Federal housing officials violated government regulations last year and made extraordinary efforts to manipulate and control an employment discrimination investigation aimed at HUD's chief investigator, congressional investigators charged in a report released yesterday.
Then, they tried to impede an investigation of their actions, according to the document issued by the General Accounting Office.
The report was the latest development in a long-running feud between Housing and Urban Development Secretary Andrew M. Cuomo and Inspector General Susan Gaffney. It shed further light on the bitter controversy that enveloped Gaffney last year after she targeted Baltimore, New Orleans and San Francisco for intensive housing fraud investigations.
Mayor Kurt L. Schmoke charged in April 1998 that the selection was racially tainted because each city was headed by an African-American mayor. Other mayors, members of Congress and HUD officials echoed Schmoke's charges during a campaign to head off the probes.
Complaints were filed with the President's Council on Integrity and Efficiency, which oversees inspector generals, claiming that Gaffney had improperly targeted the three cities based on racial considerations. Both the council and the Justice Department dismissed the allegations.
Eventually, Gaffney retooled the investigation. She expanded the Baltimore investigation to cover all of Maryland, dropped San Francisco and New Orleans, and launched investigations in five other regions around the country.
Sen. Fred Thompson, a Tennessee Republican who released the GAO report as chairman of the Governmental Affairs Committee, said, "There has clearly been an extraordinary effort to discredit this long-time public servant and to portray her as something she is not."
Two senior HUD officials, who refused to be identified, vehemently denied Thompson's charge, saying, "We never did anything to discredit her." They also defended the agency's actions as an effort to deal with a serious charge of racial discrimination.
The GAO report did not involve Schmoke's charges, though it alluded to the controversy they generated. Instead, it focused on a complaint by Philip Newsome, an African-American subordinate of Gaffney's who said that he had not been promoted or accorded warranted bonuses.
Initially, HUD's Equal Employment Opportunity office, following standard practice, hired an outside firm for $2,700 to look into Newsome's charges, GAO said.
In August 1998, senior HUD officials ended that probe and then disregarded federal procurement regulations in hiring the law firms of Deval Patrick, a former assistant attorney general for civil rights, and Kumiki Gibson, a former trial attorney in the Justice Department's Civil Rights Division, for nearly $98,000 to conduct the investigation.
Subsequently, HUD hired a third law firm for $100,000 to help fight Newsome's complaint and to prepare a report defending HUD's conduct in hiring Patrick and Gibson.
GAO said HUD officials claimed that "an environment of pervasive racial discrimination" existed in Gaffney's office, a perception reinforced by the controversy over the fraud investigation. Officials also claimed that Gaffney had faced an "excessive" number of racial discrimination complaints compared with other HUD agencies, according to GAO.
Citing HUD statistics, GAO said discrimination complaints against Gaffney's office had been lower than the overall HUD rate for the past three fiscal years, though they had been higher for her first two years in office.
The rate of complaints against her has "always been much lower than that of HUD's Office of Secretary," the GAO report said.
The report specifically criticized Harold Glaser, who was deputy general counsel at HUD and is now counsel to Cuomo. It called Glaser's hiring of the law firms "extraordinary."
EEO officials at HUD "told us that Mr. Glaser's involvement in the investigation was unprecedented," the report said and prompted the EEO to question whether its independence was being undermined.
Glaser refused to comment, as did Gaffney.
Newsome, who filed a federal discrimination suit against Gaffney in April, also refused to comment. His lawyer, Steven Hoffman, said they are "rather bemused by this effort to make Susan Gaffney look to be an injured party."
"Nobody seems to be looking at the fact that there's racial discrimination being practiced in that office," Hoffman said. "She's directly involved in it."
The Congressional Black Caucus also criticized GAO yesterday, saying in a statement, "The issue at hand is not the department's internal relations or the fine points of federal contracting but the violation of basic civil rights of federal employees."