News leaks target HUD investigator Data released to hurt inspector general distorted, inaccurate; Unsigned and unattributed; Gaffney planned probe of housing spending in Baltimore, other cities

THE BALTIMORE SUN

Mayor Kurt L. Schmoke was delighted last week that Baltimore had been dropped -- at least temporarily -- as a target for a major probe of federal housing spending, an investigation that he has tried for more than two months to derail.

While Schmoke was raising questions publicly about how the selection of Baltimore was influenced by racism and politics, his housing agency was joining in a largely clandestine campaign to leak damaging information to undercut the chief investigator.

The target is Susan Gaffney, the inspector general for the U.S. Department of Housing and Urban Development.

The leaks include unsigned and unattributed papers that exaggerate and distort the conclusions of two critiques of Gaffney's operation prepared by her staff. While the documents by Gaffney's staff also are being given to reporters, the few news reports that have emerged have relied largely on the anonymous -- and inaccurate -- summaries.

A federal official since 1979, Gaffney was named to her current post by President Clinton in 1993. She works independently of the administration and doesn't answer to HUD Secretary Andrew M. Cuomo.

The anonymous leaking began after The Sun reported in March that she planned a major criminal probe of the spending of HUD funds in Baltimore, New Orleans and San Francisco. Ten days ago, an official of the FBI, which is working with Gaffney, said no city should be considered a target for investigation until new selection criteria are developed.

Usually, leakers provide information to reporters on condition that they not be identified as the source. In this case, Zack Germroth, spokesman for Baltimore Housing Commissioner Daniel P. Henson III, set no such condition when he offered the documents to a reporter.

Henson's department wasn't alone in giving the documents to The Sun. Two copies came from Washington critics of Gaffney who insisted on anonymity.

The goal clearly is to dilute Gaffney's criticism of HUD and sidetrack the probe by raising questions about her competence. The unsigned documents claim that Gaffney was required by law to submit one of the staff reports to Congress. Her defenders dispute that.

One of the internal critiques being leaked is a January 1998 report, essentially an internal audit, that Gaffney commissioned. Her auditors reviewed $23 million worth of expenditures between Oct. 1, 1994, and March 31, 1997, concentrating on $7.5 million appropriated for Operation Safe Home, a Gaffney effort to combat violent crime in public housing.

Overall, the 1998 report found problems with a small fraction of Gaffney's expenditures and said that internal controls in Operation Safe Home needed improvement. In some cases, it said controls were already being improved.

The second report, written 12 months earlier, called for improvement in the administration of Operation Safe Home, now a $10-million-a-year effort conducted with other law enforcement agencies.

Examples of leaks

The documents -- one four pages long, the other two -- that were leaked with the critiques cast a harsh light on the reports.

For example:

One unsigned document says Gaffney "is unable to account for millions of dollars in expenditures under the Operation Safe Home program" and that "lax management controls have led to widespread waste and abuse by the inspector general." Both say that only $900,000 of the $7.5 million appropriated for Operation Safe Home had been spent and that Gaffney was "unable to account" for the other $6.6 million.

In fact, the 1998 report accounted for the unspent funds by describing their status.

One document says Gaffney's office "circumvented government procurement rules by splitting credit card purchases to avoid the threshold for competitive procurement."

The 1998 report cited a single instance where five purchases of furniture totaling $4,784 were made in the same month from the same vendor.

"A $100,000 cash advance was made without documentation," one document says.

The second report, written in January 1997, did not say there was no documentation. It said the funds to a local agency "ostensibly for police overtime" should have been distributed on a reimbursement basis after the overtime was incurred.

One document says an equipment request from a district office "was approved without documented evidence."

In fact, the 1997 report says the request "was approved without documented evidence [that] the request reviewer discussed with the district the need for the quantity asked" and that the reviewer said the discussions were verbal.

One document says there is "no oversight over the purchase and use of computer equipment. As an example, the report cites notebook computers being given to non-OIG employees without any receipt."

Actually, the report said internal controls over computer equipment were not being enforced in all of Gaffney's offices. It cited one case where a notebook computer was assigned to a HUD employee not on Gaffney's staff without getting a "custody receipt."

This month, the leaks have found their way into the Wall Street Journal, the Baltimore Afro-American and a Washington newsletter that covers housing affairs. The Afro-American and the newsletter repeated assertions in the two-page anonymous document as if they were conclusions of the 1998 report to Gaffney.

Mostly anonymous

Gaffney's defenders suspect that the leaks originated at HUD. But, like the leakers, her supporters have been unwilling to be quoted by name or to offer evidence -- at least until last Wednesday.

That's when an infuriated congressman charged that "some within HUD" were trying to derail the probe of the three cities and sully Gaffney's reputation, a charge that a Cuomo aide denied.

Rep. Jerry Lewis, chairman of a House appropriations subcommittee and chief mover behind the investigation, did not cite specifics and did not mention the leaks. But, said Lewis, who holds HUD's purse strings, "I will consider any attack on Ms. Gaffney -- personal, political, or otherwise -- to be an attack on me and will respond to it forcefully and vigorously."

The California Republican put $9 million in Gaffney's budget last year to finance the probe and added another $9 million to the new budget now working its way through Congress.

Gaffney and Cuomo, who became secretary in January 1997, have been at odds for months. The National Journal, a respected Washington weekly, recently characterized their relationship as a "civil war," calling Gaffney "one of his toughest critics."

Last year, a HUD official sought an investigation of Gaffney after she refused to channel all news media contacts through Cuomo's press office. The complaint claimed that she had leaked confidential information and had been insubordinate by refusing to go along with the proposed media policy. Subsequently, the complaint was withdrawn.

To the frustration of her defenders, Gaffney has remained silent, refusing to defend publicly the selection of Baltimore, New Orleans and San Francisco, and refusing to release whatever criteria she used to choose the cities.

Said one defender, "She doesn't know how to play hardball."

Pub Date: 6/29/98

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