REPORT OF INVESTIGATION 

Alleged Misconduct by

23-001-1 September 2023 

RESTRICTED USE - PRIVACYACTMATERIAL - INVESTIGATIVE REPORT 

FOR OFFICIAL USE ONLYEXTERNAL RELEASE WITHOUT INSPECTOR 

GENERAL APPROVAL ISNOTAUTHORIZED 
investment company. OIG conducted a Preliminary Inquiry under File 22

007. The inquiry 

revealed that was working for a private investment company while working 

as an employee at DFC, with the knowledge and concurrence of DFC ethics officials. The 

private investment company on its website as with 

a bio indicating• was a• atDFC, which created the appearance ofa conflict ofinterest. 

When . , was advised of this by OIG, contacted the company and had the 

listing removed. also updated • Linkedln profile to reflect that • 

association with the company had ended. On May 25, 2022, OIG provided a report to DFC 

management, which took no action (because action had been already taken by • 

). 

On June 8, 2022, a whistleblower requesting confidentiality contacted OIG and reported 

that may have tried to trick - into admitting that made a complaint to 

OIG, in preparation for retaliating against - in the mistaken belief provided the 

information to OIG that initiated the inquiry under File 22-007. The complainant requested 

that OIG not take any action at the time. The information was logged under File 22-009. 

On October 5, 2022, OIG initiated an investigation under File 23-001 upon receipt of a 

complaint from the whistleblower that circumvented hiring procedures to 

bring on a former business associate as lliiilllllll .On November 29, 2022, OIG 

received a subsequent written complaint from the whistleblower with additional allegations 

concerning . The complaint alleged, among other things, travel policy 

violations and conflicts of interest (in addition to the previously reported whistleblower 

retaliation and improper hiring allegations). 

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retaliated against the whistleblower based on the erroneous belief 

initiated an OIG complaint against• in March 2022 and other personal grievances by, 

among other things: issuing - a Letter of Concern on June 30, 2022; giving - a poor 

performance rating for FY2022 on November 9, 2022, with no performance bonus for 

FY2022; and recommending be removed from federal service and placed on 

administrative leave on ••I 2023. 

On June 8, 2022, the whistleblower contacted OIG and reported that may 

have tried to trick - into made a complaint to OIG, in preparation for 

retaliating against- in the mistaken belief provided information to OIG that 

initiated a previous inquiry regarding an apparent conflict ofinterest. The complainant 

requested that OIG not take any action at the time. 

On June 30, 2022, issued a Letter ofConcern to the whistle blower for 

alleged behavior and attitude issues. 

On October 5, 2022, the whistleblower reported to OIG that

hiring procedures to bring on a former business associate as

November 29, 2022, the whistleblower submitted a written complaint to OIG with 

additional allegations concerning••••• including travel policy violations and 

conflicts of interest. 

On December 1, 2022, the whistleblower informed OIG that Human Resources told _ 

that DFC was planning to take a personnel action against• . 

On December 5, 2022, Inspector General (IG) Tony Zakel met virtually with Chief 

Executive Officer (CEO) Scott Nathan and briefed him on concerns that taking action 

against the whistleblower could constitute retaliation. IG Zakel requested that CEO Nathan 

intercede with respect to the proposed personnel action, which the OIG at that time 

understood to include a poor performance rating for the end of FY2022 and thus no 

performance bonus. CEO Nathan requested that OIG communicate the concern to DFC's 

Office ofGeneral Counsel (OGC). 

On December 6, 2023, OIG Senior Attorney

, Associate General Counsel, , stating: 

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Facts
among other things. We consider the employee to be a whistleblower. Thus, any 

adverse personnel action could be deemed an act of illegal whistleblower 

retaliation. As such, it could subject DFC to potential damages and other negative 

consequences. Our investigation is ongoing and we have not made any final 

determinations about the allegations. However, I am writing to inform you about 

this matter so DFC has the benefit ofwhatever counsel you deem appropriate before 

it takes any action that could harm the Corporation. 

2023, the whistleblower informed OIG that called - into 

• office, served - with a letter removal from federal service, and 

placed- (on administrative leave. 

On January 23, 2023, OIG contacted the Office of Special Counsel (OSC) 1 and discussed 

the whistleblower retaliation claim with an OSC attorney. OIG provided the whistleblower 

with contact information for OSC. 

During the afternoon ofJanuary 23, 2023, I G Zakel and Deputy I G/General Counsel

met with CEO Nathan and VP/General Counsel to let them know 

that, based on the whistleblower's report was being proposed for removal from 

federal service and placed on administrative leave, OIG was going to request in writing 

that DFC stay any pending or planned personnel actions against the whistleblower until the 

OIG investigation was complete. VP asked why OIG was sending this request in 

writing. IG Zakel responded that from OIG's perspective the matter had escalated. That is, what OIG initially believed was an issue ofa poor performance rating and no performance 

bonus in December 2022 had escalated in January 2023 to a proposed removal and 

placement on administrative leave. VP disagreed that there was any escalation and 

stated that DFC had started the process oftaking these actions prior to the whistleblower 

coming to OIG on June 8, 2022; thus, there was no escalation. VP asserted that the 

email from OIG Attorney to OGC Attorney on December 6, 2022, 

suggested that DFC could take whatever action it deemed appropriate as long as it had the 

benefit ofOGC' s counsel. VP stated that DFC took this into consideration when it 

made the decision to propose the whistleblower's removal from federal service and 

placement on administrative leave and reiterated that DFC started the disciplinary process 

prior to the whistleblower approaching OIG on June 8, 2022. 

1 OSC is an independent federal investigative and prosecutorial agency whose primary 

mission is to protect federal employees from prohibited personnel practices, especially 

reprisal for whistleblowing. 

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the allegation ofreprisal for the protected disclosure. The personnel action is being 

proposed by the very official against whom the allegations were made. We request 

that you pause any proposed personnel actions against- until we issue our report 

into the allegations ofwhistle blower retaliation against- . 

Our investigation is ongoing. However, based on the information we have obtained 

thus far, there are reasonable grounds to conclude that the personnel actions against 

[the whistleblower], including a failing performance evaluation, placement on 

administrative leave, and proposed removal from federal service, were retaliatory 

and thus illegal under 5 U.S.C. § 2302(b)(8)(B). To protect DFC and the integrity 

of the OIG investigation, we request that DFC stay any actions against [the 

whistleblower] until our investigation is complete and OIG issues its report. At that 

time, DFC will have the opportunity to review and respond to the OIG Report of 

fuvestigation, including to present the agency's rebuttal with clear and convincing 

evidence to support the personnel actions. 

As we mentioned yesterday, we have also informed the Office of Special Counsel 

(OSC), as OSC has ultimate authority over whistleblower retaliation complaints. 

resigned from federal service, effective , 2023. 

On February 14, 2023, IG Zakel and DIG met virtually with CEO Nathan and VP 

to discuss, among other things, whistleblower rights and protections, and the 

procedures and standards OIG uses in conducting its administrative investigations. During 

the meeting, CEO Nathan expressed concerns with certain aspects ofthe OIG investigation, 

which had apparently been relayed to him by

On February 16, 2023, OIG contacted OSC regarding recent discussions OIG had with 

DFC management. By mutual agreement, OIG and OSC decided that OIG would suspend 

its investigation of the whistleblower's retaliation claim to allow OSC to independently 

investigate the retaliation claim. Meanwhile, the OIG would continue to investigate the 

other allegations ofmisconduct by

On 2023, the whistleblower returned to work at DFC. 

On August 28, 2023, OSC sent DFC a settlement memorandum summanzmg the 

preliminary results of OSC's investigation ofthe whistleblower's retaliation claim. 

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reprisal for making a complaint or disclosing information to an Inspector General, 

unless the complaint was made or the information disclosed with the knowledge 

that it was false or with willful disregard for its truth or falsity. 

5 U.S.C. § 2302 (Prohibited Personnel Practices) 

Under Section 2302(a)(2), a "personnel action" includes: an appointment; a promotion; a 

detail, transfer, or reassignment; a removal; a performance evaluation; or a decision 

concerning pay, benefits, awards, or training, ifthat training could reasonably be seen to 

effect change in any ofthe above; or any other significant change in duties, responsibilities, 

or working conditions. 

Section 2302(b) provides: 

Any employee who has authority to take, direct others to take, recommend, or 

approve any personnel action, shall not, with respect to such authority-

(8) take or fail to take, or threaten to take or fail to take, a personnel action 

with respect to any employee or applicant for employment because of-

(A) any disclosure of information by an employee or applicant 

which the employee or applicant reasonably believes evidences-

(i) any violation of any law, rule, or regulation, or 

(ii) gross mismanagement, a gross waste of funds, an abuse 

of authority, or a substantial and specific danger to public 

health or safety, 

ifsuch disclosure is not specifically prohibited by law and if 

such information is not specifically required by Executive 

order to be kept secret in the interest of national defense or 

the conduct offoreign affairs; 

(B) any disclosure to the Special Counsel, or to the Inspector 

General of an agency or another employee designated by the head 

ofthe agency to receive such disclosures, ofinformation which the 

employee or applicant reasonably believes evidences-

(i) any violation ofany law, rule, or regulation, or 

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(C) cooperating with or disclosing information to the Inspector 

General of an agency, or the Special Counsel, in accordance with 

applicable provisions oflaw. 

Criteria for Reprisal Allegations 

Under Title 5, whistleblowers claiming retaliation are required to first demonstrate that 

they were in fact victims of retaliation by a preponderance ofthe evidence. To do so a 

whistleblower must present evidence that it is more likely than not that: 

(1) the employee made a protected disclosure or activity; 

(2) the employee then faced an adverse personnel action or threatened action; and 

(3) the protected disclosure or activity was a contributing factor in the decision to 

take or threaten the adverse personnel action. 

A protected disclosure or protected activity is a contributing factor ifit plays any part in an 

agency's decision to threaten, propose, take, or not take a personnel action. By statute, an 

employee may demonstrate through circumstantial evidence that a disclosure or activity 

was a contributing factor. As an example of such circumstantial proof, 5 U.S.C. § 

122l(e)(l) states that a contributing factor may be shown through evidence that a personnel 

action was taken or threatened soon enough after a protected disclosure or activity that a 

reasonable person could conclude that the disclosure or activity played some part in the 

action or threatened action. 

Under the Title 5 rubric, if the employee presents evidence that it is more likely than not 

that all three requirements are present, the agency can still prevail by establishing by clear 

and convincing evidence that it would have taken the same action absent the protected 

disclosure or activity. Clear and convincing evidence is greater than a preponderance and 

"is that measure or degree ofproof that produces in the mind ofthe trier offact a firm belief 

as to the allegations sought to be established." 5 C.F.R. § 1209.4(e). When determining 

whether an agency has shown by clear and convincing evidence that it would have taken 

the same adverse action in the absence of the protected disclosure or activity, the three 

factors considered are: 

(1) the strength ofthe agency's evidence in support ofits adverse personnel action; 

(2) the existence and strength ofany motive to retaliate on the part ofthe official(s) 

involved in the decision to take the adverse action; and 

(3) any evidence as to how the agency has acted against similarly situated 

employees who have not made protected disclosures or engaged in protected 

activities. 

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are entitled to considerable weight. 

OSC preliminarily found it likely that the whistleblower has a prima facie case of 

whistle blower reprisal. This represents a finding by a preponderance ofthe evidence: that 

the whistleblower made a protected disclosure; that the retaliating official ) 

had knowledge of the protected disclosure; that the retaliating official took or threatened 

to take an adverse personnel action against the whistleblower; and that the protected 

disclosure was a contributing factor to the personnel action. Further, OSC preliminarily 

found it unlikely that DFC can meet its burden to rebut the prima facie case by showing 

through clear and convincing evidence that it would have taken the same personnel actions 

in the absence of the whistleblower's disclosure. Accordingly, OSC recommended that 

DFC consider a variety of corrective actions as it pursues a settlement with the 

whistleblower. 

Significantly, OSC found that created a hostile work environment for the 

whistleblower. OSC observed that, "[s]oon after arriving, angered or scared • 

staff in - • even staff whom cited as supporters." OSC further observed that 

"[w]itnesses within - described as condescending and dismissive with 

explosive anger, often expressed publicly, and as someone who bears grudges." (Emphasis 

in original.) Indeed, admitted in an interview with OSC that the whistleblower 

"had sought employment in • professional circles, and • had and would continue to 

prevent-from obtaining such employment." 

Based on the foregoing, OIG considers the allegation of whistleblower reprisal to be 

substantiated. 

II. IMPROPER HIRING PRACTICES 

Allegation 

circumvented hiring procedures to bring on former business associate 

to serve as was hired as a contractor 

wasn't willing to report to Washington, DC as a full-time hire until summer 

2023. Although contractors are prohibited from having supervisory responsibilities,• 

told staff to trea t as Further, led DFC 

meetings and traveled to represent DFC. - staffwere concerned that had 

been terminated by - •previous employer. 

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replied was interested in the position, and they made arrangements to speak. 

(EXHIBIT I) 

On December 22, 2021, sent an email to with a link to the job 

announcement. (EXHIBIT 2) 

The announcement, which was for a

_ , stated: 

The position sensitivity/risk was determined to be "Critical-Sensitive (CS)/High 

Risk." The announcement stated: "Must be able to obtain and maintain a Top 

Secret security clearance." (Emphasis added.) 

The location ofthe position was Washington, DC. (EXHIBIT 3) 

On December 21, 2021, signed a Position Designation Record stating that 

the position required a Secret security clearance. (Emphasis added.) (EXHIBIT 4) According to OHRM, 50 candidates applied for the advertised position but only 8 of 

those applicants completed the MTQs required by the application. All 8 of the candidates 

who completed the MTQs were found qualified and were referred to the selecting 

official. , then residing in _ , was selected on , 2022, and 

approved by the hiring official to enter on duty in the summer of 2023, tentatively on -

2023. 

On May 23, 2022, DFC Security declined to issue an interim security clearance to 

, pending completion of-full background investigation. DFC Director of 

stated: 

is currently employed as a contractor working remotely as a 

as of 09/12/2022. - current position only requires 

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On July 17, 2022, sent an email to - staff saying: "As mentioned at the 

pipeline meeting this week, , who will join- as the- in 

and [sic] will be in the office to introduce and get to know 

the team. Please make- feel welcome!" (EXHIBIT 6) 

On August 1, 2022, requested a waiver from Security for' 

. In a Requestfor Waiver of 

Preappointment Investigative Requirements For Noncritical-Sensitive Positions 

(emphasis added) signed by on August 1, 2022, stated: "In 

accordance with the provisions Code of Federal Regulations Part 1400.202, it is 

requested that the pre-appointment investigative requirements be waived for 

" (EXHIBIT 7) 

On August 8, 2022, HR Specialist OHRM, told Security: ,_ is 

going to in a contact position until next summer. We are aiming for 

an EOD into the Federal position 2023." (EXHIBIT 8) 

On August 16, 2022, DFC awarded a sole-source "non-personal services contract for 

temporary staffing to act as

for travel. (EXHIBIT 9) 

On September 2, 2022, sent an email staff saying: "We have lots of 

new Jomers . .. 

. " (EXHIBIT 10) 

OIG contacted Assistant Regional Security Officer (ARSO) , US Embassy, 

, and asked if- approved to perform- official DFC duties in 

- •and ifso to provide details ofthe approval. ARSO - provided email 

documentation dated May 10, 2022, from U.S. Embassy Human Resources Officerto OA, declining a Domestic Employee Teleworking 

Overseas (DETO) request from DFC for•••· The email stated: "I have spoken to 

both our MGMT Counselor and S/RSO and while we empathize with the situation we 

cannot approve someone to DETO

,, 

On October 25, 2022, AIGI , OIG Senior Attorney ,andARSO -

residence in

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pp

p

, posted in Washington, in early 2022. was 

tentatively selected and was asked to fill out an E-Qip. found out 

asked to be able to te lework fulltime from • home in . was told by DFC that that it would not 

be possible for - to be a direct hire based in told that 

DFC could not on duty date for the year and needed 

someone to fill the role of-so the DFC team CV to 

. • later received an offer ofemployment from the 

. DFC could be temporarily employed as a 

contractor and transition to a direct hire _ , attended a DFC 

online employee orientation and was introduced to the rest of the team. 

(EXHIBIT 11) 

On October 25, 2022, AIOI , and ARSO -

visited the premises .Staff at the location 

said that no longer worked there and that it had new owners. They provided 

contact information for

On October 27, 2022, AIOI

. said was a at

- took over management of in June 2022 at the request of investors 

because performance ofthe fund was suboptimal due in part to macro issues but also 

poor management. The three managers, including , were let go because there 

was not a place for senior managers in the fund structure, as prefers to grow junior 

members. - said was a "good• •" honest, and had integrity and was the 

best ofthe three managers who were let go. 

On December 21, 2022, AIOI ,OIGGC , and 010 Senior Attorney 

interviewed in the OIG's office. 

stated that• and served on the

in- together, and only had a six-month 

overlap. - stated that- probably sent- an email on

2021, advising that• >was going to post an announcement for a vacancy 

for

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g 

common in the industry to remove a GP when fund performance is not up 

to par. - said that• had no evidence was personally fired. -

said that •••has emerging market experience, and that the "lack of 

success is a learning point." 

said that on November 21, 2022,• met with

.

- asked them if they 

had been spreading rumors that .- said it was 

in their professional realm to know that GPs are removed when fund 

performance is not up to par. - said that• does not like people on the 

team being personally attacked, even ifthey are a contractor. 

said that was selected by a senior leader hiring 

process with an independent panel, in November 2021, not by • 

individually. There was a hiring freeze in effect. was finally 

offered the position in 2022,

'so 

opted to remain in - until summer 2023. said that 

DFC attempted to obtain a DETO approval from the U.S. Embassy in 

for , but it was refused. said it was the first 

time• had attempted to obtain a DETO for staff. 

recalled that there was also an issue with respect to

being eligible for an interim security clearance, though • did not recall 

what it was. - requested and received a waiver security 

clearance requirement from DFC Security-something• said• has 

done for others. Later,• was speaking with OSFI VP , who 

said that• had third-party contractors deployed overseas [who did not 

require a DETO]. then proposed that be brought on 

as a contractor.- was advised by OGC that it was a way to hire 

said that is a , in a contract position. 

- remembered once announcing was a • .• said 

that was a mistake. - denied that has supervisory or 

managerial responsibilities. - has chaired meetings in• 

absence, including a

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OIG consulted with the U.S. Office ofPersonnel Management (OPM) about the facts 

surrounding security clearance. OPM expressed concern that when

could not obtain an appropriate interim security clearance for a civil service 

was contracted, seemingly to downgrade clearance requirements. 

II.A. Improper Hiring Practices - Waiver of Security Clearance Requirements 

5 C.F.R. § 1400.202(a)(I) provides (emphasis added): 

A waiver ofthe preappointment investigative requirement contained in section 

3(b) ofExecutive Order 10450 for employment in a national security position 

may be made only for a limited period: 

(i) In case ofemergency ifthe head ofthe department or agency 

concerned finds that such action is necessary in the national 

interest; and 

(ii) When such finding is made part ofthe records ofthe department 

or agency. 

5 C.F.R. § l400.202(a)(2)(ii) provides (emphasis added): 

For positions designated Critical-Sensitive under this part, the records of the 

department or agency required by paragraph (a)(l) ofthis section must document 

the decision as follows: 

(A) The nature ofthe emergency which necessitates an appointment 

prior to completion of the investigation and adjudication process; 

(B) A record demonstrating the successful initiation ofthe required 

investigation based on a completed questionnaire; and 

(C) A record ofthe Federal Bureau ofInvestigation fingerprint 

check portion ofthe required investigation supporting a 

preappointment waiver. 

5 C.F.R. § 1400.202(a)(2)(iii) provides (emphasis added): 

When a waiver for a position designated Noncritical-Sensitive is granted under 

this part, the agency head will determine documentary requirements needed to 

support the waiver decision. In these cases, the agency must favorably evaluate 

the completed questionnaire and expedite the submission ofthe request for an 

investigation at the appropriate level. 

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Law
y 

y 

because of 

. DFC prepared a waiver for using a Request/ or Waiver of 

Preappointment Investigative Requirements For Noncritical-Sensitive Positions. 

position on the waiver form was listed as

signed the waiver form on August 1, 2022. 

OIG requested any records justifying the downgrade position from CriticalSensitive to Noncritical-Sensitive, and any records satisfying the requirements of5 

C.F.R. § 1400.202, including the nature ofthe emergency and national interest justifying 

the waiver. OHRM provided emails discussing and transmitting the waiver form. 

However, none ofthe emails gave a justification for the downgrade or the basis ofthe 

waiver. Thus, DFC failed to comply with 5 C.F.R. § 1400.202 when it waived

pre-appointment security investigation. 

Further, given the prior relationship between and the 

considerable lengths to which went to hire , the waiver ofpreappointment investigative requirements for has the appearance ofimpropriety 

(i.e., favoritism over security interests). 

II.B. Improper Hiring Practices- Use ofThird-Party Contract 

48 C.F.R. Chapter 1 is the Federal Acquisition Regulation (FAR). 

DFC is subject to the FAR because it is an "executive agency" under 48 C.F .R. §

1.101. See 48 C.F .R. § 2.101 ( defining "executive agency" to include a "wholly 

owned Government corporation within the meaning of31 U.S.C. 9101 "); 31 

U.S.C. § 9101(3) (defining "wholly owned Government corporation" to include 

DFC). 

• 

48 C.F.R. § 2.101 defines a "personal services contract" for purposes ofthe FAR

as "a contract that, by its express terms or as administered, makes the contractor 

personnel appear to be, in effect, Government employees (see 37.104)." 

• 

48 C.F .R. § 3 7 .104 governs personal services contracts under the FAR. • 

o Section 37.104(a) states: "A personal services contract is characterized by 

the employer-employee relationship it creates between the Government 

and the contractor's personnel. The Government is normally required to 

obtain its employees by direct hire under competitive appointment or other 

procedures required by the civil service laws. Obtaining personal services 

by contract, rather than by direct hire, circumvents those laws unless 

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Law
or (ii) the manner of its administration during performance, contractor 

personnel are subject to the relatively continuous supervision and control 

ofa Government officer or employee." 

o Section 3 7.104( c )(2) states in part: "Each contract arrangement must be 

judged in the light ofits own facts and circumstances, the key question 

always being: Will the Government exercise relatively continuous 

supervision and control over the contractor personnel performing the 

contract?" 

o Section 37.104(d) provides the following factors to assess whether a 

proposed contract is personal in nature: 

(1) Performance on site. 

(2) Principal tools and equipment furnished by the Government. 

(3) Services are applied directly to the integral effort ofagencies or an 

organizational subpart in furtherance of assigned function or mission. 

(4) Comparable services, meeting comparable needs, are performed in 

the same or similar agencies using civil service personnel. 

(5) The need for the type of service provided can reasonably be 

expected to last beyond one year. 

(6) The inherent nature ofthe service, or the manner in which it is 

provided reasonably requires directly or indirectly, Government 

direction or supervision of contractor employees in order to -

(i) Adequately protect the Government's interest; 

(ii) Retain control ofthe function involved; or 

(iii) Retain full personal responsibility for the function 

supported in a duly authorized Federal officer or employee. 

o Section 37.l04(e) directs agencies to obtain the review and opinion of 

legal counsel when awarding a personal services contract. 

5 U .S.C. § 3109 provides authority for federal agencies to hire by contract temporary 

services of consultants and experts, without regard to civil service rules, under certain 

circumstances established by OPM regulations. 

• DFC is subject to section 3109 because it is an "agency" under section 3109(a)(l). 

See 5 U.S.C. § 5721 (defining "agency" to include an "Executive agency"); 5 

U.S.C. § 105 (defining "Executive agency" to include a "Government 

corporation"); 5 U.S.C. § 103 (defining "Government corporation" as a 

corporation owned or controlled by the Government of the United States"). 

5 C.F .R. § 304.103 is the OPM regulation governing appointment ofconsultants and 

experts under 5 U.S.C. 3109. 

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individual to an expert or consultant position pending Schedule C 

appointment or noncareer appointment in the Senior Executive Service." 

Section 304.103(b)(6) 

Summary ofthe Law 

• The FAR defines personal services contracts (PSCs) based on the facts and 

circumstances ofthe arrangement, not just the contract's terms, focusing on the 

Government's supervision and control over the contractor performing the 

contract. 

• An agency violates the FAR and civil service laws if it awards a PSC without 

specific statutory authorization. 

• 5 U.S.C. § 3109 provides statutory authority for agencies to hire the temporary 

services ofconsultants and experts by contract, without regard to civil service 

rules, under certain circumstances established by OPM regulations. 

• 5 C.F.R. § 304.103 is the OPM regulation governing appointment of contractors 

under 5 U.S.C. § 3109. 

• Section 304.103(b) specifically states that agencies cannot use section 3109 to 

appoint a contractor: 

o to do work performed by the agency's regular employees; or 

o solely in anticipation ofgiving that individual a career appointment. 

Analysis 

In March 2022, was selected as a direct-hire for the position of

- based in Washington, DC. For personal reasons, was unwilling to enter 

on duty in Washington until summer 2023. initiated, and DFC management 

facilitated, a request to work from under an unsponsored 

DETO arrangement. When this request was denied by the State Department,

initiated, and DFC management facilitated, hiring •• as a third-party contractor 

working remotely from and DFC management went through these 

maneuvers notwithstanding that there were other qualified candidates who did not require 

such accommodations and that start was delayed 2022. 

contract states that it is not a personal services contract (PSC). However, the 

facts belie this statement. attended DFC employee onboarding.- official title 

under the contract is However, performed 

many ofthe duties of , except for officially supervising employees and 

handling budgets. Indeed, introduced to - staff as

reported to and served as••• . even 

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Like other federal agencies, DFC is authorized to retain professional services through 

PSCs under 5 U.S.C. § 3109 and 22 U.S.C. § 9632(a)(2). However, this authority is 

constrained by 5 C.F.R. § 304.103. Under section 304.103(b), federal agencies are 

specifically prohibited from using PSCs: 

• "To do work performed by the agency's regular employees." Section 

304.103(b)(4); or 

• "Solely in anticipation ofgiving that individual a career appointment." Section 

304.l 03(b )(6). 

As discussed above, DFC hired through a de facto PSC under 

performed the work ofa senior staff member of__Emails between and 

OHRM clearly show that the intention from the beginning was to use the contract as a 

temporary mechanism and then convert to a full-time hire in summer 2023. 

Tellingly, the contract even states that the position is for "temporary staffing." Therefore, 

DFC violated 5 C.F.R. § 304.103(b) and civil service rules when it used a third-party 

contract as a temporary staffing mechanism to hire as de facto

- · 

It is unclear whether DFC obtained the review and opinion of legal counsel required 

under 48 C.F.R. § 37.104(e) when it awarded contract. 

11.C. Improper Hiring Practices - Vetting of Prior Employment 

Allegation 

was fired employer. DFC did not conduct a sufficient 

background check on• -• firing creates a reputational issue when dealing with other 

DFis who pushed removal. 

two partners were terminated from their previous employer,

because investors were unsatisfied with investment performance.

was not terminated based on any misconduct or individual performance. The CEO 

ofthe firm that took over management of fund described as a good 

person with honesty and integrity and said that was the best ofthe three managers at 

who were let go. 

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Facts
g

frequently travelled to , where• lived. - rarely told 

staff in advance and rarely provided the required Delegation ofAuthority before leaving, 

which frequently left staff scrambling to find someone with appropriate signing authority. 

Staff were concerned used DFC funds to travel to to see • 

, using flimsy excuses ofmeetings easily could have done 

by video conference. 

Ill.A. Use of Official Travel for Personal Benefit 

OIG obtained copies of Travel Vouchers and cross-referenced them 

against. Unofficial Foreign Travel requests. (EXHIBIT 14) The analysis disclosed that 

ofthe times traveled outside the United States from October 2021 to 

December 2022, five were in connection with official business and six were for unofficial 

(i.e., personal) travel. 

On December 21, 2022, was interviewed by AIGI , DIG , and 

OIG Attorney . (EXHIBIT 12) 

said that is• , lives in 

, and that - visits- once per month. When asked how many times 

• visited - while on official foreign travel, - responded: "Once. We had an 

overlapping conference." 

AIOI went through the itineraries for each of official 

foreign trips in detail, working backwards from the present.- interactions with 

on each trip, as disclosed during the interview, are summarized in bold 

below: 

l 1/27/2022-12/05/2022: Global Private Capital Association (GCPA) and 

European Bank ofReconstruction and Development (EBRO) meetings in 

was at the GCP A meeting. 

10/09/2022-10/15/2022: Global Impact Investing Conference (GIIC) 

training in came at the last minute. 

06/19/2022-06/24/2022: Went to the Three Seas Summit in_,then on 06/22/2022 went to for a British International Investment 

meeting: in 

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10/30/2021-11/02/2021, went to (NOTE: The travel voucher 

disclosed no associated lodging charges on 10/30/2021, and a travel 

arranger's note on the travel voucher stated: "Traveler is not claiming 

lodging on Saturday, October 30 in (wasn't on leave). -

booked a hotel that• paidfor on- personal funds."). 1 l/02/2021-

11/04/2021: In for the UN Climate Change Conference. 

11/4/2021-11/7/2021: In saw•••while. 

was in 

answers when confronted with detailed records of•travel show that -

was not forthcoming when• initially said • only once while on 

official travel. In fact, • 'met- five times while on official travel. - initial answer 

that•met- 1once appears to be an attempt to minimize • contacts with • 

while on official travel. 

Notwithstanding this minimization, appears to have had business 

justifications for each trip, and DFC employees are not prohibited from visiting friends 

on personal time during official travel, provided they account for their time and expenses 

properly. However, the frequency with which ••••met while on 

official travel (5 times in 14 months) gave the appearance to staff that• was using 

conferences and other meetings as a pretext to travel at DFC expense to see• 

Thus, while it appears that did not violate travel policy by visiting • 

during official travel,• nonetheless created an appearance ofimpropriety due 

to the frequency ofthese trips. 

ill.B. Work Performed During Unofficial Foreign Travel 

OIG reviewed Unofficial Foreign Travel Requests (UFTRs) for the times 

• traveled outside the U.S. on personal travel and cross-referenced them to• travel 

records and earnings and leave statements. In each ofthe UFTRs, indicated 

that• was visiting or traveling with . In 2022,••• claimed 

241.25 work hours while on unofficial foreign travel: 

Location Hours Claimed 

16 hours 

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Dates

redacted (b) (6), (b) (7)(C) redacted (b) (6), (b) (7)(C)
8 hours 

24 hours 

12 hours 

34 hours 

40 hours 

The State Department's Foreign Affairs Manual and Foreign Affairs Handbook govern 

foreign travel for U.S. government executive branch employees. See 2 FAM 113.1.a 

("The COM's [Chief ofMission's] authority encompasses not only the personnel ofthe 

Department of State, but rather all U.S. government executive branch activities, 

operations, and employees."); 2 FAH-2 H-112.1.a (The COM has "the authority to direct, 

supervise, and coordinate all U.S. Government executive branch employees in the 

COM's country or area ofresponsibility. This includes U.S. Direct Hire (USDH) 

employees and Personal Service Contractors (PSCs), whether assigned permanently or on 

temporary duty or an official visit."); 2 F AH-2 H-113.b ("Those persons subject to COM 

authority and agencies with personnel subject to COM authority have the following 

responsibilities.... (4) Request country clearance for any employee who will be in 

country on official business. The COM has the authority to grant, withhold, or limit 

country clearance .... Employees who will be in country for 364 days or less must request 

permission using eCountry Clearance."). 

DFC Policy OA-HRM-002-2020 "Telework" (03/18/2020) recognizes these requirements 

and articulates them for DFC employees: 

VI(E)( 4) Telework Overseas. The ChiefofMission (COM) has sole 

authority to determine if a Corporation employee may work overseas. 

Employees who do not meet the criteria below are prohibited from 

working while overseas, including while on personal overseas travel or 

non-workdays included in an overseas travel authorization. Permission 

to work overseas exists where: 

a) The employee is duty stationed overseas pursuant the requirements of 

the Foreign Assistance Act, including COM approval; 

b) The employee is on official overseas travel under an approved travel 

authorization; or 

c) The employee is under an approved Domestic Employee Telework 

Overseas (DETO) agreement and COM approval to work overseas has 

been obtained. 

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OIG contacted the Department ofState, Bureau ofDiplomatic Security regarding• 

visits to the countries listed above. None ofthe Regional Security Offices had 

a record of receiving Country Clearance or a DETO authorization during the 

periods listed above. 

Based on the foregoing, violated State Department regulations and DFC 

policy by working more than 240 hours (equivalent to 30 days) while on personal foreign 

travel in 2022 without being in authorized travel status or having Country Clearance. 

IV. CONFLICT OF INTEREST 

Allegation 

OIG received multiple allegations ofconflicts of interest regarding related to 

• pushing deals for friends, particularly for an executive at

, a global impact manager with whom DFC has an existing relationship and 

whose latest fund was in the early stages ofevaluation by - · The complainants 

alleged that ••applied explicit and implicit pressure on underwriters to use 

DFC capital to support funds managed by people with has personal 

connections. 

On December 1, 2022, OIG obtained Unofficial Foreign Travel Requests 

(UFTRs) that• submitted to DFC Security. In each ofthe trips, . indicated • 

would be visiting/traveling with who resides in 

. (EXHIBIT 14) 

On December 1, 2022, OIG obtained

website, which disclosed is

. (EXHIBIT 15) 

On December 5, 2022, OIG reviewed an email dated December 28, 2021, in which • 

suggested to • subordinate,

"Why not consider debt for as only other global fund (though I'm recused from 

this more it's a big fund, it's the product they have, we don't have a lot of global and 

probably will keep it that way)". (Emphasis added) (EXHIBIT 16) 

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Facts
(EXHIBIT 18) 

On December 5, 2022, OIG reviewed a "Request for Clearance" memorandum dated 

November 28, 2022, which indicated was seeking a new

investment from DFC. (EXHIBIT 19) 

On December 6, 2022, OIG spoke via Teams videoconference with DFC Ethics Attorney 

and Designated Agency Ethics Official

. DAEO stated that suggested recuse 

- from deals involving • partner for appearances, . was not actually required to 

do so under conflict-of-interest rules unless• were cohabitating. 

On January 13, 2023,•• chaired a Screening Meeting for approval ofa _ 

investment in

decided to advance the deal to due diligence. (EXHJBIT 13) 

On May 5, 2023, CEO Nathan approved a Decision/Action Memorandum to allow 

certain Review countries to be included in the list ofEligible Countries for the (now)_ 

investment in the Fund. (EXHIBIT 20) 

Analysis 

OIG received multiple complaints from - staff regarding the number oftimes• 

met with , who was an at , using 

official travel (5 times in 14 months, as detailed above). These staff members were concerned relationship with created a conflict of interest. 

properly sought ethics advice on the potential conflict of interest. DFC' s 

ethics officials reasonably concluded that- relationship was not a covered relationship 

under applicable conflict-of-interest rules. Nonetheless, they advised • to recuse

to avoid the appearance of a conflict of interest. 

initially followed the ethics advice - received and informed• staff that 

• was recused from deal. OIG's investigation did not reveal any evidence 

that took official action regarding the deal. Thus, the investigation 

did not reveal any evidence of an actual conflict of interest involving and 

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any actions by a senior DFC official that create even the appearance ofa conflict of 

interest should be ofconcern to DFC management and its Board of Directors. In this 

case, relationship with combined with _ 

continued involvement with the deal created such an appearance. 

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Based on OSC's investigation, the allegation of whistleblower reprisal is 

substantiated. 

OSC's investigation revealed that the whistleblower likely has a prima facie case of 

whistleblower reprisal, and that it is unlikely that DFC can rebut this case by showing that 

it would have taken the same personnel actions in the absence of the whistleblower's 

disclosure. Accordingly, OSC proposed a variety ofpotential corrective actions that DFC 

should consider taking. 

In addition, OSC found that created a hostile work environment. OSC found 

that: (I) angered or scared • staff in _ , even staff whom• viewed as 

supporters; (2) was perceived within - as condescending and dismissive 

with explosive anger, often expressed publicly, and as someone who bears grudges; and 

(3) prevented and intended to continue to prevent the whistleblower from 

obtaining employment in•sphere of influence outside DFC. 

II. IMPROPER HIRING PRACTICES 

II.A. Waiver of Security Clearance Requirements 

DFC failed to comply with 5 C.F.R. § 1400.202 when it waived

pre-appointment security investigation. 

was selected for a position that was advertised as a Critical-Sensitive 

(CS)/High Risk position requiring a Top Secret security clearance, and later reclassified 

as requiring a Secret security clearance. After was was unable to 

get an interim Secret security clearance. and DFC waived preappointment investigation using a form for Noncritical-Sensitive positions. 

DFC has no records justifying the downgrade of position from CriticalSensitive to Noncritical-Sensitive, as required by 5 C.F.R. § 1400.202. DFC did not 

document the nature ofthe emergency or the national interest justifying the waiver. Thus, 

DFC failed to comply with 5 C.F.R. § 1400.202 when it waived preappointment security investigation. 

Further, given the prior relationship between and the 

considerable lengths to which went to hire , the waiver ofpreappointment investigative requirements for ••has the appearance of impropriety 

(i.e., favoritism over security interests). 

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In March 2022, was selected as a direct-hire for the position of

- based in Washington, DC. For personal reasons, was unwilling to enter 

on duty in Washington until summer 2023. initiated, and DFC management 

facilitated, a request for to work from under an unsponsored 

DETO arrangement. When this request was denied by the State Department, 

initiated, and DFC management facilitated, hiring as a third-party contractor 

working remotely from

contract states that it is not a personal services contract (PSC). However, the 

facts belie this statement. attended DFC employee onboarding.

performed many ofthe duties of , except for officially supervising employees 

and handling budgets. introduced to- staff as

reported and served as .• even 

chaired screening meetings and made decisions to move forward on investments. 

According to and - staff, was deeply involved in the 

substantive, day-to-day work of _ _Thus, the facts demonstrate that served 

as an integral part ofthe - team, in a senior decision-making role, on a day-to-day 

basis, and not as an outside consultant. Therefore, was a de facto government 

employee, and. 'contract should be deemed aPSC under 48 C.F.R. §§ 2.101 and 

37.104. 

Emails between and OHRM clearly show that the intention from the 

beginning was to use the contract as a temporary mechanism and then convert

to a full-time hire in summer 2023. Tellingly, the contract even states that the position is 

for "temporary staffing." Therefore, DFC violated 5 C.F .R. § 304.103(b) and civil service 

rules when it used a third-party contract as a temporary staffing mechanism to hire 

as de facto 

It is unclear whether DFC obtained the review and opinion of legal counsel required 

under 48 C.F.R. § 37.104(e) when it awarded contract. 

11.C. Vetting of Prior Employment 

The allegations was fired from • previous employer and that DFC did 

not conduct a sufficient background check on - are not supported by the evidence. 

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than 240 hours ( equivalent to 30 days) while on personal foreign travel in 2022 without 

being in an authorized travel status (i.e., being stationed, on approved TDY, or under a 

DETO) and without Country Clearance from the COM. 

does not appear to have violated federal or DFC travel policies by visiting 

during official travel. However,• created an appearance ofimpropriety 

due to the frequency ofthese trips. 

IV. CONFLICT OF INTEREST 

created the appearance of a conflict of interest among- staffby 

stating that- was recused from the deal while continuing to discuss the 

deal with staff and appearing to advocate for it. 

properly sought ethics advice on the potential conflict ofinterest that arose 

becaus was an investment partner at , a DFC client. DFC's 

ethics officials reasonably concluded that• relationship was not a covered relationship 

under applicable conflict-of-interest rules. Nonetheless, they advised.to recuse

to avoid the appearance ofa conflict ofinterest. 

initially followed this advice and informed•staff that• 1was recused 

from the deal. OIG's investigation did not reveal any evidence that• 

took official action regarding the deal. Thus, the investigation did not 

reveal any evidence ofan actual conflict ofinterest involving Iand

However, despite telling.staff that• was recused from , 

continued to discuss the deal with staff and on at least one occasion appeared to advocate 

for it. Thus.--gave staff the impression that• was not fully recused and was 

attempting to facilitate the deal "behind the scenes." 11.i.is created the appearance of a 

conflict ofinterest. 

Assistant Inspector General for Investigations 

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