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Printed Hearing The Committee on Energy and Commerce W.J. "Billy" Tauzin, Chairman Procurement and Property Mismanagement and Theft at Los Alamos National Laboratory <DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:86048.wais]
INVESTIGATION OF MANAGEMENT PROBLEMS AT LOS ALAMOS NATIONAL LABORATORY
=======================================================================
HEARINGS
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
FEBRUARY 26 and MARCH 12, 2003
__________
Serial No. 108-13
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida PETER DEUTSCH, Florida
CLIFF STEARNS, Florida Ranking Member
RICHARD BURR, North Carolina DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
Vice Chairman HENRY A. WAXMAN, California
MIKE FERGUSON, New Jersey BOBBY L. RUSH, Illinois
MIKE ROGERS, Michigan JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Hearings held:
February 26, 2003............................................ 1
March 12, 2003............................................... 91
Testimony of:
Browne, John C., Senior Research Scientist and former
Laboratory Director, Los Alamos National Laboratory........ 181
Busboom, Stanley L., Staff Member and former Director,
Security Division, Los Alamos National Laboratory.......... 97
Darling, Bruce B., Senior Vice President, University Affairs
and Interim Vice President, Laboratory Management,
University of California:
February 26, 2003........................................ 66
March 12, 2003........................................... 149
Dickson, Frank P., Jr., Laboratory Counsel, Los Alamos
National Laboratory........................................ 114
Doran, Steven L., Consultant, Office of the President,
University of California................................... 20
Erickson, Ralph E., Manager, Los Alamos National Laboratory
Site Office, National Nuclear Security Administration, U.S.
Department of Energy, Los Alamos........................... 190
Friedman, Gregory H., Inspector General, U.S. Department of
Energy..................................................... 50
Hernandez, John, former BUS-5 Team Leader, Los Alamos
National Laboratory........................................ 171
Marquez, Richard A., Associate Director for Administration,
Los Alamos National Laboratory............................. 171
McDonald, Jaret.............................................. 23
McTague, John P., Professor of Materials, Materials
Department, former Vice President for Laboratory
Management, University of California, Santa Barbara........ 184
Salgado, Joseph F., former Principal Deputy Director, Los
Alamos National Laboratory................................. 104
Walp, Glenn A., Consultant, Office of the President,
University of California................................... 12
Additional material submitted for the record:
Salgado, Joseph F., former Principal Deputy Director, Los
Alamos National Laboratory, letter dated April 10, 2003,
enclosing material for the record.......................... 209
(iii)
INVESTIGATION OF MANAGEMENT PROBLEMS AT LOS ALAMOS NATIONAL LABORATORY
----------
WEDNESDAY, FEBRUARY 26, 2003
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice, at 1 p.m., in
room 2322, Rayburn House Office Building, Hon. James C.
Greenwood (chairman) presiding.
Members present: Representatives Greenwood, Walden,
Ferguson, Rogers, Tauzin (ex officio), Deutsch, and Schakowsky.
Also present: Representatives Wilson, Radanovich, Markey,
Eshoo, Tauscher, and Tom Udall.
Staff present: Ann Washington, majority counsel; Dwight
Cates, majority staff; Michael Geffroy, majority counsel; Young
Choe, legislative clerk; and Edith Holleman, minority counsel.
Mr. Greenwood. Good afternoon. I apologize for the delay.
This hearing of the Oversight and Investigations Subcommittee
will come to order.
Without objection, the subcommittee will proceed pursuant
to committee rule 4(e). Is there objection to proceeding
pursuant to rule 4(e)? What is it? We need to know that.
Committee rule 4(e) is the new rule that allows that those
members who are present at the time the hearing is gaveled to
order who wish to forgo an opening statement will have an extra
3 minutes accorded to them for questions. Without objection, we
will pursue according to rule 4(e).
This afternoon we hold the first day of our hearing to
examine allegations of mismanagement and theft of government
funds and property at Los Alamos National Laboratory. The focus
of today's hearing will be on the evidence and allegations of
what went wrong.
We will hear from the people who first discovered these
problems and first investigated the situation at Los Alamos, as
well as others brought in to investigate as matters quickly
spun out of control.
The situation we begin to confront today is not your run of
the mill theft and misuse of taxpayer property, as much as that
demands our urgent attention in its own right. We also must
examine what our committee investigators have learned is a
disturbing breakdown in management controls and oversight at,
of all places, an institution that pursues research critical to
the Nation's security.
At our next hearing, which we will hold within the next
couple of weeks, we will be able to raise these serious
questions directly with the management at the lab, those people
charged with ensuring that things like don't happen. But today
we turn to the people who identified the problems and their
experiences in doing so.
By way of background, as many of you know, the committee
has been involved in an ongoing investigation of fraud, waste
and abuse in government procurement through the purchase card
program since July 2001. In fact, we had the Department of
Energy before us just last April.
At that hearing, DOE testified that they had little or no
idea how the purchase card programs are operated at their
contractor run facilities such as Los Alamos. Unfortunately,
soon thereafter, we all got a close look at what DOE didn't
know.
The committee quickly became involved in the situation at
Los Alamos in November of 2002 when press reports began to
surface that several laboratory employees were under
investigation by the FBI for misusing a government supply
contract to buy goods for personal use. Our investigation soon
discovered that was just the tip of the iceberg.
We have learned that the property theft and mismanagement
problems at Los Alamos extend far beyond the misuse of this one
government supply contract by two lab employees. We have
learned of a lab employee who allegedly attempted to use her
government purchase card to buy a $30,000 Ford Mustang, another
employee who used her purchase card at a local casino, and
another employee who altered a travel voucher to obtain
additional funds.
We have learned of hundreds of thousands of dollars in
unchecked theft of government property, including scores, if
not hundreds, of lab computers and hundreds of other lost
items, simply written off the lab's books each year.
This property management system is surely in need of an
overhaul. I find it astonishing that a laboratory that can
develop the most advanced nuclear weapons systems on the face
of the earth and technologies to rapidly detect radiological,
biological or chemical attacks by terrorists cannot develop a
system to simply keep track of its sensitive property and
prevent theft of government property by its own employees.
Our other key finding is a lack of accountability among
both the lab's officers and employees with respect to poor
inventory and fiscal controls. Simply put, cases of theft,
misuse or loss of government property are not aggressively
investigated, and usually no one is held accountable when it
occurs.
Indeed, the most decisive action taken by the lab to deal
with this issue was its decision to unceremoniously fire the
two security officials who were aggressively investigating
these instances of mismanagement, misuse and theft.
These two gentlemen, Mr. Glenn Walp and Mr. Steve Doran,
both of whom are very experienced law enforcement officers, are
here with us today. I very much look forward to hearing their
testimony about their experiences at the lab when attempting to
look into allegations of wrongdoing, and their suspicions as to
why they were terminated from their positions.
Also with us today on the first panel is Mr. Jaret
McDonald, who works for a Los Alamos facilities management
subcontractor and who was the first person to raise with Los
Alamos management the concerns about theft. The determination
to see these concerns addressed ultimately led to the current
FBI investigation into the misuse of a government supply
contract to buy personal camping and hunting equipment, among
other things. He will describe his lengthy, until recently,
unsuccessful efforts to get anyone at the lab to take his
concerns seriously, and why he ultimately decided to contact
the FBI directly in June of 2002.
We will also hear today from the Honorable Greg Friedman,
Inspector General for the Department of Energy. Mr. Friedman's
office opened an inquiry in November into the allegations of
management coverup of property and procurement problems and the
terminations of Mr. Walp and Mr. Doran.
Its initial report, issued last month, clearly expresses
strong reservations about the manner in which senior laboratory
management responded to these problems, including the
terminations. I am pleased to have Mr. Friedman with us today
and look forward to a more detailed discussion of his office's
findings and recommendations.
We are also joined today by Mr. Bruce Darling, the Interim
Vice-President of Laboratory Management for the University of
California, which operates Los Alamos under contract with the
Department of Energy.
Mr. Darling also became intimately involved in the matter
before us when he traveled to the lab in November at the
request of University of California President Richard Atkinson
to review management concerns at the lab. We should note that,
since UC's direct involvement in this matter began under Mr.
Darling, UC has taken a series of personnel administrative
actions in an attempt to begin reforming the lab management and
systems, including replacing the lab's director and deputy
director and the lab's director and deputy director of
security.
UC has also rehired Mr. Walp and Mr. Doran to advise the
Office of the UC President as it continues its investigation
into management problems at the laboratory. I am pleased to
have Mr. Darling here today to add his insight into what
exactly happened at the lab and what further plans UC has to
correct these problems in the future.
I thank all of the witnesses for attending. I now recognize
the ranking member of the committee, Mr. Deutsch, for his
opening statement.
Mr. Deutsch. Thank you, Mr. Chairman. For many years this
committee has been investigating the management at the Los
Alamos National Laboratory by the University of California. The
University and the laboratory's attempt to cover up management
failures and its treatment of loyal employees who try to bring
problems to management's attention and get them fixed has been
a continuing theme of those hearings.
Two years ago, the University promised that many changes
would be made. It set up a special laboratory management
council and committed to making changes in the Security
Division. Our first two witnesses, Glenn Walp and Steve Doran,
were hired to professionalize the criminal investigations and
to make changes.
What they found is that the laboratory did not want change.
As a senior lab manager warned Mr. Walp a few months before he
was fired, the laboratory is famous for eating its own
children. Mr. Walp was told that he would be leveled with both
barrels if he did not keep management happy and protect the
lab's contract with the Department of Energy and, as we will
hear later, he was leveled with both barrels.
Today, however, we are looking at an unprecedented
situation. Mr. Walp and Mr. Doran were actually rehired by the
University, while the laboratory's director, deputy director,
the director and deputy director of security and the head of
audits and assessments were removed from their positions
because of their management incompetence in controlling
procurement and property and their failure to address the
problems brought to their attention.
This incompetence was only exacerbated when they tried to
control Mr. Walp's and Mr. Doran's investigation into what was
basically relatively routine criminal activity. The laboratory
did not want any of this known, especially by this committee.
What we are going to hear today is that in less than 2
years these systems allowed three people in just one division,
by using numerous suppliers and procurement vehicles, to buy
all kinds of camping and hunting gear, including 251 knives, 18
pair of binoculars, sleeping bags, Arctic jackets, hiking
boots, Coleman lanterns, battery operated ice chests, and
global positioning systems.
They were not cheap. The binoculars cost up to $3,300 each,
some of the knives $266 each. There were helmets and boxes of
gloves for all-terrain vehicles, floor sanding equipment for
facilities that had no wood floors, auto supplies when vehicles
were maintained by the GAS, railroad ties for retaining walls
that weren't built, welding tools for people who weren't
supposed to weld, and over $5,000 of lock picking equipment,
plus a CD containing instructions on how to pick locks, enough
hand and shop tools to maintain an army. The perpetrators
couldn't even figure out how to use it all.
In addition, Mr. Chairman, our Federal dollars were going
to pay these lab employees--actually, there is a receipt that
actually went through the procurement process for Oakley
sunglasses that, obviously, as you see from the copy, were
approved, directly approved. Thank you.
These were all ordered by a small group of people whose
main job was to supervise a subcontractor that did the actual
maintenance work and brought its own tools and supplies.
Shockingly, the manager of this group was given high marks
during these years for his ability to control costs.
Even more shockingly, these purchases were rarely
questioned by any of the contract administrators, even though
the purchase of knives, for example, is not allowed in the
laboratory, and what conceivable reason could they have for
lock picking equipment.
Where did all these purchases go? It is difficult to tell,
since the majority of them do not appear to have gone through
the regular inventory delivery system to be marked, and most of
them did not require inventory controls, because they cost less
than $5,000. But some of them were found in the houses of the
implicated managers when the FBI raided them.
How did the lab handle this? When Jaret McDonald, who is
one of our witnesses today, went to the Security Division to
ask for an investigation, the investigator, who remains on the
lab's payroll today, received a list of all these purchases,
agreed that they were suspicious, made a call to the FBI. But
they did no serious follow-up for 7 months until Mr. McDonald
went directly to the FBI.
The FBI has focused on one contract, but our investigation
shows that these same types of purchases were also made under
several other contractors and vendor agreements. This is not
the only instance in which procurement and financial controls
were weak or nonexistent.
Another employee working directly for the head of
procurement used her credit card to get cash advances, as has
been mentioned by the chairman, at various casinos. Why wasn't
this picked up immediately, because like several other
employees, she was both the buyer and the approver of purchases
on her credit card. The same situation has been mentioned
regarding purchase of a Mustang vehicle.
Yet another employee was able to convert $1,800 to her own
personal use by simply sending electronically a bogus travel
plan and asking for an advance check. No supervisory approval
was required. However, instead of allowing these instances to
be handled by the appropriate law enforcement agencies, Mr.
Walp and Mr. Doran, Joe Salgado, the lab's principal deputy
director, and Frank Dickson, the lab's counsel, quickly and
personally took over the management of the investigation.
When Mr. Walp and Mr. Doran tried to do their job and work
with outside law enforcement agencies to prosecute, Mr. Salgado
and Mr. Dickson had them fired based on a flimsy
justifications, some of which they knew were false. The real
reason was that they were not protecting the laboratory and its
contract with the DOE.
Mr. Chairman, the procurement and property systems, but
more importantly, the entire management of Los Alamos National
Laboratory needs a complete overhaul. It is not enough to say
that there is a great science at the lab. Employees have to
remember that they are public servants with public trust, and
those individuals who bring fraud, waste, abuse and
mismanagement to the lab's attention should be honored, not
pursued and ostracized in their community.
I hope this hearing will be the beginning of such a
process. Thank you.
Mr. Greenwood. The Chair thanks the gentleman and
recognizes----
Mr. Deutsch. Mr. Chairman, may I also just mention, the
ranking Democrat on the full committee, Mr. Dingell, probably
will not be here, and if I could submit his statement for the
record.
Mr. Greenwood. Without objection, the statement will be
made a part of the record.
[The prepared statement of Hon. John D. Dingell follows:]
Prepared Statement of Hon. John D. Dingell, a Representative in
Congress from the State of Michigan
Thank you, Mr. Chairman, for holding this hearing, which I
understand is the first of three hearings on the University of
California's and the Department of Energy's management of the Los
Alamos National Laboratory. We have been holding hearings on the lab
for many years, with many promises of reform, mostly unfulfilled.
Today, we will hear more promises. The question that everyone,
including the Department, must answer is whether they are too little,
too late.
Over two years ago, the University promised the Congress and this
Committee that it would make major changes in its management of its
Laboratories, particularly in the area of property control. Appendix O
was added to the University's contract. A senior laboratory management
council was established that was going to shape up the management.
Security and safeguard efforts were going to be strengthened.
This management council did put the National Ignition Facility at
Lawrence Livermore National Laboratory back on track, but the day-to-
day management of Los Alamos--a billion-dollar business--appears to be
worse than ever. There are still no basic controls. It is still
operating with its ``unique'' procurement systems left over from the
Manhattan Project days and outside of standard University operating
practices.
I am particularly pleased that Glenn Walp, Steven Doran, and Jaret
McDonald are testifying today. They each have compelling stories. For
example, Mr. Walp was told when he went to Los Alamos that he was there
to change things in security, particularly in the investigation of
property theft. But when he tried to make changes that would hold
Laboratory employees responsible for their criminal behavior, he was
fired because his ``customers''--the top management of the Laboratory--
didn't want the FBI or any other law enforcement agencies on its
premises. This management tried to run the investigations themselves,
and when the FBI said they had ``screwed up,'' they blamed Mr. Walp,
firing him and his colleague Mr. Doran. That was an outrage.
So now there is yet another management council and more promises
that we will hear about today. Two management consulting firms are at
Los Alamos as we speak. They will recommend more changes. But, once
again, we cannot know if these are only promises to make us go away, or
if they have real meaning and will actually be implemented.
And will people who in good faith try to make these changes be held
in high repute in the Los Alamos community, or will they be seen as
troublemakers and ostracized when the lights of the press fade?
Already, one of our witnesses has been told that his actions may not be
good for his career. This reactionary attitude must be rooted out.
People who bring environmental, safety, procurement and property
management, and fraud, waste and abuse to their managers' attention
should be rewarded.
The University of California must do better, or we must find
someone who can. There are many universities, government agencies and
businesses that can do research without letting their property
management, procurement, travel and other systems be run like the
proverbial cookie jar.
One last thing, Mr. Chairman. When Bill Richardson was Secretary of
Energy, he was pilloried mercilessly, and very often unfairly, by some
on this Committee and others for security and property control
shortcomings at Los Alamos. The lab and the University were, frankly,
largely let off the hook in Congressional hearings. The Department of
Energy is ultimately responsible for what happens at Los Alamos, but I
also hope everyone now understands the University of California and the
lab management played the key role in these chronic management
shortcomings. Now the University has one last chance to fix things.
Mr. Greenwood. The gentleman from Louisiana, chairman of
the full committee, Mr. Tauzin.
Chairman. Tauzin Thank you, Chairman Greenwood.
Let me first point out, as we've done very often, one of
the most essential functions of this subcommittee is to cast
the bright light of sunshine upon areas within our full
committee's jurisdiction that are susceptible to waste, abuse
of taxpayer dollars, and outright fraud and theft, as this case
may be.
The serious and disturbing problems with management and
theft of government property at Los Alamos National
Laboratories demonstrate very clearly why this investigative
function is so important to this committee, to the Congress,
and to the public at large.
The facts that this committee and its investigation have
uncovered, which we will begin to explore today, reveal a
troubling story of looting at the lab. They also reveal what
appears to be an utter lack of interest by senior laboratory
managers to do anything the theft and fraud that was apparently
going on right under their noses.
In fact, we will hear today that the lab's management not
only ignored this malfeasance, but in some cases actually tried
to prevent others from exposing this malfeasance. Management
actually turned its back on the good guys trying to make
matters right.
I won't repeat the chairman's discussion of the committee's
findings in detail except to say there appears to have been
inadequate inventory controls and oversight at Los Alamos.
Now I do have two other questions. How long has this gone
on at the facility, and what other gaps in property management
and, by extension, what other gaps in security exist at this
vital lab?
What I found most astonishing in this investigation is that
this theft, this fraud, this abuse, takes place in such a vital
facility for this Nation. It is a facility this country, this
Nation, puts an awful lot of trust in with some of the most
sensitive information that our government and our people are
entrusted with.
Mr. Chairman, we will begin the examination today, as you
suggested, and give this our most close--our closest scrutiny,
but we must understand as best we can what happened and why,
and then do everything in our power to fix it.
Now we have some serious matters, obviously, before us, but
I am confident that you as chairman of this important
subcommittee--I've seen your work before. We are going to get
to the bottom of this, and we will have some recommendations
about how to make sure this doesn't happen anymore. But I want
to extend my personal welcome to the witnesses before us.
I want you to know how much the committee appreciates the
fact that some of you had to go through an awful lot in recent
months as you've tried to do what was right, and particularly
to Mr. Walp and Mr. Doran, I want to thank you for being here
and for doing your job.
I was pleased that our committee--our committee letter
insisting that you be rehired and put back on the job was
honored and that you've had a chance to follow through on your
investigation.
I am particularly pleased to welcome Mr. McDonald. Like
Sherron Watkins before us in the Enron investigations, we
learned the importance of whistleblowers, of people who put
themselves in the terrible, awkward position we know you feel
yourself in today, Mr. McDonald, who went not once, but twice,
to management trying to tell them what was going on and,
frustrated with the lack of response you got, eventually had to
go to the authorities, as you have to the FBI.
I realize you are here under friendly subpoena, and that is
kind of interesting that we had to do this to facilitate your
attendance here, and the information you bring us also had to
be delivered by subpoena.
I note that for the record, but I most of all want to say
thank you to you and emphasize again, Mr. Chairman, and to all
the members of this most important committee of our full
committee how critical it is that this country protect
whistleblowers who try to do the right thing and who come
forward, as you have, Mr. McDonald, and try to protect
investigators such as the other two, to make sure that we honor
and respect the role you play in this most awkward
circumstance.
I want to say one more time that we will not tolerate any
ill treatment of any DOE, Los Alamos or subcontract employee
who is willing to assist this committee as we move forward with
this investigation. We will not tolerate it. We will insist
that you be treated fairly and that anyone else who wants to
assist us is not harmed in any way by their willingness to
assist this committee in its work, and this country in solving
the problems that are presented to us in this awful mess.
Again, Mr. McDonald, you are to be commended, as we
commended Sherron Watkins, and I notice that Time magazine
commended whistleblowers like yourself. You are critical to
this country and to the taxpayers of this country, and we honor
and respect you for being here today. Thank you.
[The prepared statement of Hon. W.J. ``Billy'' Tauzin
follows:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Thank you, Chairman Greenwood. You know that I've pointed out
before that one of the essential functions of this Subcommittee is to
cast a bright light on areas within the Full Committee's jurisdiction
that are susceptible to waste and abuse of taxpayer dollars--and
outright fraud and theft, as this case may be.
The serious and disturbing problems with mismanagement and theft of
government property at Los Alamos National Laboratory demonstrate very
clearly why this investigative function is so important to the
Committee and to the public.
The facts that this Committee's investigation has uncovered, which
we will begin to explore today, reveal a troubling story of looting at
the lab. They also reveal what appears to be an utter lack of interest
by senior laboratory managers to do anything about the theft and fraud
going on right under their noses.
In fact, we'll hear today that the lab's management not only
ignored this malfeasance, but in some cases actually tried to prevent
others from exposing this malfeasance. Management actually turned its
back on the good guys trying to make matters right.
I won't repeat the Chairman's discussion of the Committee's
findings in detail, except to say that there appears to be very
inadequate inventory controls and oversight at Los Alamos. But I do
have two other questions: How long has this gone on at this facility?
And what other gaps in property management and--by extension--security
exist here?
What I find most astounding about this management and oversight
mess, this fraud and theft and abuse, is that it takes place at such a
vital facility. It takes place at a facility that our Nation trusts
with some of our most sensitive information.
Mr. Chairman, what we begin to examine today, as you suggested,
requires our closest scrutiny. We must understand as best we can what
has happened and why--and then do everything within our power to ensure
that it is fixed.
We have serious matters before us. But I am confident that, with
the help of Members on both sides of the aisle, this Committee will
pursue them and help fix them.
Let me extend my welcome to the witnesses. And let me also add that
the Committee appreciates very much that some of you have gone through
quite a lot in recent months as you tried to do what was right.
Sometimes it does just take a few good men (and women, of course) to
set things right. We commend you for that. And let me assure you that
this Committee will not tolerate any ill treatment of any DOE, Los
Alamos or subcontractor employee who assists this Committee and this
Nation in getting to the bottom of this mess at Los Alamos.
Thank you again, Mr. Chairman. I look forward to the testimony and
the questions, and yield back the remainder of my time.
Mr. Greenwood. But we can't guaranty you to be on the cover
of Time magazine.
The gentlelady from Illinois, Ms. Schakowsky. Do you wish
to make an opening statement or have 3 extra minutes?
Ms. Schakowsky. I would like to.
Mr. Greenwood. The gentlelady is recognized for an opening
statement.
Ms. Schakowsky. Thank you, Mr. Chairman and ranking member
Deutsch, for convening today's hearing and for your leadership
on this important subject.
In my previous role as the ranking Democrat on the
Government Reform Subcommittee on Government Efficiency and
Financial Management, I had the opportunity, along with my
chairman, Steve Horn, to look at government procurement
practices and, unfortunately, the numerous cases of abuse that
exist. We were particularly focusing on the Department of
Defense, but it suggested that this may be occurring throughout
the U.S. Government.
The committee today will review findings that are even more
concerning, because it suggests a lack of attention to critical
information at one of the Nation's most critical national
security installations, the Los Alamos National Laboratory.
We will hear about illegal use of taxpayer funds, theft of
government property, lax to nonexistent inventory controls, and
a culture of denial and deceit at Los Alamos. What is most
troubling to me, though, is the fact that management at the Los
Alamos National Laboratory knew about the problems and were
more concerned with self-preservation and the image of the lab
than with their responsibility to the American public.
One would think that news of individuals using government
funds to procure items such as lockpicking sets, hunting
knives, golf equipment, and numerous other illegitimate
purchases would immediately raise flags and touch off
disciplinary and other actions.
What little we have seen at Los Alamos in that regard came
only after inquiries by this committee, the press, and the
Department of Energy's Inspector General. Energy and Commerce
Committee staff uncovered serious problems. The staff
investigation brought to light the fact that Los Alamos
National Laboratory has no system in place to conduct inventory
review for items that are either not sensitive, computers and
the like, or cost less than $5,000.
In fact, the Department of Energy does not require
inventory controls for such items. According to committee
documents, as of February 2002 items that were either sensitive
or worth more than $5,000 went unaccounted for to the tune of
$723,000, and millions of dollars worth of very expensive
equipment were stolen as well.
This leads me to the question whether the problems we are
seeing at Los Alamos extend to the broader Energy Department,
and Mr. Chairman, I hope you will consider calling Secretary
Abraham and Acting National Nuclear Security Administration
Administrator Brooks to come to discuss these issues with the
subcommittee.
Beyond the staff mismanagement and illegal procurement
issues, what troubles me most is the retaliation against Los
Alamos personnel who tried to investigate allegations of abuse
of taxpayer funds, and it sounds like from the opening
statements so far that this is a major concern to the committee
and its leadership.
These individuals were doing their patriotic duty by
raising concerns over Los Alamos' serious management failures,
and instead of being commended and encouraged, they were fired.
Mr. Chairman, I want to thank you again for convening this
important hearing. Improving homeland security and taking care
of our struggling economy are top priorities for my
constituents and those around the country. What went on at Los
Alamos undermines both of those important efforts, and I look
forward to working with you to improve the situation.
If we cannot at least root out theft and mismanagement at
Los Alamos, how can we confidently guaranty the security of the
Nation's nuclear weapons stockpile to the American people? I
welcome our witness and look forward to their testimony.
Mr. Greenwood. The Chair thanks the gentlelady. The
gentleman from Oregon, the vice chairman of the subcommittee,
Mr. Walden, do you wish to make an opening statement?
Mr. Walden. Thank you, Mr. Chairman. I am going to waive my
opening statement under our rules to give my time at Q&A.
Mr. Greenwood. Very well. Mr. Ferguson has come and gone.
Mr. Rogers?
Mr. Rogers. I will waive my statement, Mr. Chair.
Mr. Greenwood. All righty. Now we are joined by other
members of the full committee who are not members of the
subcommittee, Mr. Radanovich, Ms. Wilson, Ms. Eshoo. Mr. Markey
is expected. We are also joined by Ms. Tauscher of California
and Mr. Udall of New Mexico who will be observing. Glad to have
their presence as well.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. George Radanovich, a Representative in
Congress from the State of California
Mr. Chairman, today's hearing is a vital step in restoring and
maintaining confidence in the national security of our nation. I
strongly believe in the outstanding work of Los Alamos and in its
employees.
The most unfortunate aspect of the issue before us today is that
the apparent wrongdoing by a few employees has reflected badly on the
exceptional work by so many others who devote themselves to the
nation's security.
I continue to have confidence in the high quality of the weapons
program and the scientific and technical work of Los Alamos. By taking
many corrective steps, I believe the lab recognizes that the business
and administrative practices of the laboratory need to be revamped so
that they will rise to a level of quality similar to the quality of the
science at the lab.
In order to restore the confidence of the nation, the lab has
implemented numerous oversight changes involving administrative and
business operations:
<bullet> The University has made sweeping management changes at Los
Alamos, and senior University administrators have taken on
direct, personal responsibility for managing Los Alamos
functions;
<bullet> President Atkinson has established an interim Oversight Board
of University Regents and scientific experts to guide the
Interim Director;
<bullet> All administrative and business operations will report to the
University of California Office of the President, for the
purpose of ensuring that the recommended changes to laboratory
business practices are implemented in a timely and effective
manner;
<bullet> the University has directed an External Review Team to expand
its recently completed review of the Lab's purchase card
system;
<bullet> As soon as the expanded work is done, the Lab will report the
results to the Committee and to the public and will immediately
address any deficiencies identified by the External Review
Team.
These changes reflect the University's deep concern about the
allegations that have been made about Los Alamos business practices and
their absolute and steadfast commitment to addressing them in a timely
manner.
I trust the Lab will continue to cooperate fully with the
legislative bodies and agencies investigating these matters, and to
support the thousands of dedicated employees at Los Alamos so that they
can remain focused on their valuable work on behalf of the American
people in a time of war.
Mr. Chairman, I look forward to working with you to ensure that
Congress and this committee are satisfied that the University of
California lives up to its long history of exceptional service to this
nation.
______
Prepared Statement of Hon. Mike Ferguson, a Representative in Congress
from the State of New Jersey
I would like to thank the Chairman for holding this important
hearing and for his ongoing work investigating fraud and the abuse of
government procurement procedures.
My constituents expect their tax dollars to be managed properly,
and I know they appreciate the Chairman's scrutiny of matters where the
public's trust is broken.
We are here today to investigate possible wrongdoing at a vital
national institution, where order, secrecy and adherence to regulation
are essential.
Last fall, word of procurement improprieties at the Los Alamos
National Laboratory came to the Committee's attention, prompting swift
and necessary action.
The allegations surfacing from Los Alamos are startling. It is
reported that audits have revealed that the lab has lost $2.7 million
in computers and other technical equipment. In addition, a lab-
sponsored audit has uncovered millions of dollars in unsubstantiated
procurement credit card purchases, allegedly ranging from camping
equipment to a Ford Mustang.
Mr. Chairman, Homeland Security must be one of our highest
priorities, and it goes without saying that security at our nation's
nuclear institutions is essential. I look forward to hearing from the
witnesses today, identifying the problems at the lab and working to
continue the process of securing the Los Alamos facility.
It is crucial that corruption and wrongdoing are rooted out from
our most sensitive facilities, and I believe that this hearing is a
step toward that goal. Thank you again, Mr. Chairman for you continued
scrutiny of this matter.
______
Prepared Statement of Hon. Anna G. Eshoo, a Representative in Congress
from the State of California
I'd like to thank Chairman Greenwood and Ranking Member Deutsch as
well as the Chairman and Ranking Member of the full Committee Mr.
Tauzin and Mr. Dingell for allowing me to participate in this important
hearing.
The accusations of fraud, mismanagement, and reprisals against
whistleblowers at the labs managed by the University of California,
both Los Alamos and Lawrence Livermore Labs, are extremely serious and
sobering.
Clearly, there have been errors that the University of California
must take full responsibility for.
Systemic changes must be instituted to ensure that whistleblowers
are protected, respected and never against.
The University of California must also resolve these serious abuses
in a way that provides the Members of this Committee, the full Congress
and the American people a certainty that they will not occur again.
This hearing offers the University of California the opportunity to
tell the Congress and the American people what it has found and what
they are doing to remedy the serious problems at Los Alamos.
It is important for this hearing to be followed by six-month
progress reports for the foreseeable future.
It is critical that the University of California demonstrably
reaffirm that the protection of our national security is its highest
priority and that it has not been compromised.
The work done by the labs includes some of our nation's most
guarded secrets.
We must be confident that these secrets and the work of the labs
has not and will not be compromised.
As we examine the management problems that have been uncovered by
this Committee, the Inspector General, and through the University of
California's own internal investigation, we must also keep the
important work done at the labs in proper perspective.
This important work and the research that the labs conduct are
critical to protecting America from hostile regimes and terrorist
organizations.
Recent events have illuminated this work.
For example, shortly after the September 11th terrorist attacks,
Lawrence Livermore National Laboratory reported that North Korea was
resuming its nuclear weapons program.
The International Atomic Energy Agency weapon's inspectors who are
currently in Iraq were trained at Los Alamos.
We've recently read about a new weapon developed jointly at
Lawrence Livermore and Los Alamos that could knock out a region's
electric circuitry without harming civilians.
The work the Labs is ongoing and critically important to our
collective homeland security.
Finally, the University of California must demonstrate their
commitment to changing the culture of mismanagement that has existed at
the Labs over the years. This is indisputable.
I encourage this Committee to continue its important role in
overseeing this commitment, affording the University of California the
opportunity to see them through.
Mr. Greenwood. With that, I would ask unanimous consent.
One of the witnesses, Mr. Jaret, has photographs that
supplement his testimony, and without objection--well, I would
ask for unanimous consent that he be permitted to show the
photographs. Seeing no objections, that will be in order.
At this time, I would advise our witnesses that, pursuant
to the rules of this subcommittee and the rules of this House,
you are entitled--well, we take our testimony under oath here.
Do you have any objections to giving your testimony under oath?
Okay.
You are also entitled to be represented by counsel. Do any
of you wish to be represented by counsel this afternoon? In
that case, if you would stand and raise your right hands, I
will swear you in.
[Witnesses sworn.]
Mr. Greenwood. So saying, you are all under oath, and we
will recognize Mr. Walp first for your opening statement, sir.
Welcome.
TESTIMONY OF GLENN A. WALP, CONSULTANT, OFFICE OF THE
PRESIDENT, UNIVERSITY OF CALIFORNIA; ACCOMPANIED BY STEVEN L.
DORAN, CONSULTANT, OFFICE OF THE PRESIDENT, UNIVERSITY OF
CALIFORNIA; AND JARET McDONALD.
Mr. Walp Thank you. Honorable Chairman Greenwood and
Honorable Members of the subcommittee, ladies and gentlemen,
good afternoon. My name is Glenn Walp. I was Director of the
Office of Security Inquiries (OSI) at the Los Alamos National
Laboratory from January 22, 2002, until Laboratory officials
terminated my employment on November 25, 2002.
I hold a bachelor's and a master's degree in criminal
justice, and I am in the proposal stage of my doctorate in
criminal justice. I am graduate of the FBI National Academy,
the FBI National Executive Institute. Among the many law
enforcement positions I have held, I was Commissioner of the
Pennsylvania State Police, the largest State police
organization in America, a member of the Governor's cabinet,
and responsible for administering a budget of over $400
million.
When I first came to Los Alamos, Mr. Stanley Busboom, my
second level manager, and Mr. John Tucker, my immediate
supervisor, told me that I was hired because of my expertise in
law enforcement. They told me to professionalize all OSI
operations, and candidly acknowledged to me that much of the
OSI staff was incompetent, and their work product was severely
deficient.
They told me to bring in new staff, which I did. In the
first few months, I improved the OSI reporting system, which
was in disarray, ensured training of OSI personnel in good
investigative practices, and initiated investigations on major
security and safeguards issues.
Although many lab employees told me that they were
delighted to see my office address the serious and pervasive
problems of theft and gross waste of government funds, it was
not long before my supervisors began to obstruct my efforts and
those of other OSI employees.
With the encouragement of senior management, on March 26,
2002, I completed a report that identified the total failure of
laboratory management to do anything about massive theft at the
laboratory. I later proposed to Mr. Tucker a plan to have the
FBI get involved in investigating these problems. Mr. Tucker
adamantly rejected my proposal on the ground that the lab did
not want the FBI back at the lab after the Wen Ho Lee case and
missing hard driver computer case--or missing hard drive
incident.
Mr. Tucker also told me, in what became a very common
refrain, that if I pursued the theft problems, it could not be
good for upper management or the laboratory's image. When I
found that much of the stolen property at the lab was
deliberately mischaracterized as lost, salvaged or dismantled,
my findings were ignored.
When Mr. Steve Doran, working under my supervision,
corroborated that two facility managers had purchased almost
$400,000 in questionable goods through the laboratory's
purchase order system, Mr. Frank Dickson, the lab's chief
counsel, told me that Mr. Joseph Salgado, the Deputy Director,
and he were concerned that my investigation could bring
negative publicity to the lab and adversely affect the
University of California's contract with the Department of
Energy.
When I continued to pursue the issue, Mr. Dickson
obstructed my office and the FBI's efforts to obtain necessary
documents. When we persevered in our efforts, Mr. Busboom told
Mr. Doran and me directly that Mr. Dickson would level me with
both barrels and would fire Mr. Doran if we interfered with Mr.
Dickson's relationship with the FBI, the DOE IG or the U.S.
Attorney.
It was the same with all of our other investigations. That
is, inquiries into problems with local vendors, the credit card
system, and the purchase order system. Mr. Salgado, Mr.
Dickson, Mr. Tucker and Mr. Busboom obstructed our
investigations, administratively resolved matters so as to
cover up Federal felonies, and ultimately fired Mr. Doran and
me. The reasons the managers gave for their actions were always
the same: Our job was to protect UC and UC's contract, not the
United States taxpayer.
What we know now is that Mr. Salgado and other lab managers
believed that Mr. Doran and I were the source of documents
leaked to the press that revealed massive fraud by lab
employees, and in order to prevent us from talking to DOE
Inspector General investigators which came to investigate the
fraud allegations, they willfully fired Mr. Doran and I. The
only reason they gave later was that we did not fit.
They were accurate about that. We did not fit. We were
intent on doing our jobs with integrity and stopping the
massive fraud and mismanagement at the lab. Even today, despite
all the publicity, the Congressional interest, and the DOE
investigations, the lab has not changed.
Many of the same lab managers responsible for obstructing
us and the FBI are still at the lab, drawing their same
salaries. Although administrative regulations and laws have
been violated, no action has been taken against these
individuals.
It is time for Congress, the DOE, and the American public
to call a halt to the lab's activities and make a long overdue
change.
A written statement is attached to my opening statement,
clarifying the details of the obstruction and the
mismanagement, and I will gladly respond to any questions that
you may have in this matter, and I thank you for inviting me
here today to this assembly.
[The prepared statement of Glenn A. Walp follows:]
Prepared Statement of Glenn A. Walp, Consultant, Office of the
President, University of California
In mid-2001 I applied for a nationally advertised position as
Office Leader of the Office of Security Inquiries (OSI) at the Los
Alamos National Laboratory (LANL). Publicized responsibilities included
conducting investigations into thefts, protecting property, and being
responsible for the strategic and tactical planning of all OSI
operations.
I was selected for the position with a $10,000.00 bonus if I could
arrive by mid-January, 2002; I was hired on January 22, 2002. I learned
that one of the reasons I was hired, and with specificity prior to the
end of January, was because my employment fulfilled a standard within
the Department of Energy (DOE) Appendix O mandate, ensuring the Lab
would receive supplemental funding (multi-million dollars) from DOE.
I was advised by my Division Leader, Stanley Busboom and my Deputy
Division Leader, John (Gene) Tucker that the reason I was hired was
because of my extensive law enforcement experience and expertise,
especially in criminal investigations. I was told by Busboom and Tucker
to professionalize all OSI functions as I deemed appropriate, and they
would support me in my efforts.
I fulfilled all job requirements and supervisory directions in
totality, receiving a 100%-plus rating for my performance of duty on
October 2, 2002. Statements within that rating included: ``Mr. Walp has
not faltered''; . . . ``applied . . . hands-on leadership and
management''. ``A pro-active and caring leader . . . a strong and
professional manager . . . very effective performer''.
Shortly after my arrival I was contacted by the Office Leader of
the Office of Internal Security, Ken Schiffer, who proposed there was
significant theft occurring at the Lab. Tucker agreed with Schiffer's
postulation, stating theft has been so rampant at the Lab ``it has been
making the valley green for years''. Subsequently I was ordered by
Busboom to conduct research and submit a written report on the theft
issue.
Preliminary data disclosed that OSI inquiry reports were severely
lacking in investigatory analysis; property was inappropriately handled
as lost, salvaged or dismantled when in fact it was stolen; major theft
occurred at unsecured drop points; and most importantly, there was a
severe problem with lost property. That is, although it was the spring
of 2002, the Business Division did not have accountability of over 700
pieces of property that was identified as lost in 1999 through 2001,
amounting to approximately $2.7 million. Lost items included: nearly
260 computers; 124 printers; 48 radios; 37 cameras; a $25,000.00
thermal analyzer; $25,000.00 control milling machine; $35,000.00 2-ton
magnet; $32,000.00 magnet lifting unit; $33,000.00 wire brush; $23,000
water tank; $27,000 remote terminal; $11,000 copier; $20,000
spectometer; $20,000.00 module oscillator; 2 work stations worth
$47,000.00; $11,000.00 cryogenic refrigerator; 2 trailer vans worth
$19,000.00; and a $6,000.00 forklift. It was investigatory speculation
that many of the items reported as lost were actually stolen.
The requested theft report was submitted to Busboom on March 26.
After submitting the March theft report I learned that theft was
occurring within the purchase card and purchase order programs, but the
most egregious area was most likely in the Local Vendor Agreement (LVA)
and Just In Time (JIT) systems. The LVA and JIT systems allows a Lab
employee to use their personal identification badge as a credit card,
with little to no audit controls. Lab personnel proposed that the LVA
and JIT systems were so flagrant that any employee, for example, could
have a computer installed in their residence and no one would ever
know. These same personnel advised me that they had been telling their
supervisors and administrators about this theft for years, but these
Lab officials would not take any action to resolve the problems.
Memorandums had been prepared by Business Division personnel in the
fall of 2001, warning of the problems associated with the purchase card
system, yet their supervisors failed to take any action. Other BUS
Division memorandums were prepared after the release of the March theft
report, confirming the severity of the theft, and the egregious
mismanagement of Lab auditing and property control systems.
I asked Tucker to allow me to work with the FBI to address this
blatant theft. Tucker rejected my request, stating that because of the
Wen Ho Lee and hard drive cases the Lab did not like the FBI coming
into their domain. Tucker also proposed that if I continued in my
efforts I am liable to determine that high level Lab management are
involved in these thefts and that would not be good for the Lab's
image.
criminal incidents uncovered
Between June and September, 2002, five major criminal incidents
were disclosed.
NIS Incident
Unbeknownst to me, during 2001, major theft was occurring in the
Nonproliferation International Security (NIS) area. Information on this
criminal activity had been given to Lab authorities Bill Sprouse,
Tucker, Katherine Brittian, and Scott Gibbs, by certain Lab employees,
but these authorities failed to take any substantive action. The
employees became disenchanted with the cavalier approach of these Lab
officials, consequently making a complaint with the FBI on June 24,
2002. On July 1, 2002, the FBI assumed the NIS investigation in
conjunction with OSI.
The major method of theft used by the NIS suspects was the purchase
order system. A review of purchase order transactions by the suspects
in the last 18 months revealed over $400,000.00 in questionable
purchases. Purchases included:
Ninety-two hunting knives; 72 hunting-type jackets and shirts; 26
GPS systems; 32 pairs of fishing/hunting-type boots; 22 cameras; 6
Rototillers; and 56 different types of lock pick and glass cutting
devices. Other items included a go-cart; motorcycle helmets (2
children); model airplanes; sleeping bags; plumbing fixtures; truck
beds; and shock absorbers.
The FBI apprehended two suspects in this case on October 31, 2002.
Mustang Incident
Lab employee Lillian Anaya was suspected of attempting to purchase
a Ford Mustang with parts, amounting to nearly $30,000.00, using a
government credit card. Stanley Hettich, a Business Division
administrator willfully failed to report this crime to OSI, indicating
he had not reported any similar type situations to OSI in the last
three years. Hettich suggested that the ESA Division had gone native,
and the whole system of property purchase was out of control. Hettich
blamed Mr. Richard Marquez and Mr. Joseph Salgado for this failing,
because they ordered him to give Lab employees anything they wanted;
customer satisfaction was the key.
Casino Credit Card Incident
Lab employee Mary Wood used a government credit card to purchase
personal items, and secure cash at local casinos. Salgado directed that
Wood should not be interviewed and she should just be fired. Tucker
recommended that she not be interviewed because she would not confess
and it would be a waste of time. Security Specialist Steven Doran, OSI,
interviewed the subject at which time she confessed. Immediately after
the confession Dickson ordered that all the reports be submitted to him
and he would determine what would happen to the case.
Tool Incident
Lab employee Orlando Smith was suspected of improperly purchasing
tools amounting to approximately $1.2 million in 12 months, from an
unauthorized vendor, while misusing a government vehicle.
Forged Voucher Incident
Lab employee Clarissa Rodriguez forged a government voucher for
$1,800.00.
The aforesaid investigations were initiated in accordance with
professional investigatory processes, but were quickly tainted by
persistent interference and obstruction by multiple Lab officials. This
interference and obstruction included:
overall interference and obstruction
Contrary to an original agreement between the FBI and the Lab, all
documentary reports needed by OSI or the FBI had to be reviewed and
approved by Frank Dickson, the Lab Chief Counsel prior to distribution.
This system severely hampered investigative processes, and in one case
the FBI waited for approximately six weeks to receive a much-needed
report because Dickson failed to act on the request.
Dickson verbally oppressed Doran and me to reveal all confidential
FBI investigative information to individuals who had no need to know
and should not have known. Dickson had been previously warned by the
FBI not to tell anyone about this information especially anyone in the
Audits and Assessments Division because there was suspect in that
division. Notwithstanding, Dickson forcefully ensured confidential
information was given to a member of the Audits and Assessments
Division, placing multiple OSI/FBI investigations in jeopardy.
Ms. Chris Chandler, an employee of Dickson, attempted to forcefully
secure confidential FBI investigative notes from me, through verbal
intimidation; she was refused access to the notes. During the discourse
she stated that she did not care about anyone's constitutional rights
or the successful prosecution of an FBI investigation. If Chandler
would have obtained these notes it could have jeopardized multiple OSI/
FBI investigations.
Dickson attempted to force the FBI to take premature investigative
action against multiple suspects, threatening he would place the
suspects on investigative leave unless the FBI acquiesced to his
demands. The threatening action of Dickson, if brought to fruition,
would have placed the NIS and Mustang cases in jeopardy.
nis incident
Dickson attempted to gain entry into an area that contained
suspected NIS stolen property placing an FBI investigation in jeopardy.
After being refused by the FBI, Dickson became irate at Doran and Walp
because they failed to cajole the FBI into allowing him access.
Salgado and Dickson directed, through Busboom and Tucker, to remove
Doran and Walp from the NIS investigation two days before culmination
of that investigation. Despite the pleas of the FBI to allow Walp and
Doran to remain on the case because they were integral to the success
of that investigation, Busboom adamantly refused. The only reason given
by Busboom for this action was that it was ``Dickson's payback against
Walp'' for Walp challenging Dickson's improprieties in the forged
voucher incident.
mustang
Dickson directed that potential FBI criminal evidence held in
official OSI investigatory control, be taken from OSI, thereby breaking
the chain of evidence and jeopardizing an FBI investigation.
Chandler conducted a dual inquiry on this case that had the
potential of obstructing the FBI investigation.
forged voucher
Dickson, Tucker and Phillip Kruger of the Laboratory Human
Resources Division, conspired to cover up this federal felony by
failing to immediately notify an appropriate criminal justice
authority, and handled the case administratively. Although Tucker
originally agreed this was a federal felony that must be investigated
by a federal law enforcement agency, he then recanted, explicating to
me, since the property did not belong to the United States taxpayers,
but rather the University of California (UC), there was no crime.
Hence, that is why Dickson has the authority to do anything he wants
with any crime that occurs on Lab property. Tucker also said that all
property and monies in control of the Los Alamos National Lab does not
belong to United States taxpayers because it is UC property and monies.
walp and doran warned to comply with lanl's corporate philosophy/
culture
Doran and I were consistently warned that our major job was not
inquiry into crime, but rather, protection of the Lab, its image, and
ultimately the UC contract. Concerning this issue paraphrased comments
included:
Dickson stated to Walp--
Salgado is concerned about the NIS case bringing negative PR to
the Lab, which may negatively affect the UC contract, therefore
I (Dickson) will keep a pulse on all FBI activity.
While preparing a news release on the Anaya and Wood cases, Dickson
wanted to keep information out of the release concerning the total
amount of thefts committed by Wood, stating ``what we're looking at is
protecting the Lab here''.
Dickson stated to Walp and Doran--
We need to remember who we work for, who is our boss and that
is the Lab, not the FBI. That is the way it is, we must look
out for the Lab and its image first, not the FBI investigation.
Salgado stated to Walp--
I am concerned that the Mustang and tool cases may generate bad
PR for the Lab, which may negatively affect the Lab's contract.
The critical aspect of the Mustang case is the bad PR for the Lab,
not the illegal attempt to purchase the vehicle.
Chandler stated to Walp--
I am not concerned about violating anyone's constitutional
rights or interfering with an FBI prosecution; my job and your
job is to protect our employer, the Lab.
Busboom stated to Walp and Doran--
Of critical importance is protecting the UC contract, and it
should be the primary concern of you as you perform your OSI
functions; your major job is not law enforcement or helping the
FBI, but to protect the Lab and its contract.
Tucker stated to Walp--
If you continue your efforts in ferreting out Lab theft you may
find that high management personnel are implicated and that
would not be good for the Lab's image.
Dickson doesn't want UC to be embarrassed concerning the Mustang
case, so they are going to take action that forces the FBI to move on
the case, because Lab officials must look out for the Lab first, its
image, and not the FBI investigation.
Your main job and that of OSI is to protect the Lab, Lab people,
the Lab contract and the Lab image above anything else; Tucker
identified this concept as ``corporate philosophy'' and/or ``corporate
rules''. The corporate rules must be followed by you and other OSI
members if they are to be successful as Lab employees.
Tucker states to Walp and Doran--
You need to know that your major responsibility is to your
employer, the people who pay your checks, therefore you must ensure
that you protect them, their image, and the UC contract.
reason for terminations
Lab officials have progressively espoused multiple reasons for the
terminations of Doran and Walp, to include: (a) They didn't fit
(contained in their termination papers); yet Busboom refused to
elaborate on what that meant; (b) Doran and Walp didn't get along with
certain groups and/or individuals at the Lab. The groups and/or
individuals identified in a Lab press release as the groups and/or
individuals they did not get along with, were groups or individuals who
were either suspects in crimes, or were interfering or obstructing OSI/
FBI investigations; (c) Salgado proposed that the reason was that a
chronology of the Mustang case contained incorrect telephone data
obtained from OSI. This insignificant issue was an inadvertent error of
an OSI employee, not Walp or Doran. The issue was quickly corrected,
and had no significance to the relevant factors associated with the
case; (d) Salgado said it had to do with FBI investigatory issues
concerning the wearing of a body wire, and the number of suspects
involved in the NIS case. All data on these matters were accurately and
completely forwarded to Salgado in a timely manner, with the
clarification that these issues were under the control of the FBI, not
OSI; and (e) Dickson proposed the reason was because Doran and Walp had
a poor relationship with the FBI. Recent investigation into this
allegation by a federal investigator found this accusation to be
totally erroneous.
In January of 2003, it was disclosed by a UC official that the
actual reason for our terminations was, as originally proposed by Doran
and Walp, a willful attempt by Lab officials to prevent Doran and Walp
from talking to DOE Inspector General
Investigators. The reason, according to the official, was because
they were fearful of what we would reveal to these investigators
concerning the crime, mismanagement and corruption at the Los Alamos
National Lab.
threats
During the course of our employment Doran and I were consistently
threatened that our efforts to approach our responsibilities from a
point of integrity, without regard for the Lab contract, would cause us
problems. For example:
1. Tucker stated to Doran and me, that we must be careful in
challenging the ethics of Lab officials because the Lab is
famous for sacrificing its children for the sake of its image.
2. Busboom told Doran and me, Dickson would level me with both barrels
and would fire Doran if we interfered with Dickson's
relationship with the FBI, the DOE IG, or the U.S. Attorney.
3. Busboom, Tucker and John Tapia told Doran and me they believed
Dickson was attempting to make us scapegoats; that Dickson was
trying to blame Walp and OSI for his own shortcomings; and
Dickson was conspiring to get people to falsely accuse Walp of
being uncooperative.
issues that still need to be addressed
Although much has been accomplished in addressing the theft,
mismanagement and corruption of the Lab, there is still much to do. For
example:
1. All lost reports for the last decade need to be reviewed item-by-
item, to ascertain, with specificity, their locations. The Lab
uses a classification system that identifies property as
salvaged, dismantled and retired. It is hypothesized that these
classifications have been used to cover up for lost and stolen
items. It is speculated that if these classification reports
were reviewed, the microscope would reveal significant fresh
ink.
2. Since Johnson Control of Northern New Mexico never reported any item
of theft under $5,000, the details of this unknown needs to be
analyzed.
3. A November 7 Price-Waterhouse-Coopers (PWC) perfunctory report,
illustrated $153 million dollars of questionable ``purchase
card'' transactions, while a review of questionable ``purchase
order'' transactions by NIS personnel amounted to approximately
$400,000.
Thus, all Lab ``purchase card'' and ``purchase order''
transactions need to be analyzed item-by-item, purchaser-by-
purchaser, for at least the last decade. It is theorized that
the attempted Mustang purchase and the illegal purchase orders
within NIS were not the first situations of this type
effectuated by these illegal processes.
4. All voucher transactions for the last decade should be reviewed for
illegalities.
5. It is proposed that the most egregious area of theft is contained
within the LVA and JIT systems. A comprehensive analyses of
these purchases for the last decade needs to be completed.
Doran and I had multiple cases we had no opportunity to
investigate, but need to be addressed. They include:
1. Significant theft of gasoline.
2. Two cases of potential fraud that may involve kickbacks to present
and former employees of the Lab.
3. Steve and I were recently contacted by multiple individuals,
proposing that they were aware of major fraud and theft that
had occurred at the Lab in previous years, amounting to
multiple millions of dollars in theft and fraud.
4. There are outstanding issues concerning criminal matters. Such as:
(a) theft of FBI evidence from an OSI office; (b) the
possibility of federal/state crimes being committed by Lab
officials; and (c) that crimes although known by Lab officials,
were never reported to an appropriate authority. As of this
date, Security Specialists James Mullins and Doran, and I, have
never been contacted by any law enforcement agency for official
interviews, notwithstanding we are critical witnesses to these
matters.
I attempted to effectuate a Federal Bureau of Investigation (FBI)
investigative task force to address these blatant failings, but the
plan was soundly rejected by my immediate supervisor.
Between June 24th and September 20th five major criminal
investigations were unraveled.
Although these investigations commenced in accordance with
professional investigatory processes, by August these systems began to
be tainted by interference and obstruction by certain Lab officials.
Namely:
1. Contrary to an original agreement between the FBI and the Lab, Frank
Dickson, the Lab Chief Counsel, ordered that all documentary
evidence had to be personally approved by him prior to
distribution; he attempted to force the FBI to take premature
investigative actions; he verbally oppressed Steven Doran and I
to reveal confidential FBI investigative information to people
who should have not known; he directed that potential FBI
criminal evidence held in official OSI investigatory control be
forcefully taken from the custody of OSI, thereby breaking the
chain of evidence control; and he ineptly attempted to gain
access into an area where suspected stolen property was stored.
These acts either hampered or had the potential of obstructing
FBI investigations.
2. Chris Chandler, an employee of Dickson, through verbal intimidation,
attempted to secure confidential FBI written notes from me,
indicating within that discourse that she was not concerned
about a person's constitutional rights or a successful FBI
prosecution; and, she conducted a dual inquiry that had the
potential of obstructing an FBI investigation.
3. Stanley Hettich, a Business Division administrator, willfully failed
to report criminal activity occurring within his area of
responsibility, admitting he had not reported any similar
situations in the last three years.
4. John (Gene) Tucker, my immediate supervisor inappropriately forced
Doran and me to remove certain ``spy type'' information from an
official OSI inquiry report; and, advised Doran and me that we
would be sacrificed as children of the Lab for the sake of the
Lab's image, if we challenged the ethics of Lab officials.
5. Dickson, Tucker, and Phillip Kruger of the Laboratory Human
Resources Division, willfully failed to immediately notify an
appropriate criminal justice authority, as it pertained to the
crime of forgery of a federal voucher.
6. Stan Busboom, my Division Leader, and Tucker, removed Doran and
myself from an official FBI investigation two days before
culmination of that investigation, and to the potential
detriment of that investigation.
7. Busboom stated to Doran and me that unless we ensured there was a
positive relationship between Dickson and the U.S. Attorney and
the FBI, Dickson would level me with both barrels and Doran
would be fired.
8. Busboom and Tucker opined that Salgado and Dickson were attempting
to make Doran and me scapegoats.
9. Doran and I were warned by a Lab official that Dickson was
attempting to fabricate negative information against Doran and
me and that Tucker was involved in this conspiracy.
Doran and I were consistently advised by multiple Lab officials
that our major role was not inquiry into crime, but the protection of
the Lab and its image, for the purpose of protecting the University of
California contract.
Although much has been accomplished in addressing the theft,
mismanagement and corruption of the Lab, there is still much to do. For
example:
1. All lost reports for the last decade need to be reviewed item-by-
item, to ascertain, with specificity, their locations. The Lab
uses a classification system that identifies property as
salvaged, dismantled and retired. It is hypothesized that these
classifications have been used to cover up for lost and stolen
items. It is speculated that if these classification reports
were reviewed, the microscope would reveal significant fresh
ink.
2. Since Johnson Control of Northern New Mexico never reported any item
of theft under $5,000, the details of this unknown needs to be
analyzed.
3. A November 7 Price-Waterhouse-Coopers (PWC) perfunctory report,
illustrated $153 million dollars of questionable ``purchase
card'' transactions, while a review of questionable ``purchase
order'' transactions by NIS personnel amounted to approximately
$400,000.
Thus, all Lab ``purchase card'' and ``purchase order''
transactions need to be analyzed item-by-item, purchaser-by-
purchaser, for at least the last decade. It is theorized that
the attempted Mustang purchase and the illegal purchase orders
within NIS were not the first situations of this type
effectuated by these illegal processes.
4. All voucher transactions for the last decade should be reviewed for
illegalities.
5. It is proposed that the most egregious area of theft is contained
within the LVA and JIT systems. A comprehensive analyses of
these purchases for the last decade needs to be completed.
Doran and I had multiple cases we had no opportunity to
investigate, but need to be addressed. They include:
1. Significant theft of gasoline.
2. Two cases of potential fraud that may involve kickbacks to present
and former employees of the Lab.
3. Steve and I were recently contacted by multiple individuals,
proposing that they were aware of major fraud and theft that
had occurred at the Lab in previous years, amounting to
multiple millions of dollars in theft and fraud.
4. There are outstanding issues concerning criminal matters. Such as:
(a) theft of FBI evidence from an OSI office; (b) the
possibility of federal/state crimes being committed by Lab
officials; and (c) that crimes although known by Lab officials,
were never reported to an appropriate authority. As of this
date, Security Specialists James Mullins and Doran, and I, have
never been contacted by any law enforcement agency for official
interviews, notwithstanding we are critical witnesses to these
matters.
Most recently Steve and I, and our attorney were informed by a top
administrator of the University of California that he has direct
evidence that we were wrongfully terminated because Lab officials did
not want us speaking to DOE Inspector General Investigators.
The aforesaid is an overview of the issues I encountered when
employed by the Lab.
I am prepared to answer any questions that you may have concerning
these and associated matters.
Thank you.
Mr. Greenwood. Thank you, Mr. Walp.
Mr. Doran.
TESTIMONY OF STEVEN L. DORAN
Mr. Doran. Good afternoon, Chairman Greenwood, members of
the subcommittee, ladies and gentlemen. Thank you for inviting
me here to testify. My name is Steven Doran.
Los Alamos Laboratory recruited me to work as an
investigator in the Safeguards and Security Division in the
spring of 2002. The recruiter who approached me told me the lab
was having serious problems with national security and theft
and needed people like me to come in and help them clean it up.
The lab recruiter encouraged me to take the job, because
working at the lab would be a service not only to the
laboratory but to my country as well. I went to Los Alamos with
the hope that I could be part of a broad effort to stop the
rampant theft at the lab and protect the security of the
country's most important nuclear secrets.
I started work on July 15, 2002. A few days later I began
work with the FBI on the Bussolini and Alexander case where the
two managers at the lab had misused the government purchase
order system to steal hundreds of thousands of dollars in
property.
In the following days and months, I saw the FBI and my
successful investigative efforts in this case and all other
cases I was working on thwarted by the lab's upper level
management, Joseph Salgado, Frank Dickson, Gene Tucker and Stan
Busboom. Lab managers from other departments including Richard
Marquez, Stan Hettich, Dick Stickler, Vernon Brown and John
Tapia attempted to cover up, change and conceal information
from our office.
These lab managers and lab counsel Dickson continue to make
innuendos and threats to Mr. Walp, and my employment could be
in jeopardy if we continued investigating the rampant misuse of
government credit cards and the purchase order system.
Because of the productive working relationship that I
developed with the FBI, Special Agent Jeffrey Campbell, Mr.
Busboom told me specifically I had to protect the lab's
relationship with the FBI and the United States Attorney or I
would be fired. He made it clear that he wanted me to
participate in the cover-up of major crimes at the lab and use
my good relationship with the FBI to prevent them from
investigating these matters on their own.
Although I always followed orders given to my by my
superiors, I refused to cooperate in their cover-up. My upper
level managers refused to provide me and the FBI with documents
we needed for our investigations, discouraged me from
interviewing key witnesses, disseminated information about our
investigation to the targets of those investigations, and
administratively settled cases so that the United States
government could not criminally prosecute the wrongdoers.
By October, almost all of my investigations had been
stopped or bottlenecked in Mr. Dickson's office. Less than 3
months after I started work at Los Alamos, I spent most of my
day defending my position that we were working to protect the
taxpayer funds and national security rather than the University
of California contract.
This meant I had to do my real work at night and on the
weekend. Despite the FBI's repeated requests that the
laboratory management reconsider and assign us to help them,
the managers refused to let us help the FBI. Dedicated former
and current employees at the laboratory supported us and kept
on reporting things to us, even after management began to
retaliate against us.
I received a call about a possible espionage matter which I
passed on to the Counterintelligence Division. When the
division did nothing, I called and e-mailed again. As far as I
know, the laboratory never followed up on this matter.
After I was terminated I got calls from former employees
who had documented millions of dollars in frauds but were
ignored by lab management. All of these people responsible for
management of the lab, all but one, still have a job at Los
Alamos. A number of the managers who thwarted our
investigations remain in positions of authority, and are
working actively to conceal the enormity of the problem of
theft and misuse of government monies.
Just before I left New Mexico to come to this hearing, a
number of Los Alamos employees brought me new documentation
that they believe demonstrate that these same managers are
giving false information to UC and the Department of Energy
about expenses charged on purchase cards as late as January of
2003.
To me, this demonstrates why UC needs to take these
managers out of their positions of responsibility at the lab.
It is unfortunate that it took the current crisis of competence
to put the lab's problems on the national agenda. By now
Congress and DOE are actively exercising oversight and
requiring accountability.
It looks as though the University of California is trying
to do something about these problems. Another step in UC's
accountability to the lab has to be to take these managers out
of their current jobs and put in fully reliable and honest
employees.
I hope that Mr. Walp and my termination has a silver
lining. It brought Los Alamos to its senses about putting some
order into its house so that it can go about doing important
work in the way that best serves the citizens of the United
States.
Thank you.
[The prepared statement of Steven L. Doran follows:
Prepared Statement of Steven L. Doran, Consultant, Office of the
President, University of California
Good afternoon. Chairman Greenwood, members of the Subcommittee,
ladies and gentlemen:
Thank you for inviting me here to testify. My name is Steven Doran.
Los Alamos Laboratory recruited me to work as an investigator in the
Safeguards and Security Division in the Spring of 2002. The recruiter
who approached me told me that the Lab was having serious problems with
national security and theft, and needed people like me to come in and
help them clean it up.
After interviewing with Mr. Walp, Mr. Michael Wismer and Ms. Nina
Epperson, the Lab offered me the job. The Lab recruiter encouraged me
to take the job, because working at the Lab would be a service to the
Laboratory as well as the country. I went to Los Alamos with the hope
that I could be part of a broad effort to stop the rampant theft at the
Lab, and protect the security of the country's most important nuclear
secrets.
I started work on July 15, 2002. A few days later, I began to work
with the FBI on the Bussolini and Alexander case, where two managers at
the Lab had misused the government purchase order system to steal
hundreds of thousands of dollars in property. In the following days and
months, I saw the FBI's and my successful investigative efforts in this
case and all the other cases I was working on thwarted by the Lab's
upper level management--Joseph Salgado, Frank Dickson, Gene Tucker, and
Stan Busboom. Lab Managers from other departments, including Richard
Marquez, Stan Hettich, Dick Stickler, Vernon Brown, and John Tapia
attempted to cover up and change and conceal information from our
office.
These managers and Lab counsel Dickson continued to make innuendos
and threats that Mr. Walp's and my employment could be in jeopardy if
we continued investigating the rampant misuse of government credit
cards and the purchase order system. Because of the productive working
relationship that I developed with FBI special agent Jeff Campbell, Mr.
Busboom told me specifically that I had to protect Lab counsel's
relationship with the FBI and the United States Attorney, or I would be
fired. What he meant was that I should participate in the cover-up of
major crimes at the Lab, and use my good relationship with the FBI to
prevent them from investigating these matters on their own.
Although I always followed the orders given me by my superiors, I
refused to cooperate in their cover-up. My upper level managers refused
to provide me and the FBI with documents we needed for our
investigations, discouraged me from interviewing key witnesses,
disseminated information about our investigations to the targets of
those investigations, and administratively settled cases so that the
United States government could not criminally prosecute the wrongdoers.
By October, almost all of my investigations had been stopped, or
bottlenecked in Mr. Dickson's office. Less than three months after I
started work at Los Alamos, I spent most of my workday defending my
position that we were working to protect taxpayer funds and the
national security, rather than the University of California contract.
This meant that I had to do my ``real work'' at nights and on the
weekend. Despite the FBI's repeated requests that Lab management
reconsider and assign us to help them, the managers refused to let us
help the FBI.
Dedicated former and current employees at the Laboratory supported
us, and kept on reporting things to us, even after management began to
retaliate against us. I received a call about a possible espionage
matter, which I passed on the Counterintelligence Division. When the
Division did nothing, I called and e-mailed again. As far as I know,
the Laboratory never followed up on this matter. After I was
terminated, I got calls from former employees who had documented
millions of dollars in fraud, but were ignored by Lab management.
It is unfortunate that it took the current crisis of confidence in
the University of California to put these problems on the national
agenda. But now that Congress and the DOE are actively exercising
oversight and requiring accountability, it looks as though the
University of California is trying to do something about these
problems. I hope that Mr. Walp's and my termination has a silver
lining--it brought Los Alamos to its senses about putting some order in
its house so that it can go about doing its important work in a way
that best serves the citizens of the United States.
Mr. Greenwood. Thank you, Mr. Doran.
Mr. McDonald.
TESTIMONY OF JARET McDONALD
Mr. McDonald. Thank you. Mr. Chairman and members of the
committee, my name is Jaret McDonald, and I am an employee of
KSL at Los Alamos National Laboratory. KSL is a joint venture
between the following companies: Halliburton, Kellogg, Brown &
Root; Shaw, and Los Alamos Technical Associates.
KSL holds the support service subcontract for the
maintenance and construction operations of LANL facilities. My
current job duties include oversight of more than 70
maintenance and construction employees. I have been an employee
of KSL since January 2003.
Prior to my employment with KSL, I was an employee of
Johnson Controls Northern New Mexico, a subsidiary of Johnson
Controls, Incorporated. JCNNM held the support services
subcontract prior to KSL. Prior to my current work assignment
as Zone Manager for Zone 13, I worked at TA-35 and Technical
Area 33. My duties were very similar to my job
responsibilities.
While working at TA-35 and TA-33, I became suspicious of
purchases made by University of California employees that did
not appear to be related to facility maintenance tasks or
general LANL business, as it related to the operations and
maintenance of the facilities under their oversight.
I suspected that these purchases were made using blanket
purchase orders, BPOs. The items I saw being purchased struck
me as highly unusual. In approximately January 2002, I brought
my suspicions to the attention of my Johnson Controls
supervisor, who instructed me to contacted an individual at
Safeguard and Securities Division at the University of
California, which I did do.
After a couple of months and several communications with
authorities at the University of California, it did not appear
that action was being taken to address the situation.
Consequently, in March 2002, I contacted the FBI through the
agency's anonymous online tip. Subsequently, I was contacted by
the FBI and a representative from the University of
California's Security and Safeguards Division.
I was instructed by the University of California and
Johnson Controls to cooperate with the FBI in their ensuing
investigation into the suspicious purchases. The FBI asked me
to provide information and documentation accordingly, as that
information related to the suspicious purchases, which I did.
Mr. Chairman, members of the committee, this concludes my
statement. I would be happy to answer any questions.
[The prepared statement of Jaret McDonald follows:]
Prepared Statement of Jaret McDonald
Mr. Chairman and Members of the Committee, my name is Jaret
McDonald and I am an employee of KSL at Los Alamos National Laboratory
(LANL). KSL is a joint venture between the following companies:
Halliburton, Kellogg, Brown & Root; Shaw, and Los Alamos Technical
Associates. KSL holds the support services subcontract for the
maintenance and construction operations of the LANL facilities. My
current job duties include oversight of more 70 maintenance and
construction employees. I have been an employee of KSL since January
2003. Prior to my employment with KSL, I was an employee of Johnson
Controls Northern New Mexico (JCNNM), a subsidiary of Johnson Controls
Incorporated (JCI). JCNNM held the support services subcontract prior
to KSL. Prior to my current work assignment as Zone Manager for Zone
13, I worked at Technical Area 35 and Technical Area 33 and my duties
were similar to my current job responsibilities.
While working at TA-35 and TA-33, I became suspicious of purchases
made by University of California employees and that did not appear to
be related to facility maintenance tasks or general LANL business as it
related to the operations and maintenance of the facilities under their
oversight. I suspected these purchases were made using blanket purchase
orders (BPO). The items I saw being purchased struck me as highly
unusual. In January 2002 (approximate date), I brought my suspicions to
the attention of my JCNNM supervisor who instructed me to contact
Safeguard and Securities Division at the University of California,
which I did. After a couple of months and several communications with
authorities at the University of California, it did not appear that
action was being taken to address the situation. Consequently, in March
2002 (approximate date), I contacted the Federal Bureau of
Investigation (FBI) through the agency's anonymous on-online tip/
hotline. Subsequently, I was contacted by the FBI and a representative
from the University of California's Security and Safeguards Division. I
was instructed by the University of California and JCNNM officials to
cooperate with the FBI in their ensuing investigation into the
suspicious purchases. The FBI asked me to provide information and
documentation accordingly, as that information related to the
suspicious purchases--which I did. Mr. Chairman, Members of the
Committee, this concludes my statement. I would be happy to answer
questions.
Mr. Greenwood. Thank you, Mr. McDonald. I appreciate that.
You have provided us with photographs of items purchased by
lab employees using one of the several available procurement
tools at the lab, such as purchase order, Just-in-Time
contract, blanket purchase agreement or government purchase
card. I would like to look at these items now and ask you to
explain what each of them is and why someone might need or not
need this item for work purposes at the laboratory,
particularly interested in knowing why they needed fly rods.
Mr. McDonald. Mr. Chairman, would you like to ask me
questions or would you like to narrate?
Mr. Greenwood. Why don't you just go right ahead and
narrate what you see in the pictures there.
Mr. McDonald. Okay. Mr. Chairman, members, basically what
we are looking at here is some of the questionable items
concerned. As an example, if you look, you can see a Ramsey
winch on the back of this John Deere mower and John Deere
trailer. To the left, you see some snowblowers and perhaps
another tractor around behind some Craftsman boxes.
As far as what this could be used for at the laboratory, I
think it would be difficult to make a judgment what a person
could use this for at the laboratory in a work related
environment.
Mr. Greenwood. Let me understand that. Did the gentleman
who purchased these items and who had them placed in this
storage facility have responsibilities that would include
mowing the lawn or blowing snow?
Mr. McDonald. No, sir.
Mr. Greenwood. Okay. Why don't you proceed?
Mr. McDonald. I guess that's about all I really have to say
about this picture.
Mr. Greenwood. Okay.
Mr. McDonald. Moving on to picture number 2, one of the
items that struck my eye as I was taking these pictures was a
sleeping bag. I am pretty sure that most laboratory folks do
not need a sleeping bag.
Mr. Greenwood. They sleep on the job without a sleeping
bag?
Mr. McDonald. Yes, sir.
Mr. Greenwood. Do you have any idea what the cost of that
sleeping bag was?
Mr. McDonald. I do not, sir.
Mr. Greenwood. What is this facility? If you could also
name the facility, the buildings, if you could explain what
they are.
Mr. McDonald. Sure. This facility that we took pictures of
is Technical Area 33. This is, I believe, Bunker 23.
Mr. Greenwood. What is it used for?
Mr. McDonald. This particular bunker is used for a shop for
the University of California employees and storage area.
Some of the other items that I thought were questionable
was--I believe that's a cooler, an Igloo cooler, and a Coleman
heater.
Mr. Greenwood. Okay, next slide.
Mr. McDonald. Once again, sir, more coolers that I found
questionable, automatic plug-in coolers.
Mr. Greenwood. Go back. That toolbox on wheels there, is
that an item that you suspected was purchased improperly, or
not?
Mr. McDonald. I don't have an opinion, sir.
I guess you can read from the box here, American Angler
fishing type equipment.
Mr. Greenwood. Okay.
Mr. McDonald. Lawn mowers--you know, KSL or Johnson
Controls, we do perform, you know, facility maintenance and
such at the laboratory, and we do use lawn mowers. However, I
took this picture because I didn't understand why laboratory
folks would need a lawn mower.
Mr. Greenwood. Okay.
Mr. McDonald. We are looking at some Rancho shocks and some
DeWalt tools. The Rancho shocks----
Mr. Greenwood. These are shock absorbers for a motor
vehicle?
Mr. McDonald. Yes, sir, would be used, you know, obviously,
on a motor vehicle, and since the facility--vehicle maintenance
was done by GSA. It didn't really make sense that somebody
would have shocks.
Mr. Greenwood. Were those the same shock absorbers that
were found on Mr. Alexander's car? Do you know?
Mr. McDonald. I do not know that. This picture--I found it
ironic that laboratory folks would need CDs on how to instruct
lockpicking.
Mr. Greenwood. How to instruct lockpicking?
Mr. McDonald. This picture was taken. I questioned the
volume of gloves in the drawer, and I couldn't imagine. We
didn't have nearly that many people working out there. So I
took this picture, really, with trying to get some sort of
understanding why you would need so many pairs of gloves.
This might be self-explanatory. I felt that this was
questionable as well.
Mr. Greenwood. It's a tool for breaking into an automobile?
Mr. McDonald. Yes, sir.
Mr. Greenwood. In case you couldn't pick a lock.
Mr. McDonald. automatic gate opener--I don't know of an
area where we could have used one of these.
Mr. Greenwood. All right.
Mr. McDonald. Some miscellaneous Honda engines. I don't
want to speculate, but anyway, the Honda engines could be used
for any number of things. Like I said, the majority of the
facility and maintenance work my people actually performed, and
we didn't have any Honda generators. So----
Here is another picture of a Warren winch. I believe these
are all-terrain vehicle or four-wheeler winches that you are
seeing there. There's two of them stacked on top of each other.
Then off to the left, of course, there is a Big Cot.
Mr. Greenwood. Your big sleeping bag?
Mr. McDonald. Yes, sir. Inside this bunker, I believe this
is Bunker 22--housed some TVs and VCRs, questionable items.
Coleman equipment, Cabela's equipment, more coolers. Looks like
an air conditioning unit. I took some pictures of the internal,
and here are some Cabela's armchairs, which struck me as
unusual.
Mr. Greenwood. Deluxe armchairs?
Mr. McDonald. Yes, sir. Motorola two-way radios, not
something that we can typically use at the laboratory.
Mr. Greenwood. Why? I've been at the laboratory. I can
imagine--I'm sure that security personnel, for instance, may
have had need for portable radios. Explain why the
responsibilities of the gentleman in question would not--could
not be presumed to include the need for these kinds of radios.
Mr. McDonald. I believe that all the Federal communications
there at University of California is regulated, and we are not
allowed to just use any type of two-way radio in order to
communicate. The facility that I was with, we actually did
have, you know, very expensive radios which to use to
communicate with each other.
Mr. Greenwood. Okay. Is that the last slide? Okay. Thank
you.
We understand that you wished to appear here voluntarily
and offered to provide this committee with these photographs,
the property being observed being purchased with government
funds, but kept for personal use by lab employees. Yet the
committee had to issue you a subpoena both for your personal
appearance and also for the photographs that you brought with
you, and that was at the request of your current employer.
What exactly did your employer advise you regarding your
appearance here, and what did he advise you regarding your
photographs?
Mr. McDonald. Sir, my employer didn't especially advise me
at all on this particular matter. Part of the reason why I
needed a subpoena to get here, I guess, is I wanted to make
sure that I was friendly to the committee and the members. But
I also did not want to appear to be too familiar or--sorry--too
friendly. So----
Mr. Greenwood. Okay. In your statement to the committee,
you stated that you approximated your first contact with lab
security personnel regarding the Bussolini and Alexander
situation as around January 2002. Through staff interviews, we
have been told that the Office of Security Inquiries, OSI, was
first contacted by you in September of 2001. Do you believe
that to be correct?
Mr. McDonald. Yes, sir, that could very well be correct.
Mr. Greenwood. What did you tell the OSI inquirer?
Mr. McDonald. The individual--I met with him, and
originally it was via e-mail, and then we met a number of times
after in person. But the first time we met in person, I
mentioned to him what was going on in my particular area as far
as what I thought was waste, fraud and abuse, theft.
He said people have turned these people in before, and I
didn't believe it.
Mr. Greenwood. Okay. All right. During the course of our
investigation, staff were told in interview with Robert Garcia,
who is the Mesa Equipment representative for the lab, that
Bussolini and Alexander advised him they were setting up a
secret and anti-terrorism center out at TA-33 or TA-35. This
was the reason for their excessive purchases and the reason
that some of the items' descriptions on invoices had to be
changed.
Do you know anything about this anti-terrorism center, and
were Bussolini and Alexander ever given that kind of direction
from management?
Mr. McDonald. I did not know anything about that, sir. As
far as I know, they did not get direction from the laboratory
to do anything like that.
Mr. Greenwood. Mr. Walp, according to your statement, you
were told that when you were hired at LANL, you were selected
because of your expertise in law enforcement. What did your
management team, Mr. Busboom and Mr. Tucker, advise you would
be your daily role?
Mr. Walp. They told me that, as indicated, they hired me
because of my background and my expertise, made comments that
one of the reasons I was hired, because they didn't have that
knowledge in that area, told me to basically go over into OSI,
if you will, and professionalize and bring expertise to it, do
whatever you feel is necessary to bring it under appropriate
professionalism, and that they would support me in that effort.
Not really definitive as to specifics other than saying that
the current individuals that were there doing an investigation
didn't really have the backgrounds or the expertise to do the
jobs the way they wanted them done, and there were problems
with reporting systems, and just basically go over there and do
the job that was necessary to professionalize it.
Mr. Greenwood. What kind of problems did they identify?
Mr. Walp. They identified, again, the weaknesses in the
current investigators. They touched on the reporting system to
a degree, but had also told me--In my posting, it was indicated
that part of my job would be the investigation of theft, the
protection of property, but didn't go anything with specificity
as to exactly what I should do in that arena.
Mr. Greenwood. What is your understanding of the reasons
you were asked to resign and you were subsequently terminated?
What did they say to you?
Mr. Walp. Well, through the course of the multiple months
they said a lot to me. I guess I could couch it in the terms
that, when I began to--when I first arrived there, I was
approached within a few days by a gentleman, Mr. Ken Shiffer,
who indicated--former FBI agent--that he felt there was a lot
of theft going on. He arranged a meeting between Mr. Tucker and
myself, at which time he talked about theft of a whole
truckload of lumber and many other ideas.
Mr. Tucker agreed, and made the statement to me that he
agreed there was rampant theft, that it had been making the
valley green for years. Therefore, they were knowledgeable, and
then asked me to go on my way of trying to find out and get a
grasp on what was going on there.
Later on, Mr. Busboom asked me actually to make an official
report on that. Then when I found out through my efforts as to
the degree of the theft and the mischaracterization of actually
lost property, missing property, dismantled, salvaged or
whatever, was actually stolen, I attempted to approach it from
an FBI investigative perspective.
In fact, Mr. Shiffer and I--Mr. Shiffer felt there may--
wanted to approach it from a RICO perspective, felt that it may
tied in with the drug trade in that area, and asked me to
approach Mr. Tucker, which I did, because I knew at that point,
having experience in white collar crime, that my evidence would
be buried in the bowels of the reports.
It took me a while to find out where those reports were,
because in law enforcement you have the uniformed crime reports
which are easy to go to, to get a profile, but I finally found
out after some consternation that it was buried in BUS 6 and
BUS 5, the Business Division, and that's where I got my report
then when I submitted a report on March 26.
When that happened and I approached Mr. Tucker, because I
knew I had to have enough personnel, I needed quality personnel
that would do investigative audit, not just audit but
investigative audit, and the FBI certainly has that expertise,
I was soundly rejected at that time.
The first inclination that there were some problems there,
because I'm beginning to unravel things, and the more I
unraveled, the more disturbance it caused by higher command
like Mr. Dickson and Mr. Salgado, that if this stuff is
revealed--constantly, from the time we were there before Steve
got there and then, of course, while Steve was there, we were
constantly reminded that our job, even though you help the FBI,
your main job is to protect the lab, its image, its PR, and
ultimately the protection of the contract. That was our main
job.
We were told that on multiple occasions. We were warned on
August 14 that, if I--Steve and I were in a meeting--that if we
continued to pursue this, that the lab is famous for
sacrificing its children for the sake of its image. When I
tried to get the FBI task force, Tucker, the caveat to that
was--and he said, Glenn, if you continue in these efforts of
trying to find the theft, you are liable to find that high
management is involved, and that is not good for the lab's
image.
So we ultimately ended up in, oh, around the month of
September where Mr. Tucker explained to me in detail what
corporate philosophy meant there, and again very distinct said
it was protecting the lab, its image, its PR and ultimately the
contract.
Of course, as we unraveled these things, we had
interference from Dickson, Busboom and Tucker. I'll just give
you a few examples what I felt led up to this termination then.
For example, the first problem we encountered was the
reporting. When we first established the system would work with
the NIS case--that is the Bussolini and Alexander case--we had
a plan set up where the FBI could easily get reports, and that
worked well for about 2 weeks, and then Dickson passed an order
down that before we could get those reports, he had to
personally review them before they would pass down.
In one case, the FBI was waiting over 6 weeks for a report
and never did get it until they made a complaint to Mr.
Salgado, because Mr. Dickson was sitting on it, refused to pass
that information down.
Mr. Dickson wanted personally to get in one of these
bunkers, to go down one night and get into the bunkers, and the
FBI did not want him to, in fact refused to allow him, because
he said all they need is to see the lab counsel down there
looking at this stolen property, and it would jeopardize the
case.
We collected evidence on the Mustang case. I personally
went in with my people and collected evidence out of Lillian
Anaya's office. Immediately upon collecting that evidence--and
at that time they didn't have an evidence control system; they
had evidence in lockers and in drawers and under desks and
whatever. So I set up a specific law enforcement type
structured system.
Immediately Dickson wanted to get into those evidence
boxes, and I told him that the FBI needs to review them first,
because there may be prosecutorial evidence in those boxes.
Ultimately, the FBI was going to serve a search warrant, and
their comment to me was they had become so frustrated with
Dickson interfering with it that, if we could do it in OSI,
look and see what's in those boxes and pass it on to them.
The day I appointed two investigators to look into it, Mr.
Tucker called me and said they are coming over and grabbing all
those boxes and taking them from my official investigatory
control, which they did that day. The FBI was not pleased with
that, even though I warned Tucker that they may be ordering an
obstruction of justice, because the FBI had just sent Dickson a
letter indicating that, before they would go into the boxes or
interview anybody, they would need to get together with them to
make sure they weren't interfering with their cases.
We had Chris Chandler, who works for Mr. Dickson. She came
to me 1 day, and the FBI in the beginning said that they would
give me their official notes, because of my law enforcement
experience that I may be able to help them tell them where to
go in this direction.
She came into my office 1 day and demanded to have those
notes so she could take them back to her office, and I refused
her, I said, because they can't--that wasn't the deal, and I
can't let them out of my possession. At that time she became
argumentative with me and said that she did not care about
anybody's constitutional rights or that it would interfere with
an FBI prosecution.
She began to do an investigation behind the back of Steven
Doran--this was on the Mustang case--and the FBI, interviewing
people that she shouldn't have interviewed. She may have
interfered, totally obstructed with that case.
One of the most egregious things that Mr. Dickson did 1
day, even though he was previously warned by the FBI, once we
got into these investigations, that he was not to reveal any
information to anybody, especially anybody in Assessments and
Audits, because there was a suspect that was connected to the
NIS case in there, Mr. Dickson arranged a meeting which Steve
and I attended, and he verbally intimidated us, that we tell
everybody in that room everything we know about every case we
have, including all FBI confidential information.
I challenged him at that time again that they may be
bordering on obstruction of justice, this is an FBI case. His
comment was to me--and I'll paraphrase, but it is in my batch
notes--was--the way he quoted was this way. He says don't go
there, boys. He says you need to know who you work for, who
pays your check, and that's the University of California. Your
job is to protect the lab, its contract, and not the FBI
investigation. He made it very clear at that time.
Obviously, we were given threats that, again, we would be
leveled or fired. The FBI--Mr. Dickson gave them an ultimatum
on the Mustang case with Lillian Anaya that either they
interview her by August 19 or they were going to put her on
investigative leave. They were going to seal her office and, if
you will, blow the case before they had the opportunity of
interviewing her.
On the Bussolini-Alexander case, they gave them another 48
hour ultimatum. Either they bring this case to a conclusion
within that 48 hours or they were going to put them on
investigative leave before they even had the opportunity.
The FBI was extremely upset about that, that they were
interfering with their case, because their timetable wasn't
ready at that point. So all these things culminating together
ultimately ended in the Clarissa Rodriguez case where it was a
forged voucher.
On September 20, we----
Mr. Greenwood. I'm going to cut you off here, because there
are other members that need to ask questions. Just one
question, and I ask you to answer it just very briefly, because
my time has long expired.
There was mention of early on being told that this lab,
this theft at the lab had been making the valley green for a
long time. Do you have any sense as to how--we talked about
specific cases, but how rampant this problem is?
Mr. Walp. The theft? To me, my observation, sir, was the
lab was riddled with theft. I believe it still is riddled with
theft. You have yet to uncover the real theft, and I believe
that is in the LVA systems and the just-in-time systems. I
think that is going to be hundreds and hundreds of thousands of
dollars of theft when you finally get into it. But most
egregious of all was management knew about it. Tucker--I was
only there a few days. It's been going on for years. Shiffer
says it's been going on for years.
Tucker never said it wasn't going on. Mr. Tapia agreed it
was going on for years. They knew about it, but they did
nothing about it. Then when I tried to do something about it,
that's when they tried to shut us down and stop us.
Mr. Greenwood. Okay, thank you. The gentleman from Florida,
Mr. Deutsch.
Mr. Deutsch. Mr. Walp, really just to continue exactly on
that line of questioning, when you say they knew about, did
they know specifics or just--I mean, it was so flagrant that it
was obvious it was going on?
Mr. Walp. I think the one thing--you need to go back to Mr.
McDonald's statement. In the fall of 2001, this information was
reported to Bill Sprouse who worked in OSI at that time before
me getting there. He said--I have a memo from him--he told
Tucker. They were aware of it.
There also was information given to a Mr. Scott Gibbs who
works in the Associate Director's office under Mr. Holt who was
given an e-mail on it. He did nothing about it. They gave it to
Katherine Brittian in Assessments and Audits, and they did
nothing about it.
So they were very well aware of the NIS case in 2001. Mr.
Sprouse told me that he told the FBI. The FBI says they never
told us anything. So as it deals with NSI, to me they
definitely knew about that.
There is no doubt, because the property manager regarding a
report with the lost property, was identified as lost, the 2.7
between 1999 and 2001--the property manager in S Division when
I questioned him trying to get a background on this, his
comment was, well, the way they take are of that is there is a
form you fill out, and you can either put dismantled, salvaged,
missing. They even have one called retired.
He says, the way you take care of it is, if you are doing
an audit and you can't find it, you just fill out a form, and
that takes care of it. It just goes away.
As it dealt with the LVA systems and the JIT systems----
Mr. Greenwood. Explain what LVA is.
Mr. Walp. Yes. Local Vendor Agreements, and the JIT is the
just-in-time where, if you need something in a hurry, you can
buy computers or clothing, shoes or whatever.
In my meeting in July with Mr. Tapia and his crew, when I
explained to him what we were going to do to try to correct
this problem, there was about 12 people in that room from the
Business 6 unit, and they almost stood up and cheered. They
said, finally, finally someone is interested in this. We've
been telling our supervisors and administrators for years. They
won't help us, and they gave me a sample of how bad it is.
They said, Glenn, we can take you down to Santa Fe today.
We can have a whole computer system in your house this
afternoon, and no one will know, and no one will ever know,
because of the system that is set up and the controls that are
not there.
Paul Mirey, financial area, attempted to send a memo out
after my report in March to try to get people to comply with
the way it should be done, and that was rescinded. I attempted
to get a young lady by the name of Meredith Brown to put out
this information in a--it's a LANL pamphlet to tell people to
report thefts. I went to Tucker, and Tucker said, no. He said,
that's not good to distribute that information lab-wide; you
shouldn't have that information.
A Ms. Roybal and a Mr. Martinez in the fall of 2001
identified severe problems with the purchase card system, made
three memos, sent it to their bosses, and their bosses rejected
it: Basically, thank you, but no, thank you, we don't want to
know about it.
When I interviewed Mr. Stanley Hettich, who is currently
working in the same position in Procurement in BUS 5, when
Steve and I went to interview him regarding the Mustang case,
because he had no intentions of telling me--Mr. Tapia had
called me, and he asked me, he said, did Mr. Hettich call you
yet about that Mustang case. I said, no. He said, well, he
doesn't want to; he doesn't want to tell you anything, but he
said, I told him, because he was a higher authority.
So I went to interview him----
Mr. Deutsch. Again, I was focusing--I'm convinced. Okay?
I'm convinced.
Mr. Doran, I understand that you were in a little
convenience store recently where a Los Alamos employee was
using his credit card to buy a bunch of little flashlights. C |
