By LARRY MARGASAK
Associated Press

WASHINGTON (AP) – The Justice Department is conducting an investigation into possible contract rigging by the general counsel at the government agency that distributes foreign aid, documents obtained by The Associated Press show.

Memos from the inspector general of the U.S. Agency for International Development also reveal that there was evidence that Deputy Administrator Donald Steinberg tried to interfere with an internal investigation.

The inspector general’s office told a House committee on Wednesday that the Justice Department investigation was “ongoing.”

An attorney for the USAID general counsel, Lisa Gomer, said Thursday night that he was told the Justice Department decided not to initiate a criminal investigation. He declined to say who in the department informed him there was no probe.

The Justice Department was unable to immediately clarify whether there was an ongoing investigation. When an inspector general makes a criminal referral, the department has the option of pursuing an issue such as alleged contract fraud as either a civil or criminal case.

Meanwhile, inspector general documents showed that the USAID deputy administrator, Donald Steinberg, told IG investigators they had no right to make a criminal referral to the Justice Department without going first to top USAID officials. The IG’s office told Steinberg that the office was independent and did not need such approval.

Inspectors general are watchdogs within a federal agency and are supposed to operate independently.

The original investigation focused on whether Lisa Gomer, USAID general counsel, may have “wired” a contract last May so the winner of the solicitation would be the agency’s retiring chief financial officer, David Ostermeyer.

The contract bidding for a “senior government-to-government assistance adviser” was canceled after questions were raised.

“If the solicitation was in fact designed for Ostermeyer to win, Ms. Gomer and USAID may have violated various federal laws, the Federal Acquisition Regulation and government ethics policies,” according to a letter from two House members to USAID Administrator Rajiv Shah in November.

The letter was written by Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, and Rep. Jason Chaffetz, R-Utah, chairman of the panel’s national security subcommittee.

On Wednesday, the inspector general’s office wrote Issa’s committee saying the Justice Department authorized the inspector general to give the committee documents related to Steinberg’s potential interference. The Justice Department said it would continue to investigate the original allegations. All the documents were described as “law enforcement sensitive.”

One document said Steinberg told inspector general officials that Shah asked him to speak with the internal investigators about the review. Steinberg, according to another inspector general document, ripped into the independent watchdog.

“When people are slapping badges down, reading rights and monitoring who is calling who as it relates to career people, it is a mistake,” Steinberg was quoted as telling his agency’s investigators. Steinberg added, according to the document, “We are not that kind of agency. People are being told they need to hire lawyers and that is inappropriate.”

The memo also quoted Steinberg as saying “now that Justice is involved, it is like the IG is out to get these people. Justice is going to proceed criminally. This should have come through the front office first.”

The law governing inspectors general says that the internal investigators “shall report expeditiously to the attorney general whenever the inspector general has reasonable grounds to believe there has been a violation of Federal criminal law.”

There was no response to a message requesting comment, left on the home answering machine of a David Ostermeyer.

Gomer attorney David Schertler said in a statement Thursday that his client “did not violate any law. We understand that the Office of Inspector General for USAID conducted an investigation, in which Ms. Gomer cooperated completely, and we have been informed that the Department of Justice reviewed the matter and declined to initiate a criminal investigation. Ms. Gomer is an example of a dedicated and committed public servant who served as an excellent General Counsel for USAID and did nothing other than to further the best interests of the agency and the United States. Her decision to leave public service is a loss for USAID.”

Steinberg declined to comment.

A senior USAID official, who spoke on condition of anonymity because he was not authorized to comment on the subject, said Gomer has been reassigned from her general counsel’s position and has submitted her resignation effective Feb. 9. The official said she was not ordered to resign.

The USAID spokesman, Kamyl Bazbaz said, “We take very seriously the independence of the inspector general and the importance of the agency’s cooperation with IG audits and investigations.”

He added, “It is the usual practice for the IG to brief the senior leadership of the agency regarding its ongoing investigations and audits.”

In an inspector general’s “memorandum of interview” last June, investigators described their probe into allegations that “Lisa Gomer, general counsel for USAID colluded with David Ostermeyer, chief financial officer for USAID, by working with him to write a scope of work for a personal service contract … in the Office of General Counsel.”

“Gomer planned to select Ostermeyer for the position,” the memo said.

The job Ostermeyer would have received in working with foreign governments would have paid between $123,758 and $155,500, according the USAID solicitation document. The solicitation said “the work is generally sedentary and does not pose undue physical demands,” an important factor in an agency where USAID workers can live in poor conditions in dangerous countries.

According to an inspector general’s document from last June, Steinberg said he “had already looked into this matter thoroughly and knows there is nothing to it.” Steinberg said the contract award was canceled because of issues raised about the procurement.

“He said it is a mistake to have a criminal investigation under way,” the investigative document said. “To take a matter to the Department of Justice for criminal consideration without first reporting the issues to the front office is inappropriate and a judgment error on the IG’s part.”

According to the document the deputy assistant inspector general for investigations, Lisa McClennon, told Steinberg “the agency never has the right to instruct the inspector general’s office on whether or not something is presented to Justice.”

Issa said in a statement, “This interference by the top USAID official and his deputy in a corruption investigation of other top officials is disturbing and outrageous. Inspectors general can only be effective if they are independent. Efforts to intimidate or chastise an inspector general for investigating agency corruption and submitting findings to the Justice Department are simply incompatible with honest government.”

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