Veterans Agency Admits Serious Lapse in Oversight

The Department of Veterans Affairs acknowledged "serious lapses in oversight" on Monday and a senior official resigned as an investigation detailed funds wasted on elaborate conferences and said employees got gifts like massages and helicopter rides.

The revelations came just months after a scandal and shake-up at another U.S. federal agency, the General Services Administration, also over a lavish conference, and renewed questions about lax supervision of taxpayer dollars in a presidential election year.

Lawmakers seized on the findings by the VA's Office of Inspector General (OIG) as proof of poor stewardship of dollars destined for the country's veterans.

"Funding allocated for these conferences was drawn from VA medical accounts, which could have been used toward providing hundreds of veterans with VA healthcare," said Representative Jeff Miller, chairman of the House of Representatives Committee on Veterans' Affairs.

The highest ranking official felled was John Sepulveda, the VA's Assistant Secretary for Human Resources and Administration, who was accused of making false statements to investigators.

VA Secretary Eric Shinseki accepted his resignation and two employees were placed on administrative leave, pending review, the agency said.

"Misuse of taxpayer dollars is completely unacceptable," the VA said in a statement.

The VA's OIG released a 142-page report portraying a sweeping lack of oversight and confused accounting for expenses, which it said topped $6 million for two training conferences in Orlando, Florida last year.

It calculated that $762,000 of that total was either "unauthorized, unnecessary and/or wasteful expenses."


This included around $50,000 spent on a video spoof of the film "Patton," which was shown at the Orlando training event in a bid to inspire the crowd of human resources professionals. A version of part of the video can be seen here:

Sepulveda made what the OIG called a "false statement" on August 16 when he denied having viewed the video prior to the conference. He later said in a sworn affidavit that was due to poor recollection, not an intention to mislead investigators.

"I would like to express my sincerest apologies," he said, according to a copy of the affidavit released by the OIG.

The Justice Department has declined to pursue prosecution against Sepulveda over the matter, the OIG said.

The investigation also revealed that 11 VA employees involved with conference management improperly accepted gifts from contractors seeking to do business or already doing business with the VA.

These included spa treatments, limo services, helicopter tours and even tickets to see the Rockettes dancing group.

"We conclude that VA employees accepted improper gifts in violation of federal law and the applicable executive branch standards of conduct," it wrote.

Still, an OIG official told reporters on a conference call that there did not appear to be any "quid pro quo," with planners demanding gifts in exchange for deals with contractors.

Shinseki last month ordered an independent review of all training and conference policies and ordered ethics training for key VA personnel. He also withdrew purchasing authority from employees under review.

"Shinseki has taken immediate action to address the issues outlined in the IG report to strengthen oversight, improve accountability, safeguard taxpayer dollars and help ensure such incidents do not occur again," the agency said.