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Alleged violations of IRS rules by IBB officials may cost taxpayers, U.S. agency millions

BBG Watch Exclusive Commentary

IRS chequeBBG Watch has learned that officials of the International Broadcasting Bureau (IBB) at a federal agency, Broadcasting Board of Governors (BBG), are alleged to have violated IRS tax rules by employing thousands of private contractors as full-time, long-term employees but failing to withhold taxes from their salaries as they were required to do, according to IRS and the Office of the Inspector General (OIG).

ALSO READ: OIG uncovers alleged massive unauthorized use of personal services contracts by IBB officials, BBG Watch, February 3, 2014.

BBG is responsible for U.S. media outreach abroad to provide news to countries without free press and to report on America, its society, and government policies. These officials are still believed to be in violation of tax rules and other federal regulations by employing a large number of contractors as permanent employees, mainly at the Voice of America (VOA), and continuing to expose the agency and taxpayers to millions of dollars in liabilities.

BBG Watch has also learned of allegations that some IBB officials suspected of these irregularities may be trying to cover up their alleged violations by refusing or delaying release of information under the Freedom of Information Act (FOIA) requests from private individuals, including news reporters and NGO representatives.

There are also additional allegations of senior IBB officials trying to silence BBG members who attempted to expose corruption. These officials are alleged to have engaged in efforts to undermine personal and professional reputation of presidentially appointed BBG members, and even trying behind the scenes to get them removed from serving on the board.

BBG LogoThe bipartisan oversight BBG board by law consists of nine members nominated by the President and confirmed by the Senate, four Democrats and four Republicans, and the Secretary of State serving as an ex officio member. IBB is the BBG’s bureaucratically bloated and powerful management and technical support division, which critics charge has grown far beyond any reasonable need and feeds on programming units it is supposed to serve by eliminating their programs and programming positions.

Some critics charge that IBB officials have become so powerful that they are able to threaten BBG members with removal if they do not toe the line. While only the President can replace a BBG member, critics have alleged that IBB officials tried to influence the nomination process at the White House through leaks of false information about BBG members they dislike.

IBB director has been until now appointed by the President and confirmed by the Senate. IBB director’s senior deputies are U.S. federal executives (SES) and other high-ranking federal government employees.

BBG Watch has learned that some of the FOIA requests, which have not been answered, are seeking to uncover exchanges between senior IBB officials about BBG members, both former and current, who were trying to expose waste and corruption and to increase transparency and accountability by the agency’s senior executive staff.

Journalists and NGOs also have been investigating various other allegations against IBB officials, including nepotism in awarding jobs and contracts to friends, relatives and former work associates, improper re-hiring upon retirement of former IBB executives as contractors, use of government travel and grants for personal purposes, and ignoring VOA’s congressionally-approved Charter, which has the force of public law, by not reporting in Voice of America programs on legitimate U.S. news generated by the administration and the Congress.

BBG Watch has now learned that new serious allegations against IBB executives have emerged as a result of investigations by the IRS and the Office of the Inspector General (OIG). If these charges turn out to be true, millions of dollars in new liabilities may force the agency into a financial crisis, which can affect the lives of many innocent employees and contractors.

According to the information received by BBG Watch, the current BBG board was briefed at its December 2013 meeting by the Office of Inspector General behind closed doors on an 2010 tax audit by IRS and an audit of BBG procurement practices. A final report is expected to be issued in a 6 to 8 weeks. We have also learned of a letter sent by the OIG in September 2013 to BBG members and some members of Congress detailing various potential violations of federal regulations by senior IBB officials.

The IRS audit reportedly states that International Broadcasting Bureau officials should have treated contract employees at VOA, IBB, and the Office of Cuba Broadcasting (OCB) as federal employees for tax reporting purposes by withholding income tax and Social Security taxes.

BBG Watch has also learned that fixing this alleged violation of IRS tax rules and potential violations of other federal laws and regulations may cost U.S. taxpayers $12 million a year and could go as high as $18 million. This is money Congress has not appropriated in the BBG budget.

Agency watchers are concerned that unless Congress provides extra money to rectify IBB’s alleged violations, IBB officials may try their previously used tactic of eliminating federal jobs in the programming part of the agency and firing journalist-contractors to protect their own jobs and their constantly growing bureaucracy.

BBG Governor Ashe receives Glasnost Award in Moscow, June 2013

BBG Governor Ashe receives Glasnost Award in Moscow, June 2013

Allegations have been made that some of IBB officials responsible for employing thousands of poorly-paid full-time contractors who have been denied by these officials basic employment protections and benefits, such as vacations and health insurance, may have also been involved in an attempt to silence and remove from the BBG board a former member, Victor Ashe, and to undermine reputation of some of the still serving BBG members who have questioned their management practices.

Alleged retaliation against Ashe is strongly suspected because he was most active among BBG members in trying to expose and prevent waste of taxpayers’ money at the agency, but at least two other BBG members who are still serving may have also been a target of a smear campaign. BBG Watch has learned that FOIA requests for documents that may show alleged efforts by IBB officials to silence BBG members and to undermine their reputation are the ones which are not being answered by IBB officials who have not yet produced any documents several months after these FOIA requests were submitted. BBG Watch also learned that there is still a pending FOIA request for additional information about an incident in which a senior Voice of America executive allegedly tried to get officials at the United Nations to revoke a press accreditation of an independent American journalist. BBG’s mission if to support media freedom. Some of these officials are still employed by BBG.

One of BBG Watch volunteer-reporters contacted Victor Ashe by phone at his home at Knoxville, TN to get his perspective on the developing scandal over violations of IRS tax rules by agency officials where he was a board member until late last year. Ashe is a former U.S. Ambassador to Poland and former popular long-term mayor of Knoxville. He had served may U.S. administrations of both parties in various federal positions. This is how BBG Watch reporter summarized for BBG Watch the phone conversation with Ashe:

“After years of neglect from prior management, Broadcasting Board of Governors is now moving to remedy the mistreatment from a pay standpoint for 35% of BBG’s employees who are on contract as opposed to being fulltime federal employees,” former BBG member Victor Ashe said.

“Of course this is due to the heavy pressure from the Internal Revenue Service and the Office of Inspector General,” Ashe added.

“One reason BBG has ranked so poorly in Office of Personnel Management (OPM) morale surveys is the way contract employees are treated, as well as the fallout from the Office of Cuba Broadcasting (OCB) Radio and TV Marti lawsuit from former Cuban American employees in Miami who were illegally dismissed, according to findings by an impartial Federal Arbitrator and legal panels. This lawsuit, which management has lost at every step along the way, continues with costs exceeding $3.5 million. While it may last two more years, cost may exceed $5.3 million by the time it is over. No one seems bothered by this use of tax dollars,” Ashe added.

“Morale at the three entities, which are Radio Free Asia (RFA), Radio Free Europe / Radio Liberty (RFE/RL) and Middle East Broadcasting Networks (MBN), remains much higher,” he added.

“International Broadcasting Bureau (IBB) has a terrible history of mistreating contract employees,” Ashe said.

“Congress needs to act swiftly to correct these problems and monitor carefully how BBG is handling the IRS audit and OIG findings. BBG owes the public an explanation on why this has occurred and how they plan on finding $12 to $18 million,” he added.

“This is all about righting a wrong. IBB past management thought they could get away with this violation of federal practices and law. Now this seems to be at an end.”

“Now the BBG board should review the Radio and TV Marti lawsuit by Cuban Americans laid off wrongly over 4 years ago and attempt to settle it. Otherwise, BBG may face $5 million in legal expenses,” Ashe added.

“I commend Jeff Shell, the new chair, for his efforts to correct the problems he inherited,” Victor Ashe stated.

New BBG Chairman Jeff Shell

New BBG Chairman Jeff Shell

Jeff Shell and the renewed BBG board have already announced several key personnel and management changes at the IBB and further management reforms are expected. Former IBB director retired at the end of November 2013. But some remaining IBB officials are alleged to be engaged in an attempt to cover up their previous mistakes by unnecessarily prolonging the FOIA process, sources told BBG Watch.

Ashe and some of his colleagues on the BBG board have been vindicated in a number of cases where their initial concerns were first strongly resisted by agency officials and later turned out to be correct and their proposed solutions embraced by other BBG members.

Among three BBG members who seem to have most annoyed IBB senior staff with demands for accountability, Ashe is credited along with Susan McCue and Michael Meehan with saving Radio Free Europe / Radio Liberty (RFE/RL) from a major management and journalistic crisis last year. Ashe received the Glasnost Award for these efforts from a Russian human rights organization. He is also believed to have helped new RFE/RL CEO Kevin Klose rehire Radio Liberty journalists who had been fired by the previous management — an incident which produced a major public relations and public diplomacy crisis for the United States in Russia.

In a phone conversation about his previous difficult dealings with IBB officials, Ashe recalled discovering that flu shots were being denied to contract employees at the agency because of their status. IBB officials declined to correct the problem until he went public with the issue and shamed them into recognizing it was a health risk for the entire workforce, since contract employees and federal employees work daily side by side. “Today I am glad to say all can receive flu shots,” Ashe was quoted as saying.

Alleged attempts to silence inconvenient BBG members and alleged attempts by IBB senior executives to remove Ashe from the BBG board with unfounded accusations to the OIG were described in recent editorials published by the American Federation of Government Employees, AFGE Local 1812, a union representing BBG’s federal workforce. One OIG team sided with IBB officials against Ashe and incredibly accused him of being too aggressive in pursuing his oversight responsibilities, although it did not mention him by name. That particular OIG team repeated assurances received from IBB executives and, also incredibly, did not discover any substantial waste or irregularities in the agency, which has a budget of over $700 million. It took another, different OIG team to find widespread irregularities in the work of IBB officials, including nonpayment of IRS required taxes.

Ashe is widely admired by rank and file agency employees and contractors, as are Governors McCue and Meehan. Chairman Shell has also developed a good reputation among BBG employees for his energy, willingness to listen to critics and some of the initial reforms he has proposed.

Ashe’s departure from the board was particularly mourned by BBG employees. Their union has arranged with the Knoxville, TN city administration to have a tree planted in one of its parks in honor of former BBG Governor and former U.S. Ambassador.

In a recent article in in Ambassador Perspectives, a forum of commentary on current world issues by non-career US Ambassadors who have served presidents of both parties, Ashe has proposed several solutions to management problems at the BBG, including appointing a single agency head, confirmable by the Senate, dissolving the current part-time nine-member board, or making it much smaller. The CEO proposal, but without Senate confirmation, is also being pursued by Chairman Shell and the current BBG board.

Ashe has also called for bringing Congress more closely into the process of reforming U.S. international media outreach to those countries where independent press is either severely restricted or completely repressed. Ashe told a reporter that “hopefully, Congress will start holding annual oversight hearings on U.S. international media outreach, which have not been held for six years.”

The key questions, however, are whether anyone among IBB’s current government executives who are still in their positions will answer for alleged violations of tax and other federal rules? Who will pay millions of dollars, which have not been appropriated by Congress, to correct alleged mistakes? Can IBB officials get away with not releasing FOIA documents that may expose their alleged attempts to cover up corruption and abuse of power.

BBG Watch has learned that at the urging of a least one NGO, a member of Congress known for his support of U.S. international broadcasting mission abroad plans to make inquiries to the BBG to find out why IBB officials are dragging their feet on answering FOIA requests for information that may expose their alleged misdeeds.

AFGE Local 1812WHO’S IN CHARGE – REALLY??

by AFGE Local 1812

It’s not the first time, and not the last, that we ask: who’s in charge of this Agency?
As the new Broadcasting Board of Governors members get down to business, we recognize their role of being in charge of ensuring that the broadcasting arm of the United States government carries out its mission for the 21st century. However, we get the feeling that some in top and mid-level management take the position that the bureaucracy is still in charge, will remain in charge, and will make sure the BBG understands who is really in charge.

Why should there be any concern? Flash back to the arrival at the Agency several years ago of a former BBG Governor, the Honorable U.S. Ambassador Victor Ashe. A politician, in addition to a diplomat, with extensive managerial experience, he engaged in behavior any official on the BBG should feel comfortable engaging in: he met with the staff, listened to their concerns, opened a communication channel by providing his personal e-mail and started asking questions of management.

The backlash was swift and fierce. Ambassador Ashe was warned in private, then warned again more forcefully in public, against assuming his full role as Governor. Apparently he did not get the message. The General Counsel’s office — whose main purpose sometimes seems to be not to assist management in respecting the law, but rather in how to circumvent it — drafted new rules that essentially tried to muzzle BBG members, trying to prevent them from freely discussing Agency business.

But that did not silence Ambassador Ashe. He had the courage to publicly deplore the diplomatic mess created by the firing of most of the staff at the Russian Service of Radio Liberty. Payback time came in many forms including a rather silly and spiteful incident, when Governor Ashe was refused entry to an event to which he was invited. Other blockades were erected by the resident bureaucracy to thwart any attempts by Governor Ashe to find out what was going on in the Agency including a scandalous contracting-out process. Even the OIG, in its January 2013 report, characterized Governor Ashe’s actions as somewhat of a transgression when it wrote: “He visits widely throughout the agency, offering to bypass IBB management to assure Board attention to employee concerns.”

And yet, Ambassador Ashe did not budge. He continued his fight. So, he was disposed of thanks to a blistering and factually-challenged OIG report that the Union described, and still does, as a ‘hatchet job’. He could have stayed in his position as a Republican Governor on the BBG. There was no need to push out the only BBG member who had a perfect attendance record at all meetings and seemed to genuinely care, and was competent as well. The Agency would not stand for that and the White House somehow found time to name someone to replace him.

AFGE Local 1812 will always be grateful to former Governor Ashe for his intrepid efforts to try to find out what was wrong in the Agency and to fix it. We are also grateful that he did not look at the Union as a pariah. For its part, the Union has arranged with the Knoxville, TN, city administration to have a tree planted in one of its parks in honor of Governor Ashe where he served five terms as mayor. We are considering another project in his honor as well.

So, as our new BBG members settle in we ask: Who’s in charge, really?? Will it be the new CEO, if and when he or she is chosen or will our bloated bureaucracy again be in charge? For the time being, that responsibility will be handled by a triumvirate which is in the unenviable position of trying to sort out the dysfunction rampant throughout the Agency. It will be a tough job and we wish them well.

Additional alleged violations of federal laws and regulations by IBB and other agency officials were also presented by the union in another recent editorial.

AFGE Local 1812Re: The Weakening Of The Rule of Law: An Agency Tragedy?

by AFGE Local 1812

In an editorial recently published by The Washington Post, Gary A. Haugen, President and CEO of International Justice Mission, reflected on the weakening of the rule of law around the world. “Throughout the developing world, public justice systems are being replaced with private systems of security and dispute resolution. The implications for the world’s poorest people are devastating”, writes Mr. Haugen.

We at AFGE Local 1812 raise this issue because we have also noticed that in the past 15 years, the rule of law at the Agency has weakened considerably. We refer here to the fact that hundreds of contractors have been hired to fill positions that should have gone to Federal employees, even though contractors are legally supposed to be a temporary stop gap to the hiring of permanent employees. Yet, some have now occupied, de facto, permanent positions for over 10 years as contractors.

“As elites abandon the public security system, their impoverished neighbors, especially women and girls, are left relying on underpaid, under-trained, undisciplined and frequently corrupt police forces for protection and all-but-paralyzed courts for justice,” continues Mr. Haugen. Well now, we know of language services at the Voice of America where men are promoted more often than women.

Although there are women in supervisory positions in the VOA language services, the record is spotty. In one particular service, only one naturalized female U.S. citizen was ever promoted to a supervisory GS-13 level in the service’s very long history; and in another where not a single woman has qualified for a supervisory position in some 20 years.

“As a U.N. commission found in 2008, a stunning 4 billion poor people live outside the protection of law,” Mr. Haugen further states. We know quite a few people inside the Agency who can’t rely on the protection of law. We refer here to the stunning rebuke issued more than two years ago against the Broadcasting Board of Governor’s Office of Cuba Broadcasting for using a reduction-in-force action to eliminate employees who had been outspoken critics of the agency. Arbitrator S.R. Butler ruled that former OCB Director, Pedro Roig, had ordered an illegal RIF and conducted it in such a way to target employees who had spoken out to the Office of Inspector General and Congress. Ms. Butler ordered the Agency to compensate and/or rehire the illegally fired employees but unfortunately, they’re still waiting, as the Agency refuses to comply with the ruling and has appealed the matter to court.

Another group of Agency employees is still “outside the protection of the law” as the Agency refuses to comply with another ruling. The Federal Labor Relations Authority over two years ago upheld an arbitrator’s ruling that the Broadcasting Board of Governors violated AFGE Local 1812’s collective bargaining agreement by hiring non-U.S. citizens for positions within the Agency when qualified U.S. citizens had applied for those positions. The wronged employees were supposed to be compensated.

They too are still waiting. There is nowhere for the Agency to appeal. They have simply refused to comply with the rulings.

“When a justice system descends into utter dysfunction, those who exploit and abuse vulnerable people may do so without fear of apprehension or prosecution,” continues Mr. Haugen. Indeed, we know of Agency supervisors who have retaliated –against other employees who dared defy them — with impunity, in violation of the law.

“When elites, including government officials, have no stake in professional and reliable public security, it deteriorates, just like libraries and schools do when affluent families opt out of public facilities and pay for such services in the private sector,” argues Mr. Haugen. Indeed, just look at the way the Voice of America has deteriorated, turning into a shadow of its former self, with a dysfunctional newsroom that can’t put out basic news. No amount of Bingo nights, cookie contests, ice-skating outings have sufficed in the past year to improve morale. What ails the VOA is the contempt for the rule of law that eats away at employees’ dignity.

As we mentioned before, in Fiscal Year 2008, the General Counsel’s office had a staff of six. For Fiscal Year 2014, the same office will count 15 employees and that doesn’t include contractors.
Why was it necessary to more than double the staff of lawyers of the General Counsel’s Office? Maybe it takes an increasing number of lawyers to defend the Agency as it continues to bend or break the law.

Using their growing pack of lawyers, the Agency, which trumpets the rule of law to a global audience, continues to flaunt the law at the expense of U.S. taxpayers.
Unfortunately, the result is plain to see: the VOA is losing its voice, while U.S. taxpayers risk having to pay an outrageous amount of money for settlement of the cases because Agency management could not be bothered, for so many years, to respect the law. This is exactly what happened in the Hartman v. Albright case, which saw the U.S. government forced to pay some 500 million dollars to 1,100 women who claimed they were discriminated against by the Agency. That case was settled in 2001. Thirteen years later, it seems the Agency has learned little or nothing from the case and continues to flaunt the law.

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