Customs’ mission is to ensure that all goods and persons entering and exiting the United States do so in compliance with all United States laws and regulations. The mission includes protecting the American public from the introduction of illegal drugs into society. In August 1995, Customs considered the Southwest border the drug smugglers’ area of choice, with hundreds of thousands of pounds of cocaine and marijuana shipped from Mexico to the United States yearly, according to intelligence estimates. According to Customs, this environment, with narcotics being smuggled through ports of entry and Customs inspectors seeking to prevent such illegal entries, is typically dangerous, difficult, and contradictory. Customs further stated that “enforcement strategies producing more determined, violent, smarter, organized, better equipped, and funded violators because of the very high economic incentives to continue their actions.” In its 1994 reorganization report, Customs recognized the continuing controversy over achieving the right balance between enforcing the law and facilitating the flow of conveyances, merchandise, and people into the country. From the mid-1960s until the mid-1990s, Customs’ organizational structure included a headquarters, region and district offices, Special Agent in Charge (SAC) offices, and ports of entry. In 1993, Customs created a team to reorganize the Customs Service. Some results of that effort were that Customs moved to a system of management by process and reorganized its field and headquarters structures. In October 1995 Customs reorganized its headquarters, which included creating an Office of Field Operations responsible for overseeing the Customs Management Centers (CMCs) and ports. The Office of Investigations’ responsibilities continued to include overseeing the Special Agents in Charge (SACs) in the field. The October 1995 field organization changes included abolishing the regions and districts and creating the CMCs to act as a single management level between the ports and headquarters. To gain an understanding of the blue ribbon panel, why it was created, and Customs’ response to its report, we read the panel’s report and transcripts of congressional hearings that dealt with Customs’ Southwest Region problems and the panel. We also interviewed three panel members—the former chairman, who was not a Customs employee; and two others who were Customs employees during the panel and continue to be Customs employees. To determine the status of the implementation of the recommendations, we reviewed a status report Customs prepared for us in August 1995 on actions Customs took in response to each recommendation. In February 1996, Customs updated relevant portions of this report. We also reviewed documents that Customs officials provided that were related to actions taken to implement the recommendations. To expand on the information provided in the Customs-prepared report and to determine if Customs officials knew if the problems identified by the panel still existed, we interviewed Customs officials from offices that were at the time of our review responsible for areas covered by the report, including the Offices of Investigations, Internal Affairs, and Human Resources Management. We also interviewed officials in Customs’ Office of Planning and Evaluation and the Treasury Department’s Office of Inspector General (IG). However, we did not verify the accuracy of the information provided or validate that policies and procedures to which Customs officials referred were being adhered to. We did our work at Customs headquarters in Washington, D.C.; at the San Diego Customs Management Center; and in Oklahoma City, OK. We conducted this review between August 1995 and June 1996 in accordance with generally accepted government auditing standards. We obtained written comments from Customs on a draft of this report. These comments are discussed at the end of this report and reprinted in appendix II. In Customs’ 1992 report on its implementation of the panel recommendations, it stated that in early 1991 it had come under intense scrutiny from national media and congressional oversight committees because of allegations of corruption and mismanagement in its Southwest Region. According to testimony by the Commissioner in 1992, she created the panel when she became aware of the scope and seriousness of the allegations in Texas. According to the transcript of hearings held by the Commerce, Consumer, and Monetary Affairs Subcommittee of the House Committee on Government Operations in 1992, a December 1992 Customs-prepared response to that Subcommittee, and a 1991 Treasury IG report on Customs’ Southwest Region, allegations included mismanagement by the Special Agent in Charge, harassment of and retaliation against whistleblowers, conspiracy by management to cover up criminal conduct of enforcement management suppression of a major drug investigation, existence of an old-boy network, improper associations or affiliations between Customs law enforcement officers and individuals possibly involved with drug trafficking and money laundering at the border, and noncooperation by Customs management with other law enforcement organizations. Furthermore, according to the December 1992 Customs-prepared response to the Commerce, Consumer, and Monetary Affairs Subcommittee, the allegations focused on two Office of Enforcement field locations. In June 1991 the blue ribbon panel convened. The Commissioner created the panel, in part, because of allegations of corruption, harassment, retaliation, mismanagement, and an old-boy network in Customs’ Southwest Region. The panel was made up of nine individuals—five from outside Customs and four from within. It was chaired by the then General Counsel of the Department of Housing and Urban Development, who had formerly been, among other things, Associate Attorney General in the U.S. Justice Department, Assistant Secretary of the Treasury for Enforcement, U.S. Attorney for the Northern District of Oklahoma, and an FBI agent. The panel did its work over an approximately 6-week period, according to its chairman. It conducted over 150 interviews and briefings with Customs employees and non-Customs officials in the Southwest Region and Washington, D.C. The panel looked at two offices within Customs—Enforcement and Internal Affairs. Those non-Customs officials interviewed were said to be key federal, state, and local law enforcement officials. They included employees of the FBI, the Marshals Service, the Immigration and Naturalization Service, and the U.S. Attorneys Office. According to the chairman’s testimony, much of the panel’s information was anecdotal and if the panelists heard it repeatedly, they considered it a finding. The chairman further stated in the testimony that the panel did not have subpoena power and it was not a grand jury; nor did it view its work as a law enforcement mission. The panel examined system failures. He said that “hat the report concentrated on was assuming the integrity of all the allegations and all the swirling controversy, how could these things happen.” The panel’s suggestions, he added, were to tighten down and firm up disciplinary processes and the management and supervisory structures. The panel issued its report in August 1991. The report had 50 findings and 51 recommendations categorized into 7 areas: management, Office of Enforcement, Office of Internal Affairs, training, whistleblowers, and discipline. As stated in the panel’s report, the recommendations reflected the consensus of the panel and proposed approaches to rectify the conditions that generated the report’s findings. The overall aim of the recommendations was to safeguard the integrity and strengthen the management systems of the Customs Service. While the panel did not determine if the Southwest region situation was representative of the rest of Customs, it believed the implications of the findings and recommendations could be applied to the entire agency. The chairman of the panel testified that because the panel uncovered “systemic management failures in the Southwest, the likelihood of that occurring elsewhere is certainly not only possible, but probable.” “The Blue Ribbon Panel found fundamental weaknesses in the Customs Service management systems at all operational levels—Headquarters, regional management, SAC office management, and regional Internal Affairs management. The apparent breakdown of the management structure in the Southwest Region was precipitated by inadequate and/or inattentive supervision in specific cases. Compounding those situations, managers were unable and/or unwilling to address serious supervisory and management problems. There was an absence of management accountability, and a perception of a collusive relationship between management and Internal Affairs. Customs’ management systems failed to identify and correct these deficiencies.” “The Blue Ribbon Panel determined that the Office of Internal Affairs (IA), at least in the Southwest Region, did not recognize the gravity of the circumstances that caused the perception of corruption, nor did it promptly initiate or complete certain investigations of related allegations. Non-criminal misconduct and mismanagement matters were explicitly removed from the IA purview. As a result, Internal Affairs did not provide the necessary safeguard to protect the reputation, operations and organizational effectiveness of the Customs Service.” “Office of Enforcement (OE) activities in the Southwest Region suffer from a lack of national direction and from confused and competing lines of authority that undermine effectiveness. Clearly articulated recruitment, mobility, and career path policies do not exist and the influence of various ’old boy’ networks taints the objectivity of the selection process and rating systems.” Some of the actions that the panel recommended in the sections on management, the Office of Internal Affairs, and the Office of Enforcement were the following: Customs should establish an Office of Organizational Effectiveness (OOE) led by an Associate Commissioner who would report directly to the Commissioner, at a level above the Assistant Commissioners. The Associate Commissioner’s recommended responsibilities included supervising the Assistant Commissioner for Internal Affairs and reforming Customs pursuant to the panel’s recommendations. The Office of Internal Affairs should be restructured. Its responsibilities should include the comprehensive and aggressive internal inspection program recommended by the panel and investigation of matters related to mismanagement, criminal misconduct, and serious noncriminal misconduct. Direct line authority should be established in the Office of Enforcement from the Assistant Commissioner for Enforcement through the Special Agent in Charge to the agent. Customs should establish a national recruitment policy and mobility policy for the Office of Enforcement. Customs accepted the panel’s findings and recommendations almost immediately and took several major actions to implement these recommendations.