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August 21, 2009
Associated Press

WASHINGTON - Outside the Veterans Affairs Department, severely wounded veterans have faced financial hardship waiting for their first disability payment. Inside, money has been flowing in the form of $24 million in bonuses.

In scathing reports this week, the VA's inspector general said thousands of technology office employees at the VA received the bonuses over a two-year period, some under questionable circumstances. It also detailed abuses ranging from nepotism to an inappropriate relationship between two VA employees.

The inspector general accused one recently retired VA official of acting "as if she was given a blank checkbook" as awards and bonuses were distributed to employees of the Office of Information and Technology in 2007 and 2008. In some cases the justification for the bonuses was inadequate or questionable, the IG said.

The official, Jennifer S. Duncan, also engaged in nepotism and got $60,000 in bonuses herself, the IG said. In addition, managers improperly authorized college tuition payments for VA employees, some of whom were Duncan's family members and friends. That cost taxpayers nearly $140,000.

Separately, a technology office employee became involved in an "inappropriate personal relationship" with a high-level VA official. The technology office employee flew 22 times from Florida to Washington, where the VA official lived. That travel cost $37,000.

The details on the alleged improprieties were in two IG reports issued this week. VA spokeswoman Katie Roberts said the agency was extremely concerned about the IG's findings and would pursue a thorough review.

"VA does not condone misconduct by its employees and will take the appropriate correction action for those who violate VA policy," Roberts said in an e-mail to The Associated Press.

On Friday, Joe Davis, a spokesman for the Veterans of Foreign Wars, said if the allegations are found to be true, individuals involved should lose their jobs, and legal action should be taken.

"America's veterans served their nation honorably and with no expectations of reward," Davis said in an e-mail. "It should not be too much to ask for that same level of commitment from government employees, too."

And Sen. Richard Burr, R-N.C., the top Republican on the Senate Veterans' Affairs Committee, said Congress should investigate.

The number of claims the VA needs to process has escalated, and the Information and Technology Office has a critical role in improving the technological infrastructure to handle the increase. President Barack Obama has said creating a seamless transition for records between the Pentagon and the VA could help eliminate a backlog that has left some veterans waiting months for a disability check.

Much of the IG's focus was on Duncan, the former executive assistant to the ex-assistant secretary for information and technology, Robert Howard.

In one situation, a part-time intern with connections to Duncan was allowed to convert to a full-time paid position even though the individual was working a part-time schedule 500 miles away at college, the IG said.

"We have never known of any other new VA employee provided such favorable treatment," the IG said.

The individual's name and relationship to Duncan was blacked out, as were many other names in the reports.

Investigators recommended that the employees who received the college money pay it back. The largest amount awarded was $33,000.

In addition to Duncan, three other high-level employees received $73,000, $58,000 and $59,000 in bonuses in 2007 and 2008, the IG said. In 2007 alone, 4,700 employees were awarded bonuses, on average $2,500 each.

Some employees were given cash awards for services that were supposedly provided before the employees started working at VA, the IG said.

A man who answered the phone at Duncan's residence in Rehoboth Beach, Del., said she was not available, and he said not to call back.

The IG also found that Katherine Adair Martinez, deputy assistant secretary for information protection and risk management in the Office of Information and Technology, misused her position, abused her authority and engaged in prohibited personnel practices when she influenced a VA contractor and later VA subordinates to employ a friend.

The IG also said Martinez "took advantage of an inappropriate personal relationship" with Howard to transfer her job to Florida. In the nine months after she moved, the IG said Martinez traveled to Washington 22 times "to accomplish tasks that she could easily do from Florida."

The relationship between Martinez and Howard started in April 2007 and continued several months after Howard left the VA in January of this year, the IG said.

Roberts' e-mail did not address a request from the AP to speak with Martinez. Howard could not be immediately located for comment.

Indiana Rep. Steve Buyer, top Republican on the House Veterans' Affairs Committee, urged quick action to fix the problems. "VA must appoint honorable individuals to these critical positions," he said.

The VA has faced criticism before in its awarding of bonuses. In 2007, the AP reported that the then-VA secretary had approved a generous package of more than $3.8 million in bonus payments in 2006, citing a need to retain longtime VA executives.