Treasury Official Resigns Amid Ethics Probe Accused Of Contract Improprieties, Bullying Secret Service Agents

The Treasury Department’s embattled chief watchdog, accused by congressional investigators of violating federal contracting law, said Friday she would resign in March.

“After almost 18 years in the public service, it is time for me to return to private life,” Treasury Inspector General Valerie Lau said in a letter to President Clinton.

Lau, who also was under fire from Republicans in Congress for her office’s investigation of two Secret Service agents, said she would leave after her office issues its audit of the department’s financial statements in March. She has held the position since December 1994. Earlier, she was an executive at the Office of Personnel Management.

Her contracting practices were first highlighted in a series of Associated Press stories last spring that prompted the congressional investigation.

“Accountability in government has prevailed,” said Sen. Charles Grassley, R-Iowa, who called for her resignation in November.

In her letter, Lau did not mention a report by the General Accounting Office, Congress’ investigative arm, that concluded she had broken the law by failing to seek competitive bids for two consulting contracts.

In one of the contracts, Lau spent $345,000 to improve the morale of her 300-member staff. The contractor produced seminars and 1,000 six-inch rulers with inspirational phrases.

A second contract, for a $90,776 management study, was awarded to a friend who had recommended Lau for her job at the Treasury Department.

At a congressional hearing, Lau said she accepted “the GAO’s professional judgment that the contracting process on these two contracts did not meet the technical requirements of the relevant” law and regulations.

Grassley, in demanding her resignation, cited the contracts and questions about whether she had misled Congress about her office’s investigation of two Secret Service agents who had contradicted the White House in the FBI files controversy.

That controversy erupted over revelations that the Clinton White House security office had requested FBI background dossiers on former Bush administration employees.

Lau told congressional committees in December 1996 and February 1997 that the two agents were not the subject of criminal investigations by her office. Last April she acknowledged that was incorrect. She said she had not seen an e-mail from her staff listing the two as subjects of a criminal investigation.

Complaints about Lau have been under review by the president’s Council on Integrity and Efficiency, an advisory panel set up to police inspectors general. By law, only the president can remove an inspector general.

A report critical of Lau was being prepared by a Senate Governmental Affairs subcommittee, which got authorization this week from a majority of its members to issue the findings, according to a Senate aide.

Sen. Susan Collins, R-Maine, the panel’s chairwoman, said in a statement, “She made the right decision.”

In a statement accompanying Lau’s letter of resignation, Treasury Department spokesman Howard Schloss made no mention of the controversies. “We appreciate Valerie’s service to this department during the last three and a half years and wish her well in future endeavors,” he said.