Bromwich: A dose of reality about IG audits

May 20, 2013

By Michael R. Bromwich
Appeared at:

The May 14 audit report of the Treasury Inspector General (IG) for Tax Administration has created quite a stir. Within days of the initial news of the report’s findings, the Acting Commissioner of the IRS resigned, the Justice Department launched a criminal investigation and the House Ways and Means Committee held the first of what promises to be a lengthy series of hearings. Only the further disclosure of relevant facts will tell us where on the spectrum of governmental misconduct this episode belongs.

Unfortunately, many people, including politicians in both parties, are not prepared to wait for the orderly development of the facts. They want swift and dramatic action, and explanations as to why such actions against those responsible have not already been taken. Already, condemnation by politicians has extended beyond IRS personnel to include high-level officials in the Treasury Department and the White House for their failure to intervene more quickly, and take summary disciplinary action against the IRS personnel involved.

This suggestion ignores many important considerations. It ignores the independence of inspectors general; it ignores the limited information that is generally provided to political officials by IGs while their audits or investigations are in progress; it ignores the risk that summary disciplinary actions could obstruct the IG’s activities; and it ignores the strong likelihood that summary disciplinary actions would not stand up to subsequent administrative and legal challenges.

First, by law, inspectors general are independent. They are not political creatures of the departments and agencies in which they operate. Indeed, the IG statute requires that IGs be appointed “without regard to political affiliation.” They are the only political appointees that, as a group, survive across administrations. In fact, the IG who performed this audit was appointed in 2004 by then-President George W. Bush.

Second, the one thing that agency executives fear more than the IGs themselves is the claim that they meddled with an IG audit or investigation. One of the hardest things for rookie agency heads to grasp is the limited influence and control they have over their own IGs, and the enormous risks, personal and political, of trying to assert more. That is by design to assure IG independence.

The Tax Administration IG has testified that he mentioned the audit to the Treasury General Counsel in 2012 as part of his agency’s overall audit program. He followed standard practice by not sharing his findings until he provided a draft report for comment in March 2013. In fact, media accounts suggest he provided earlier and more detailed briefings to Congress than to the executive branch.

In those rare cases when information about the audit or investigation goes beyond the agency in the executive branch, it would be unprecedented in my experience for anyone outside the agency to become involved in the customary back and forth between the IG and the agency, much less to intervene with the IG before his work is complete. Intervention of this kind would be foolish, inappropriate and dangerous to those who attempted it. Such actions could be viewed as obstruction of the IG’s work.

Third, summary disciplinary action against agency employees before the completion of an audit would be unprecedented. Discipline is never imposed in the midst of an IG audit or investigation. At most, an employee is placed on administrative leave, generally with pay, with full due process to follow at the conclusion of the IG’s work. On one of the very few occasions in my experience when an agency employee was suspended during an investigation, it became the subject of sustained congressional criticism. The agency was ultimately forced to settle with the employee and pay him a substantial sum of money as part of the settlement. The agency does not have the last word on whether its sanctions are legal and proper – other federal agencies and the courts exist for that purpose. Premature disciplinary action, based on an undeveloped evidentiary record, provides a strong basis for the employee to be reinstated.

These cautions are not meant to condone any of the actions of the IRS employees but instead to emphasize that we are only at the early stages of knowing what happened. We have an audit report that does not name names or attribute personal responsibility to individuals. Although the fevered temper of our times does not easily accept the need to wait for appropriate evidence to be developed, that is what is required to honor our traditions of fairness and justice, especially when outrage is at its highest pitch.

Bromwich served as the Inspector General at the Department of Justice from 1994-1999. He is currently the Managing Principal at The Bromwich Group and a partner at Goodwin Procter, LLP.

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