wiring. A fire inspection

report obtained by this committee concluded that ‘‘the entire installation is not acceptable.’’

During the committee’s investigation, we identified numerous allegations regarding the embassy that came into your office. For example, your office received at least five hot line complaints regarding the embassy spanning from April 2006 to July 2007. Your office

also received a letter in December 2006 detailing ‘‘allegations that

First Kuwaiti had defrauded the State Department through a variety of schemes.’’ This person later e-mailed you directly and there

is evidence that you spoke to this individual personally.

In addition, the Special Investigator General for Iraq Reconstruction warned your office in May 2007 that ‘‘things are going to blow

up’’ at the embassy and ‘‘important folks are involved.’’ Despite all

these allegations, you refused to allow any investigations into the

Baghdad embassy.

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Mr. Krongard, why didn’t you allow your investigations division

to open any investigation into these claims? And I don’t want to

confuse the issue or have you characterize that an audit is an investigation. I want to be clear as to what kind of investigation I

am talking about: that of a criminal nature relative to the construction of the U.S. embassy in Baghdad.

Mr. KRONGARD. Sir, it is hard to answer that other than to say

I never nixed any investigation. I only had—first of all, we had

very limited number of investigators, as I say, 7, 8, 10, 12, at any

one time, but only 1 of whom was willing to go to Iraq. I never

turned down anything that was well thought out or justified or

supportable. That is all I asked for in terms of approving investigations. I never said that somebody couldn’t open an investigation. I

made it clear all of the many different things we were doing. And

you are saying don’t talk about audits and so on, but the fact is

we have done several audits, we have done several inspections. In

addition, if you are talking about the trafficking in persons issues,

I did tell people at the time hold off on these until MNF-I IG and

myself get our reports completed and issued. So, as to that, we did

do that.

There has been an investigation going on which I did approve.

The investigators, they may be back by now because I am a little

out of the loop, but they were there for some 6 weeks or whatever

it has been. So I don’t think that I have shut down anything. There

have been recommendations made to me from the investigators

that I did not agree with, and I could go into those, if you like.

Mr. HIGGINS. Mr. Krongard, your office did eventually initiate an

investigation, and this happened on September 11th, 1 week after

your office learned that this committee was investigating your failure to pursue these issues. Your decision clearly came too late. Had

you engaged earlier, perhaps some of these critical deficiencies

could have been addressed before they erupted as they did.

Mr. KRONGARD. Sir, I don’t want to pick on dates, but you said

September 11th. I mean, I don’t know these dates, but if you say

that the investigation was open on September 11th—because I was

in Afghanistan at that time—this committee’s letter was dated September 18th, so it would be the reverse.

Mr. HIGGINS. OK, let me ask you this. The head of your investigations division, John DeDona, stated in an e-mail to your Deputy, Bill Todd, that ‘‘Under the current regime, the view within Investigations is to keep working the BS cases within the Beltway

and let us not rock the boat with more significant investigations.’’

Is Mr. DeDona correct?

Mr. KRONGARD. No, he is 180 degrees wrong, because we had

this dispute many times. It was my view that investigations were

not pursuing the really meaningful investigations: following the

money, determining what U.S. big programs were doing around the

world. My investigators tended to do time and expense sheets and

I don’t want to say petty, because they are important, but minor

violations of people in embassies and one-off of visa fraud cases;

whereas, I was trying to push them to do meaningful cases, such

as visa fraud cases by companies and interlopers who were allowing large numbers of people to come into the country illegally,

which constituted a threat to national security, where they were

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doing cases where somebody imported some product without paying

$15,000 worth of taxes or something.

So I would say that the dispute went the other way.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Cannon.

Mr. CANNON. Thank you, Mr. Chairman. I think today we got

news that the State Department has made the point that they are

not going to send people to Iraq who don’t want to go to Iraq. Isn’t

it true that part of your problem here is that you don’t have people

that will go to do investigations in Iraq?

Mr. KRONGARD. Sir, you are correct. As I stated before, two very

important audit engagements had to be either eliminated or redone

simply because the auditors refused to go to Iraq.

Mr. CANNON. That makes it sort of hard, right?

Mr. KRONGARD. It sure does.

Mr. CANNON. Are you happy with this policy of the Department,

not to send people where they don’t want to go?

Mr. KRONGARD. Sir, that is beyond my competence. I am not a

policy——

Mr. CANNON. I am not happy with it. I think it really actually

is wrong and bad, and I love Duncan Hunter’s suggestion that we

allow people who have been over there, who know the culture and

may have been injured while wearing the uniform, to go back as

diplomats. I think that might actually help our diplomatic corps

significantly.

Mr. Shays, I am pleased to yield to you, if you would like.

Mr. KRONGARD. Sir, Mr. Shays, I know, has been a great person

in terms of going to Iraq; he has been there many times. I have

been there, I think, three times.

Mr. CANNON. You have been there three times, right?

Mr. KRONGARD. Yes, sir.

Mr. CANNON. My sense is Mr. Shays has been there, like, 18

times.

Mr. KRONGARD. I remember.

Mr. CANNON. If the gentleman would respond to a question. Are

you the Congressman who has gone to Iraq the most?

Mr. SHAYS. I don’t know that, but I do know that when I go

there, I learn a heck of a lot.

And what I am struck with, Mr. Krongard, first off, I want to say

this for the record. To have been in contact with your brother and

to have your brother tell you that he was not involved in

Blackwater, and then to find out at a hearing that he actually attended and then left, and to find out he is connected is a pretty

outrageous thing. He has done you tremendous damage by that,

the fact that your brother would say he is not involved. I would like

to know do you have more than one family member, brother, sister,

sibling? How many siblings do you have?

Mr. KRONGARD. At this point in time I have one.

Mr. SHAYS. Wouldn’t it make sense, given your position, to have

been up front with your brother, to say, since I investigate everything the State Department does, I need to know any contact that

you have because I need to recuse myself?

Now, the other argument could be don’t tell me anything you

have because then I am not in conflict. But the problem is nobody

170

is going to believe you, frankly, and we can’t just say, they didn’t

tell me, but they are involved. If they are involved, you need to

recuse yourself, and you know that. And it would strike me that

what you would do is you would say to your brother I know what

you have done in the past, we didn’t talk, but now I have my job

to do. I need to know everything where I may have to potentially

recuse myself. Wouldn’t that make sense?

Mr. KRONGARD. Yes, sir.

Mr. SHAYS. And I don’t know what kind of conversation you had

with your brother when you were on the phone, but I would be one

pretty unhappy guy.

I would like to ask you, you have gone on record as saying that

you have had no contact with Karl Rove at all, so we are dealing

with that issue. Mr. Waxman said you interfered with an ongoing

investigation into the conduct of Kenneth Tomlinson, the head of

Voice of America and a close associate of Karl Rove, by passing information about the inquiry to Mr. Tomlinson. I would like to know

why did you pass information to Mr. Tomlinson?

Mr. KRONGARD. As I stated before, sir, I did not pass anything

to Mr. Tomlinson. I never had any contact, either by fax, hone, or

meeting, with Mr. Tomlinson.

Mr. SHAYS. So you have had no——

Mr. KRONGARD. That is correct, I have had no contact with Mr.

Tomlinson.

Mr. SHAYS. When you have to allocate—it is a little unsettling,

as well, for you to say you have 5, 6, 7, 9, 10 inspectors. How many

investigators do you have?

Mr. KRONGARD. Investigators. Well, it varies because we have

had people on medical disability. It has never been, I think, more

than, like, 13. In numbers, we sometimes——

Mr. SHAYS. What do you have now?

Mr. KRONGARD. Roughly—if you don’t count the administrative

people, who only do——

Mr. SHAYS. Right.

Mr. KRONGARD. We have about a dozen or so, 13, maybe. I don’t

know, there is one that may still be on medical leave, I am not

sure.

Mr. SHAYS. OK. And the issue is they are all involved in particular investigations, is that not correct?

Mr. KRONGARD. That is correct. And they have differing skills

and experience, too.

Mr. SHAYS. And your issue is if you move them from one place

to another, then you are not going to have them conduct an investigation that—you are going to get blamed no matter what you do,

just so you know. It is like a constituent of mine who will say, Congressman, you haven’t dealt with global warming, you haven’t dealt

with the budget crisis, you haven’t dealt with the war in Iraq, and

the list is as long as they have. And, you know, they are right. I

have to pick and I have to choose. So the real issue is what is the

motivation behind your making a decision, and I think these are

very legitimate questions. Thank you.

Chairman WAXMAN. Thank you, Mr. Shays.

Mr. Braley, I think you are next.

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Mr. BRALEY. Mr. Krongard, I want to followup on the very insightful comment that was just directed toward you by the gentleman from Connecticut, and I want to focus a little bit briefly on

your background. You are a graduate of Harvard Law School, correct?

Mr. KRONGARD. Yes, sir.

Mr. BRALEY. And you are a practicing lawyer.

Mr. KRONGARD. Yes, sir.

Mr. BRALEY. So like those of us who practice law, we were subjected to ethical rules that included rules that governed the appearance of impropriety.

Mr. KRONGARD. Yes, sir.

Mr. BRALEY. And the need to avoid the appearance of impropriety. So you were familiar with that concept before you went to

Deloitte, correct?

Mr. KRONGARD. Yes.

Mr. BRALEY. And then when you went to become general counsel

at Deloitte, you not only had your legal background, but you were

general counsel to a firm that did auditing and accounting that was

subject to its own ethical guidelines that also included prohibitions

on avoiding the appearance of impropriety, correct?

Mr. KRONGARD. Yes, sir.

Mr. BRALEY. And then, when you became the Inspector General

for the State Department, you were an employee of the executive

branch.

Mr. KRONGARD. Yes.

Mr. BRALEY. So you were subject to the standards of ethical conduct for employees of the executive branch. Are you familiar with

those?

Mr. KRONGARD. Yes. Yes.

Mr. BRALEY. They are found in 5 C.F.R. 2635 and they talk specifically about the need for executive branch employees to avoid the

appearance of impropriety.

Mr. KRONGARD. Yes.

Mr. BRALEY. Mr. Krongard, according to your Deputy, Bill Todd,

who met with a State Department official—or, excuse me, you met

with a State Department official in August 2007 who was implicated in potential criminal activity regarding to the embassy contract, and 1 day after the individual was interviewed by your audit

division, you arranged a special meeting to speak with the individual privately.

According to Mr. Todd, he personally advised you not to have the

meeting, and here is what he told us: ‘‘And Mr. Krongard said,

until they are a subject, why can’t I meet with them? And I said,

because of the appearance of it. And he said, Bill, I have to do my

job, so he met with them.’’ Do you remember that conversation?

Mr. KRONGARD. Not specifically, no.

Mr. BRALEY. Then 3 days after your meeting, that same individual who was the subject of that inquiry failed to show up at a

scheduled meeting with the auditors. They were informed that he

had returned to the Middle East and has not returned to the

United States or made himself available for a followup meeting

since.

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And this same Mr. Todd reported that you engaged in similar

conduct involving another individual. When you left the United

States on a trip to Iraq, this individual was a ‘‘person of interest’’

in the Justice Department investigation, and after you arrived in

Baghdad, the individual’s status was changed to ‘‘subject of investigation,’’ and Mr. Todd said he informed you of this fact and advised you not to meet with the individual, stating that it would be

questioned by our investigators and would give people cause to

comment. Do you remember that conversation?

Mr. KRONGARD. No, I do not. I don’t know how it could have

taken place because I was gone at that time.

Mr. BRALEY. Well, this is conversation that took place after you

had arrived in Iraq. In this case, Mr. Todd went a step further and

asked the Justice Department to speak to you directly, and, according to Mr. Todd, the Justice Department did contact you and

warned you not to conduct any witness interviews while you were

in Baghdad. Yet, despite these warnings, several members of your

staff told this committee that you spent several hours with this individual, and when you returned to the United States, your investigators were so concerned that you might taint their investigation

that they had specifically asked you not to tell them anything that

you had learned. Nevertheless, you sent one of those investigators

an e-mail outlining the substance of your conversation with the individual. How do you explain those?

Mr. KRONGARD. Sir, I would like to go by, if we had the time, one

by one, each of them—and I didn’t write each of them down, but

virtually every one of those I disagree with. Let me take the most

obvious, the Department of Justice. When I planned my trip to

Iraq, before I went to Iraq I was aware of three Department of Justice investigations. I called all three of them to tell them exactly

what I was doing, what I could do for them while I was over there,

and did they have any concerns about it. Two of them I spoke with

on the phone and one group I went over and met in person. In fact,

some of them really appreciated what I was doing because they

didn’t know what each other was doing. I knew more about what

each of them were doing than they did. So all three of those—and

I can give you the names, all three groups, because there was more

than one involved from each of those, I can tell you what groups

from Justice they were—they knew exactly what I was doing and,

as I say, I really asked them—and I have records to show this—

how can I help you while I am there.

Mr. BRALEY. Has the Justice Department advised you to recuse

yourself from embassy investigation?

Mr. KRONGARD. Absolutely not. On the contrary. After I had completed my work in Iraq with regard to the new embassy compound—because that was only a small part of what I was doing in

Iraq—after I completed that, I got an e-mail that was hard to understand, but it suggested—and it may be the one you are talking

about—it suggested that I should have no witness interviews. And,

by the way, I would like to tell you what I was doing. These were

not witness interviews, and I would like to tell you what exactly

I was doing both with Mr. Golden and Ms. French. But when I got

that, I was troubled by that. So, from Iraq, I made contact with

and through my deputy—and I forget exactly how it happened, but

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I spoke with a senior Justice Department official to ask him am I

reading this right, am I supposed to not be doing this after talking

with each of these people? And that person, after checking on it

and getting back to us, who is more senior than any of the other

people, told me exactly not, that there was no problem with what

I was doing.

Mr. BRALEY. So your testimony is that your deputy and your entire office counsel did not advise you to recuse yourself from the

embassy investigation.

Mr. KRONGARD. I don’t believe I was advised to recuse myself, no,

I don’t.

Mr. BRALEY. Have you ever——

Mr. KRONGARD. But I have, by the way. Since I came back and

since the activities of this committee, I have stepped aside from

that.

Mr. BRALEY. Have you formally recused yourself in a public way

so that people know you are no longer involved in that investigation?

Mr. KRONGARD. Well, I have sent e-mails to people. I have told

people. I have told people in the State Department. I don’t know

what else—I don’t do press releases, if that is what you are talking

about.

Mr. BRALEY. Are you announcing today that you have formally

recused yourself, in front of this committee, from any investigation

into the embassy in Iraq?

Mr. KRONGARD. When you say any investigation, I am not exactly sure. If you are talking about the one that—by the way, when

you say I sent the agency, I didn’t send the agency. In fact, I

couldn’t have. The agent was one of the whistle-blowers. If I had

sent him to Iraq, I would have been accused of retaliatory comment. I discussed with him the opportunity to go not only for that,

but to do something else that I had been working on there which

he was very interested in. So I presented him with the opportunity;

e-mails are replete with that. He decided what he wanted to do.

Chairman WAXMAN. The gentleman’s time has expired.

There is something I don’t understand. Why did you recuse yourself from the embassy involvement? The Justice Department didn’t

ask you to recuse yourself. Your brother is not working in any way

that would involve you having a potential—why did you recuse

yourself?

Mr. KRONGARD. Because of the activities of this committee.

Chairman WAXMAN. Because of the investigation of this committee you decided you should recuse yourself?

Mr. KRONGARD. No, sir. You instructed me in the letter not to

have any communications with the people who were being interviewed by you and not to allow any communications between them,

and I wrote you back saying that was of great concern to me because it paralyzed our office. What effectively we did was to sort

of keep me out and not to have communications among all of our

senior people on the specific issues but you raised. But your request was even broader than that, it was not to have any communication at all.

Chairman WAXMAN. Mr. Yarmuth, I am going to give you the

choice. We can do your 5 minutes now, but we are going to have

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to come back anyway, and it is going to put us pretty close to the

time, but we should be able to make the vote. So it is up to you.

Mr. YARMUTH. Let me do it. I will try to keep it quick, Mr. Chairman.

Chairman WAXMAN. OK.

Mr. YARMUTH. Before I ask the one question I want to ask, following up on something that Mr. Shays mentioned, I want to just

refer to a comment that Mr. McHenry made earlier in the hearing—he is not here now—in which he called this a drive-by oversight and also mentioned the fact that this committee had not done

anything legislatively based on what we had heard during the

course of the year, and I would just like to mention that already

this year we have passed whistle-blower protection legislation, we

have dealt with legislation related to the free flow of information,

Government contracting, Blackwater and other private security

firms, and also procurement policies and defense appropriations

bills. So I just want to correct the record that Mr. McHenry implied

that we—not implied, stated that we had not done anything legislatively.

I want to go back just for a minute to the question of the Tomlinson investigation. You said that you had not had any contact with

Mr. Tomlinson. Yet, people have told us that the letter that was

sent to your office from Congressman Berman and Lantos and Senator Dodd and a complaint actually ended up in the hands of Mr.

Tomlinson that was faxed to his executive director. Did your office

have anything to do with faxing that letter of complaint to the executive director of the board?

Mr. KRONGARD. Yes. Well, not executive director of the board.

The executive director of the organization.

Mr. YARMUTH. The organization.

Mr. KRONGARD. Yes, sir, I did. The faxing of the letter was intended. The faxing of the attachment to the letter was inadvertent,

and as soon as we learned that we instructed him to return it to

us, and he assured us at that time that it had not been shown to

anyone else, and it was only a day or so.

Mr. YARMUTH. You say it was inadvertent. I mean, it seems like

a pretty serious mistake to alert someone or alert an organization

that was being investigated that there was a compliant against

them.

Mr. KRONGARD. The facts are pretty clear. I don’t dispute the

facts in any way. I had a phone conversation with Mr. Conniff is

his name because of the nature of the information that was required from the congressional letter. I told him that we would need

help at his highest level in getting things like time sheets and information and so on, and he said what do you need it for, and I

gave him a general background, I didn’t refer to any congressional

letter. And he immediately said, oh, you are talking about the double-dipping and the 40-hour a week. He knew each of the issues.

I was brand new; I had only been in office about 6 weeks. But, apparently—and this turned out to be the fact—these same issues

had already been the subject of an investigation both by the Corporation for Public Broadcasting and the Office of Government Ethics. So he well knew the issues. So at that point I said, yes, this

is a request on the same issues.

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And since he knew those issues, I said I will just send you the

letter and you can see what it is. And I told my assistant, who was

a temporary person at the time, fax the letter to Conniff. I don’t

think anybody disputes that was the instruction, fax the letter to

Conniff. She was within, I think, her right to interpret that to fax

the attachment. It was not my intention that it include the attachment; I was only thinking of the letter. When we learned, I think

it was the next day, that the attachment had been faxed, I instructed my legal counsel to call Brian Conniff to ask him to return

immediately the attachment, and that was done.

Mr. YARMUTH. But, in fact, Peter Lubeck, who was the person

who was investigating this, the chief investigator on this matter,

has testified that one of the witnesses said what happened—and

this is quoting Mr. Lubeck: ‘‘What happened as a result of this, two

of the witnesses were observed shredding documents related to this

case. When I interviewed the two witnesses, they said, oh, we were

just housekeeping.’’ So, apparently, that letter had potentially very

serious implications.

Mr. KRONGARD. I think that is a leap of faith, sir. I really do. To

say that with all the knowledge and all the media attention that

was being given at that time, already, and had been given to these

allegations against Mr. Tomlinson, to say that a shredding party

took place because of my discussion with Brian Conniff, who we

have no reason not to trust—he was the highest ranking officer in

that organization—I can’t say one way or the other, but I wouldn’t

jump to the conclusion that is what caused it.

Chairman WAXMAN. Mr. Yarmuth, if you would allow me, I am

confused, because when Mr. Shays asked you whether you had any

communications with Mr. Tomlinson or others that would get to

him, you said no, absolutely not. Now it turns out you directed a

fax that inadvertently had an attachment to it, which you tried to

pull back afterwards. Isn’t that a communication?

Mr. KRONGARD. There is a great difference in my mind between

the executive director, Mr. Conniff, and Mr. Tomlinson. I answered

faithfully the question that I did not provide anything to Mr. Tomlinson. There was no way we could have conducted our investigation without the cooperation of someone at a high level of BBG so

we could get the materials we needed—the time sheets, the pay

sheets, all of the records—and the person we would go to would be

the executive director.

Chairman WAXMAN. Well, let me tell you this. If you ever investigate me and you send an information to my chief of staff, I am

going to know about it. Don’t you think Mr. Tomlinson would have

known about it?

Mr. KRONGARD. No, because the chief of staff is in a different relationship than the executive director and the chairman of the

Board.

Chairman WAXMAN. In some offices they talk to each other.

Mr. KRONGARD. Sir, with all due respect, I don’t know, sitting

here today, who, other than Mr. Conniff, we would have gone to to

get information of the type we needed.

Chairman WAXMAN. We have another vote on the House floor.

We are going to recess. There are four votes, so it will probably

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take us a half hour, but we will come back and will wrap up at

that point, but there are some more questions.

[Recess.]

Chairman WAXMAN. The committee will come back to order.

Mr. Issa, I want to recognize you for questioning.

Mr. ISSA. Thank you, Mr. Chairman.

I have a number of questions, but perhaps the one that is most

vexing to me, on the staff report for House Oversight—I guess this

is the majority report—I am a little confused. On page 93—oh, I

am sorry, the minority report. Thank you. I am sure it says minority somewhere here, I just missed that.

There is a quote here that I would like you to comment on. It

appears that, following the July 31st meeting at the Justice Department with Assistant U.S. Attorney and Chief of the Eastern

District of North Carolina, Robert Higdon, that he wrote—and I

think I am quoting: Thank you for taking time to meet with the

Deputy Criminal Chief, Jim Candelmo and me earlier this week

when we were in Washington. We appreciate the frank exchange

of views and information. We will remain cognizant of these issues

and will work closely with you and your staff to move this matter

forward in the most expeditious way possible. Your decision to

allow your case agent to continue to work on this matter will make

that much easier.

Can you comment on why they would thank you and then we are

sort of hearing the opposite in this hearing?

Mr. KRONGARD. Well, I quoted from this earlier, sir, for the same

reason. I can only go by what they said to me both in the meeting,

where they expressed appreciation, and in their followup letter.

What is being said either second or third-hand, which I am just

hearing, I don’t know how to resolve those. I go by what they said

to me.

Mr. ISSA. OK, I am confused. This hearing, I can’t figure out if

it is about the Iraqi embassy or if it is about you. If it is about the

Iraqi embassy, the embassy is on time and on budget, and normal

construction errors, and maybe even not so normal construction errors, are being dealt with both through your office and through

General Williams’ office, and so on. And in the case of these specific

areas of joint investigation, it appears as though you and Justice,

at least officially, and through the participation of resources, are

working together. Is that what it appears in your case to be?

Mr. KRONGARD. Yes, sir. I think that is correct. I think, at the

end of the day, we have been helping them to the best of our ability.

Mr. ISSA. So, Mr. Chairman, my question to you is where is the

beef? I really have to try to understand your opening statement

versus these facts, which seem to have—yes, they are controverted.

They are controverted by the empty seats there.

I guess I am going to switch from the things that don’t appear

to be here, which there doesn’t seem to be a case for the Iraqi embassy, per se, being in trouble, other than it is a big project and

there are things to be fixed. There doesn’t appear to be any lack

of willingness with appropriate oversight by yourself and your office to working together with Justice. So let me ask you this. You

have a lot of areas, 252 embassies and missions around the world,

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that you have to do statutory oversight on, that you have to investigate. What are your priorities? I would like to know what you are

working on, because what this hearing is about today appears not

to be a problem. But I would like to hear about the problems that

you would like us to know you are working on that maybe we

should focus attention on.

Mr. KRONGARD. Well, that is a really important question, sir, because when I came into office, one of the things I spoke about at

my confirmation and always in the early days was that I wanted

my priorities to be set not by the calendar, but by the priorities of

the day. And I come from an audit background, where you go to

the highest risks first, and I used to say I don’t want to have to

go to Island in the Sun because I haven’t been there for 5 years

and, oh, no, you can’t go back to Kabul because you were there last

year.

I think the problem is that, when I first came in, 70 percent of

our work was mandated, so what we were working with, in order

to fix our own priorities, is not significant. I mean, most of our

work is—when you say what are we working on, I can tell you a

lot of it, but it wouldn’t necessarily be my highest priorities. As I

said, in investigations, we are doing a lot of time and expense. I

would like to be doing program.

Mr. ISSA. Well, let me give you an example of a question that I

have had. State Department took a couple of decades to sell and

buy a new embassy grounds in Lebanon. They no more than closed

escrow and I am now told they will never build there, that they

will have to find a new site. Is that something that your department looks at, the decision process and whether it was a legitimate

change in events as a result of the assassination of Hariri, or

whether, in fact, this is indicative of a selection process that we

may be repeating around the world at great cost to the taxpayers?

Mr. KRONGARD. That is the kind of thing we do, and I hate to

speculate about something that took place before my time, but my

recollection is that, before my time, there was an inspection of Embassy Beirut that did get into this issue, but that is my recollection.

Mr. ISSA. Well, you can followup for the record, if you don’t mind.

Mr. KRONGARD. We will, certainly. And let me tell you, sir, that

one of the things that was highest on my priority lists is in the

process of being achieved thanks to the Congress, which was setting up a Middle East regional office. Remember, we are talking

about all these people who act in Afghanistan and Iraq. They all

have people there. We have never had a single person in the Middle East, whether it is Baghdad or Kabul or anyplace else, and

thanks to the Congress and my efforts of over 2 years to try and

get support, we were given $1.5 million to set up a Middle East regional office, and the people just returned from Amman yesterday,

where it is being set up. And the reason we picked Amman is because our problems aren’t just Iraq and Afghanistan, they include

Beirut, and that is one of the places we want to be.

Mr. ISSA. Well, thank you, and thank you for your service. And

I will end by saying that first week of December the President is

having a Christmas party. I have an extra guest ticket. After

today, I know that you have earned it. I would be happy to have

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you use my guest ticket, and then you will get a picture with the

President and then you will get to meet him, as well you should.

Thank you for your service.

Mr. KRONGARD. Thank you, sir.

Chairman WAXMAN. Thank you, Mr. Issa.

Mr. Shays, you are recognized.

Mr. SHAYS. Thank you. Mr. Chairman, first off, I want to say

that what troubles me about this hearing is that, Mr. Krongard,

you have not been confronted by your accusers. You were confronted with a 14-page document. We don’t want our IGs to be politically interfered with by the executive branch or Congress, and

yet you have disclosed that you were basically forced to recuse

yourself because of this committee, when in fact you may not have

had to, because of the interference of this committee.

The chairman has said something that I think was totally inaccurate. We all make mistakes, but the chairman said we don’t need

to have your accusers here because they were deposed by this committee under oath. They weren’t deposed and they weren’t under

oath. John DeDona, in regards to the September 18th letter, was

an interview not under oath; Ralph McNamara, who has made accusations in the September 18th letter, was an interview, he was

not under oath; Brian Rubendall and Ron Militana, September

28th letter, they were interviewed, but they were not under oath;

and Peter Lubeck, October 4th, was interviewed, but was not under

oath.

They haven’t come before this committee. You have not been

given the kind of courtesy that we have given other people who

come before this committee to know what they have said and we

can compare the testimony and they can be under the light of public disclosure, as you have been today.

And then there were two other individuals who are whistle-blowers who have made accusations that the majority has chosen not

to share with us who they are, so we can’t question them about it

because we don’t know who they are.

So I just want to say we all make mistakes, and in this case I

think this committee has made a number. You have made a mistake, in my judgment, in not being clear with your brother the importance of him being up front with you, and I think that has really been not helpful at all. That is the one thing that I have learned

in this hearing that I think is very uncomfortable to me. All the

other issues, the travel, the allocation of your resources, to me

seem fairly straight forward. So I leave this hearing thinking that

you are an honorable man, you have tried to be up front with us,

and I wonder sometimes why anybody would want to work for Government. You ran a big business, you obviously had a lot of employees, so it is not like you don’t have management skills.

And your point to us, which I accept, is that you came in as a

change agent and know you have limited time, and probably

pushed it a little more quickly in the public sector than you can

in the private sector, and that is the reality of working in the public sector, and it is one reason why Government sometimes is ineffective, because it can’t respond to the kinds of changes that we

need.

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I would like to ask you, as it relates to the embassy. There have

been a number of allegations concerning construction deficiencies

at the Baghdad embassy. Does your office have investigators with

the required skills to go to the constructionsite and add value to

an investigation of issues such as the proper wall strength needed

to withstand rocket attacks, whether the building is properly

wired, has proper plumbing, or has adequate fire suppression systems?

Mr. KRONGARD. No, we don’t have that kind of skill.

Mr. SHAYS. Isn’t it true that the allegations of construction deficiencies are being handled by other investigative entities that have

some expertise in construction and building security matters?

Mr. KRONGARD. That is true, but without meaning to interrupt

your train of thought, can I answer more fully? Because this is not

intended to be self-promotional, but I want this fact out on the

table, that when I was in Iraq in September, I think I made two

very valuable contributions. It was I who insisted upon and obtained the agreement that the fire suppression system would have

to be certified by an outside, independent, third-party expert and

that an outside, independent, third-party expert would have to certify as to the structural integrity of the buildings. I insisted upon

that.

Mr. SHAYS. Let me ask you. When you went to Iraq, people are

treating this as if you were doing an investigation. My sense, in

hearing you, is that you went as the Inspector General to get information in general, that you were not conducting any investigation.

I surmise from that you were also trying to determine where to allocate your resources and what areas you felt should be investigated and not. Am I looking at it the way I should be or is there

more to the story?

Mr. KRONGARD. There is more to it. I was gone for 3 weeks, I visited five countries, and the principal reason for my visit was a——

Mr. SHAYS. You visited five countries?

Mr. KRONGARD. The whole trip. The principal reason for my trip

was to do a classified investigation with the Inspector General of

the Department of Defense. That was what my principal reason for

that 3-week trip was. I carved it out so that I have a couple of

extra days on my own in Baghdad——

Mr. SHAYS. So that wasn’t connected to any investigation.

Mr. KRONGARD. Not connected to anything we have talked about

today. And I carved out some time while I was in Baghdad to attend to other things that are of interest to me, where I have made

contributions: rule of law, anti-corruption, and the new embassy

construction. So that was something that I carved out because I

was there, it was not the principal reason for my trip.

Mr. SHAYS. Thank you.

Chairman WAXMAN. The gentleman’s time has expired. I just

want to say, Mr. Shays, again, that the witnesses that talked to

our committee staffs jointly and that were put up to question——

Mr. SHAYS. Excuse me. Is this on your time? Because I used it

on my time. I am just curious.

Chairman WAXMAN. Well, I think this is just something for the

record.

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Mr. SHAYS. OK, because I just want to say I used my 5 minutes,

and I would appreciate not having to do it. But, anyway, continue.

Chairman WAXMAN. Well, it looks like you don’t want the record

to be complete, but I just want to point out——

Mr. SHAYS. No, I would just like you to use your 5 minutes like

I used mine.

Chairman WAXMAN. I see. Well, I am not going to use my 5 minutes in correcting a record as chairman of the committee. And as

chairman of the committee, the procedures by which we have followed in interviewing witnesses is to give them a choice of a deposition or an interview, and we have never heard any objection from

the Republican side of the aisle on that process..

Mr. SHAYS. We don’t object to that.

Chairman WAXMAN. Excuse me, I am still talking.

The second point I want to make is that when somebody is responding to questions in an interview, as opposed to a deposition,

they are still subject to criminal penalties if they lie or misrepresent information. And, third, you have never requested that these

witnesses be here today. You have come in and completely complained at every opportunity they are not here, but we never had

a request from the Republican side of the aisle to bring them in.

So I just want the record to reflect that.

Mr. SHAYS. Could I ask a question in this regard?

Chairman WAXMAN. Yes, certainly.

Mr. SHAYS. Am I incorrect, didn’t you say that these people had

been under deposition and had been under oath? That is what you

said, and I wanted to correct the record that they weren’t, and that

is true. And, second——

Chairman WAXMAN. No, I said that some were under oath in a

deposition and some were interviewed. It was a combination of the

two.

Mr. SHAYS. And they were not. None of these individuals that

made these charges were under oath, and please——

Chairman WAXMAN. That is not an accurate statement.

Mr. SHAYS. Please——

Chairman WAXMAN. Maybe the individuals you are referring to,

but not all the people we talked to.

Mr. SHAYS. So let me be clear. The individuals that I named

were not under oath?

Chairman WAXMAN. I am going to tell you this, what I told you

earlier. We will give a list——

Mr. SHAYS. I just want the truth. I just want the truth.

Chairman WAXMAN [continuing]. Of the people that talked under

deposition and then talked under interview circumstances. We

gave, for the most part, the people the choice.

Mr. SHAYS. And the question I would then end in, why do we

swear in a witness if we don’t need to swear in a witness, if they

have to tell the truth anyway? Why are we doing that to Mr.

Krongard, but we are not doing it to the people who made the

charges?

Chairman WAXMAN. Well, the rules of the committee provide

that anybody that testifies before a committee meeting, a committee hearing must testify under oath. The process by which we

interviewed or deposed witness has been to give the individual a

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choice. We have never heard any objection from anybody to that

process. We think it has worked well. It is only at this hearing that

we are now hearing complaints.

And, second, we never had a request from the Republicans to

bring all those witnesses in. We had a report put out by the Democrats, a report put out by the Republicans. Mr. Krongard knows

well the concerns that we have raised and he is here to answer

them, and he told us, or at least we have seen quotes from him,

that he welcomed this opportunity. He may not have chosen it at

his first choice of how to spend the day, but this is the only way

that we think, is to get him in and answer questions.

Now it is Mr. Cummings’ turn, if he wants to ask questions.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I will be

very brief.

Mr. Krongard, Congressman Shays just made a statement that

I thought was very profound, when he said that the one thing that

troubled him was with regard to the statements you made with regard to your brother, and I came to this hearing today, I must tell

you, with an open mind, and if there is anybody on this committee

who, over the years, has guarded witnesses and tried to make sure

that they were treated fairly, I have done that. But in light of all

the evidence we have, it is increasingly difficult, I must tell you,

to give you the benefit of the doubt and to find your testimony

credible, and let me just explain to you why. And you don’t have

to look so confused, I am just telling you what I am feeling.

In fact, the only way you can be credible is if all your employees

who have given sworn testimony to our committee, over a dozen

that is, are wrong in their statements and if the Justice Department is wrong in the information that it has shared with us. Let’s

just summarize your testimony as we close this hearing. As I have

listened, and I have not been in the entire committee, but I have

watched it on TV, the Justice Department told us you impeded

their investigation. You have told us that not only haven’t you

blocked the Department’s work, but that the Department doesn’t

believe you blocked its work. So you are telling us you are right

and the Department is wrong.

The Justice Department and the agent you assigned to the

Blackwater inquiry told us you put your congressional and public

affairs officer in charge of obtaining relevant documents. You have

told us that isn’t true, even though the congressional and public relations director confirmed the two other accounts. So, again, you

are telling us you are right and they are wrong.

Your employees have uniformly told us of the abusive and hostile

environment that you created. This morning you told us the problem wasn’t with you, but was a reflection of the low quality of the

people working for you. In fact, you previously told them the Office

of Inspector General was a ‘‘banana republic’’ and belittled the

standards they followed. In response, your Chief Counsel, Erich

Hart, told us that ‘‘I think everybody in that room was personally

offended by that statement. I was offended. I come from a military

background and my standards are exceedingly high.’’ In this case

you are telling us you were right and, again, your senior employees

were wrong.

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Despite the recommendations of the head of your audit division,

your chief counsel, and your deputy that you not allow the State

Department to replace a qualified audit of its financial statement

with a clean audit, you did this in both 2005 and 2006. This morning you told us that you did this to preserve the integrity of the

audit process, notwithstanding the views of your top advisors, and

when they objected, you told one of them he was ‘‘irrelevant.’’ Bill

Todd, your deputy, told the committee that ‘‘Howard said I was

wrong. Howard told Duda he was wrong and Howard told Erich

Hart he is wrong.’’

A number of your senior advisors told us your personal investigation into First Kuwaiti’s alleged labor trafficking was unorthodox,

‘‘didn’t comply with any standards,’’ was ‘‘an embarrassment to the

community,’’ and ‘‘an affront to our profession.’’ But this morning

you have stuck to your position and insist you were right and they

were wrong.

A number of those same advisors and the Justice Department

have also told us they warned you that your proposed participation

into an ongoing criminal inquiry was wrong and could taint the

real investigation. Again, you insisted today that you were right

and they were wrong.

In fact, the only time today that you have admitted you were

wrong relates to your brother, Buzzy Krongard. You were adamant

this morning that he did not serve on the Blackwater board. As a

matter of fact, after you gave your statement, you were emphatic

that you had talked about him and gave me the impression that

you had just talked to him recently, and then came back and said

it had been a while. I am just saying that was the impression I got.

Mr. Krongard, I just don’t believe that everybody is wrong and

you are the only one who is right. But I will give you one more

chance to reflect on these overwhelming facts and reconsider your

testimony, and if you would like to do that, you may.

Mr. KRONGARD. Thank you, sir. I am not sure I can do every one,

because I wasn’t writing fast enough. Let’s start with DOJ. I am

accused of impeding their investigation and you say that I am disagreeing with them or the people who are speaking for them. When

I read you the letter, which reflects exactly what they said—and

that letter very clearly makes the point that I was cooperating with

them, they appreciated what I was doing, they liked my candor,

they liked the fact that I had assigned to them a good investigator.

So I don’t think it is a question of my saying that they are wrong;

I am relying on their own words.

With respect to the congressional and public affairs person, it is

true as to the documents. You said that I denied that the congressional and public affairs person was responsible for getting the documents. I stated the contrary; she was because she was doing it for

SIGIR, as well, and, therefore, it made it easy to do it for both.

What I said she was not doing was any investigative activities. She

wasn’t an investigator, I agree with you.

Mr. CUMMINGS. Mr. Krongard, I want to interrupt you for 1 second. That letter from the Justice Department was after the July

meeting that you had with them. The complaints we are getting

are from all the things you did after that.

Mr. KRONGARD. Well, let me get to that.

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Mr. CUMMINGS. So just the chronology.

Mr. KRONGARD. Let me get to that, then.

Mr. CUMMINGS. OK, go ahead.

Mr. KRONGARD. I was following the Congressman’s order, but let

me get to that. I made it clear in my testimony, and I will stand

by it, that I communicated by phone and in person with each of the

three branches of the Justice Department that had investigations,

to my knowledge, before I went to Iraq, told them what I was going

to do in Iraq, and asked them if there was anything I could do to

assist them. I don’t know what else—I am not disagreeing with

them. I did talk to them and I know what they said to me, so I

do disagree with you on that.

I am not disputing that the problem is all somebody else’s. I

didn’t try and say that. I tried to say I have been very hard on the

people. I came to do a very difficult job. I gave up a lot to come

down and do that, and I wanted to make the contribution that was

expected of me, and I wasn’t prepared very well for what I found,

and, yes, I have created an environment that a lot of people felt

uncomfortable.

But you haven’t heard from any of the people that like what I

am doing, and admire and respect what I am doing. It would have

been nice if some of those people had been consulted. But I am not

saying the problem is all with them as far as the work environment. It is a work environment that I have been very demanding;

I have been very critical. I have tried to get to a high level of care.

When I read every report and I make comments on it, some people

view that as micro-managing, some people view that as interference.

Each of the seven names, I believe, that Congressman Shays

read with respect to giving this adverse testimony are all from the

investigations group. I came into a situation where that investigations group had never been managed. They viewed any management, any oversight as interference. So, yes, I am part of the problem. I have tried to deal with it. I would like to do better.

There are e-mails in here, frankly, that I am embarrassed to see

in print when I see them in print by themselves, without seeing

what led to them and what pushed me to them. But, nevertheless,

I am embarrassed by them. And it has not been asked, but I will

tell you I learned a really good lesson through this, and I am going

to think long and hard before hitting that send button, which we

all should. E-mail is a terrible thing.

So I don’t say it is everybody else.

As to who is right and wrong, on the audit, absolutely I knew

I was going against the majority, and I believe to this day that one

of the best things I have done in the Department since I have been

there is that memorandum that I wrote with respect to why I was

doing what I was and had the support of the American Institute

of Certified Public Accountants, OMB, and GAO, and I think to

this day what I did was correct.

And the people who disagreed with me, by the way, even though

they disagreed with me in principle, acknowledged, including Erich

Hart, the legal counsel, that there was nothing illegal about what

we were doing, and our role as not being the auditor, but just being

the overseer, was only to make sure they didn’t do anything illegal

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or unprofessional. So on that I really do believe I was right and the

other people were wrong, and so be it, that is the way.

On the work on the new embassy compound, as I say, I have

made real contributions there. With respect to getting the fire suppression system certified by an outsider and the structural integrity, I pushed for that, and I demanded it and I got it.

So I have tried to do the best job I can. That is all I can tell you.

I am not perfect. I am not going to be here telling you everybody

else is wrong and I am right.

Mr. CUMMINGS. I see my time is up. Thank you.

Chairman WAXMAN. Your time is up.

Mr. Krongard, the thrust of those last questions is you are right

and everybody else is wrong. That is the way it appears to some

of us, but what strikes me is the enormous gap between your

strong reputation in previous jobs and your performance and the

Inspector General. There is a string of incompetent actions that

you took. Now, I took notes when you testified originally, and you

said I took on a mission that put me in conflict with people resisting change. Then you also said I never allowed staff to affect my

judgments. I sometimes think that is an incredible statement, because you had staff there that should have affected your judgment,

because many of them had more information, knowledge, experience than you did.

Now, all the people that were critical were not from the inspections unit. Bill Todd said that what you were doing was very unorthodox. He was the Deputy Inspector General. Patty Boyd said

your audit was an embarrassment. Erich Hart, your counsel, said

it was wrong to give the State Department more time on the audits, which you did for 2 years running.

Despite strong warnings from the Justice Department, you insisted on meeting with a person of interest. You investigated and

wrote a report on human trafficking that was widely ridiculed by

your career investigators for being the furthest thing from an investigation. Your staff specifically warned you not to debrief them

on your discussions with subjects of investigation for fear that it

would taint their investigation, and you then proceeded to send a

detailed e-mail to one of the agents doing exactly what they asked

you not to do. In the case of Ken Tomlinson, you shared with him

a whistle-blower letter detailing the allegations that were being investigated. And there were other instances. You met with two State

Department officials that were persons of interest, and that was a

problem.

There is one area after another where you seem to ignore the

people who had ideas of what to do and instructed you that they

thought there was a problem, but you put your judgment over

theirs. And I would submit it looks like your judgment in every

case was not better than theirs. This record of incompetence is

completely at odds with your previous professional reputation. I

don’t know how to reconcile the two, but I know that we can’t ignore the facts.

You have a critical role as an inspector general for the State Department. The State Department needs your help to make them

more effective and to make the most of their resources, and the

challenges that are facing the State Department are enormous in

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Iraq, particularly; they have profound implications for our relations

with the entire world. So you have to do the oversight to keep them

honest.

Our job is to do the oversight to keep you and the State Department honest, and to make sure that you are doing the job you need

to do.

Now, our investigation and our hearing today has been belittled

by the Republicans. When they were in power, they didn’t do any

investigations over anything that might embarrass the Bush administration. It is as if they had nothing to do with it all. They

were only Members of Congress, although the Constitution spells

out we have a job, providing the checks and balances. Now that we

are trying to do that, we get a lot of criticism.

But back to you. I will take the criticism. Back to you. How is

it that you ignore and put yourself in a situation where you belittle

the people that are trying to have you do your job right? Are they

all wrong and you are right? And it seems to me it is not just a

question of credibility; it is a question of what has happened has

been viewed as incompetent. How do you respond to some of these

specifics and my general comments?

Mr. KRONGARD. OK, let me try, sir.

Chairman WAXMAN. And, with that, we are going to end the

hearing.

Mr. KRONGARD. Let me try, sir, because there are some things

that have been said, really, for the first time to me and are wholly

implausible. For example, I have heard for the first time today that

I was told not to tell the investigators information that I had acquired in Baghdad, and they didn’t want to know it and I forced

them to know it. Let me read to you the e-mail which I sent to the

agent—I won’t use his name—as soon as I got back from Baghdad.

It says, ‘‘When I was in Baghdad last week discussing so-and-so,

here is what happened,’’ and I did tell him. Here is the response

from the agent on October 5th: ‘‘Howard, thanks for the information. I believe this is an area of interest to the prosecutors, so I will

forward the information to them as well.’’ That seems to me a total

acceptance of what I did.

I then followed up with him and said, ‘‘Good. Have you had a

chance to consider my suggestion at our meeting Tuesday?’’ We had

met.

Chairman WAXMAN. You wouldn’t give your e-mails to the Justice Department because you told them what? Why didn’t you provide the Justice Department the information they need? You are

supposed to work with them; they are the ones in charge of criminal prosecutions, not you. And if they ask for information, why

wouldn’t you give it to them?

Mr. KRONGARD. They never asked for this information, sir. I had

not even been aware that there was an investigation, because it

happened while I was in Iraq. I provided my investigator with the

information. I didn’t even know he was working on an investigation

with the Justice Department.

Chairman WAXMAN. Well, you are reading aloud from e-mails

that are not on the public record. Do you want that on the public

record?

186

Mr. KRONGARD. You have put on the public record a statement

that I was told something that I wasn’t told. This is directly contrary. I was cooperating with this agent. I gave him information

that he liked. I gave him an opportunity to go to Iraq and I put

the choice to him. I mean——

Chairman WAXMAN. Let me just ask you to hold off for a minute,

because I think you are maybe going to adversely affect other investigations by what you are saying here.

Mr. KRONGARD. But the allegation——

Chairman WAXMAN. We have to respond to the vote.

Mr. SHAYS. He has to be able to defend himself to the charges.

Chairman WAXMAN. Well, I am not going to deprive him of being

able to defend himself, but if he uses information that he has that

has some——

Mr. KRONGARD. I will submit this right now to you.

Chairman WAXMAN. Where did you get that?

Mr. KRONGARD. It is my e-mails. It is my record. I produced

this——

Chairman WAXMAN. Now, this is something we subpoenaed and

we never received. Why didn’t we get that when we asked for it

under subpoena.

Mr. KRONGARD. You would have to ask the person who processed

this. I gave up my e-mails to the person processing this. Maybe it

was determined that this is, like you are saying, affects investigations. It may be. I wouldn’t have gotten into it but for the allegation against me that has been made today.

Chairman WAXMAN. I know, but we asked for the information

from you. We even——

Mr. KRONGARD. I gave it to the person. I gave it to the person.

Chairman WAXMAN. You gave it to our committee?

Mr. KRONGARD. No, I gave it to the person—I was recused and

separated from the production process. I produced all of my e-mails

to legal counsel in my office who was responsible for the production. I don’t know if this was produced or not.

Chairman WAXMAN. As I understand it, the Justice Department

objected to our getting that e-mail because they said it was sensitive to a prosecution, and now you are reading it.

Mr. KRONGARD. The parts that I read went only to whether the

agent appreciated or objected to my providing him information.

That is all I have read and that is my point.

Mr. SHAYS. You answered his question. Thank you for answering

his question.

Mr. KRONGARD. OK, can I try one more? I mean, there was a

whole string. Because you asked why I didn’t allow my staff to influence my job selection and allocation, and you referred to what

I had said before.

Chairman WAXMAN. Not job selection, not allocation of funds.

They asked you to do and not do certain things, and you just absolutely ignored them. In fact, the record that they have given us is

that you belittled them. You told them they were irrelevant, that

they didn’t know what they were talking about.

Mr. SHAYS. These are people that haven’t come before the committee, I am sorry.

187

Chairman WAXMAN. These are people who have come before our

committee.

Mr. SHAYS. Not him.

Mr. KRONGARD. My only point was you referred to my written

and oral statement this morning. I just want to clarify what I actually said. I said the clashes were unfortunate, but I need to emphasize that I never allowed them, the clashes—not the people—to affect my judgment. I did take into account recommendations, positions, and other advice that came from my staff.

In the course——

Chairman WAXMAN. You took them into account, but you didn’t

follow them.

Mr. KRONGARD. I did the best I could. If I felt that my judgment,

as I did in the audit question that we have talked about, was better, I followed mine. But, more important, sir, in these de-conflict

situations, the investigators who are governed by very strict confidentiality, they generally known what they are doing. They don’t

know what the auditors are doing and they don’t necessarily know

what the inspectors are doing, and all don’t know what the others

are doing.

I am the one that is on the top of this, that has to put all this

together and make the determinations as to what is good from a

resource point of view, what is good from a conflict point of view,

what is good from doing the job that I swore to undertake to do.

That is my responsibility. Yes, it is hard, and maybe I don’t always

make the right decision, but I can tell you my motivation has been

nothing different from when I came to Washington in the first

place.

Chairman WAXMAN. Well, no one has attacked your motivation

except what we are attacking as your competence and your credibility.

Mr. KRONGARD. Well, sir, I will stand on my record of competence.

Mr. SHAYS. Mr. Chairman, you have attacked his motivation. The

whole letter was attacking his motivation. You basically charge

this man with being corrupt; you charged him with so many things.

It is an outrage.

Chairman WAXMAN. My letter will speak for itself, not your characterization of it. The facts will speak for themselves, not your

characterization of it.

We have a vote and there are 2 minutes left. Rather than ask

you to come back further, I think we have gotten to the point

where we know what your position is and we know what others

have said, and we know what the Republicans think of this and we

have our executive summary and the Democratic summary of the

information we received. We will let the facts speak for themselves.

With that, I am going to adjourn the meeting. Thank you for

being here.

[Whereupon, at 2:10 p.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

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