ALEXANDRIA, VA.- While the reason the NCUA Board chose to disregard the recommendations of the Office of Special Counsel's report on how to punish lower-level officials for their roles in the hiring scandal that has rocked the agency for nearly four years remains unknown- the fallout of their decision, should it stand, has already begun to form a toxic cloud-and it's not good news for the agency or the credit union movement. Morale among career employees at NCUA has already slumped, and mistrust of how the board, made up of three politically-appointed persons, two Democrats and one Republican, has handled the punishment of full-time government employees has resulted in a growing resentment and a palpably obvious question-why? Why did the board take such drastic action? Why did it ignore the strong suggestion of its own Executive Resources Board to accept the OSC's punishment guideline? Perhaps more importantly, why, when the Board had the opportunity to move beyond this continuing saga of ill-feeling, political infighting and finger-pointing did it choose instead to give a story that was slowly approaching an end a few more chapters? Worse yet, why did it add to the intrigue, making a mystery of this now novel-length tale? So many questions with so few on-the-record answers have bewildered credit union watchers and to an extent stymied the press' attention to the story, which now will seemingly stretch well into this new millennium. From documents, previously published stories in Credit Union Times and from several off-the-record sources both inside and outside the agency (with second and third confirmations of fact), it is now possible to outline at least the bones of what happened. On Thursday evening February 3 the board voted in closed session to demote two highly experienced Regional Directors several pay grades, and suspend them for 60 days. While the suspensions are not yet in force (they have the right to due-notification and appeal) it appears unlikely the board will retract its decision. Region VI Director Jane Walters (headquartered in Concord, Calif.) and Region IV Director Nicholas Veghts (headquartered in Chicago) will be reduced in salary by some $50,000 and will no longer be able to serve at the RD level when their suspensions are over. (Pay grades for government employees have a range of salary levels and vary from region to region, owing to geographical variations on the cost of living.) The board took less drastic measures against present Region III Regional Director Alonzo Swann III (headquartered in Atlanta) supposedly because he was not an RD at the time of the alleged infractions. But Swann, Timothy Hornbrook, deputy regional director of Region III, Steve Dennison, supervision director of Region III and Kent Buckham, deputy director of the Office of Corporate Credit Unions (and former deputy director in Region II) were all suspended for 30 days and a salary reduction of some $10,000 was imposed on all. The appeals process begins first at the NCUA Board level itself; with all six employees having the right to ask the board to reconsider. If frustrated there, as seems likely, they can appeal to the Merit Systems Protection Board. That appears to be the likeliest route, given new information provided to Credit Union Times. A highly placed source explained that all the participants had, in fact, agreed to the punishment decided upon by the Office of Special Counsel (OSC), and were blindsided, it seems, by the hammer wielded by the board. It was the recommendation of the OSC, and seconded also by the NCUA Board appointed Executive Resources Board (ERB) that Walters be suspended for eight days and Veghts for five. Having agreed to those suspensions, it was a shock to have the board go so far beyond both the OSC's deemed fitting punishment, and so many lengths past the NCUA's handpicked ERB panel. All three members of the NCUA Board dutifully refused to comment when personally contacted. Chairman D'Amours said, "I'm not going to discuss anything that was the subject of a closed board session. I've never done that and I'm not going to start now." Yolanda Townsend Wheat offered, "I'll have to give you a firm `No comment,'" and Dennis Dollar stated that he "could not discuss details of personnel actions taken during a closed board session." In that closed session, it got very heated indeed. There were raised voices, bad feelings and plaintive calls for a more measured decision. These are, after all, career government employees who will remain long after the politically- appointed board has moved on. These are the people that supervise and manage the oversight of supervisory examiners throughout the country. And while a mark of any kind for an allegedly illegal pattern of hiring is a painful thing for any employee's permanent record, there is punishment, and then there is punishment with a capital P. A suspension of more than 14 days marks the difference between a minor and a major infraction or adverse action. That could mean these employees would have a terrible time trying to get another government job. This is the sort of thing that can blacken a career, and while most of those involved are far from retirement, Veghts may in fact be impacted the most, as he has the longest service. Pension pay is determined to a great extent on the last several years of salary (usually the highest). This demotion, therefore, could affect his retirement package. During the discussion, the ERB panel, reportedly with Director of Examination and Insurance Dave Marquis making a case for leniency, and other members in agreement, the two Democratic members, D'Amours and Wheat, voted together for the more stringent punishment, allegedly to send a message. Dollar, according to highly placed sources present in the session, vehemently opposed the treatment. As the only board member whose fingerprints are nowhere to be found in the matter, he had the least to lose by making the vote unanimous, but he stated that after the vigorous investigation OSC had completed, and the ERB's appeal to accept their finding, it was punishment not fitting the crime. Dollar also was completely bypassed, it seems, on the discussion of the so-called `plea agreement' made between the other two board members, the OSC and the involved parties, an informed source told Credit Union Times. Dollar was not available for comment on that charge specifically, and his assistant Kurt Cuevas could not be reached. But if it is true that Dollar only learned of the agreement just prior to the board's meeting, it raises other issues in the matter. Dollar seemed quite upset, the source said, for being left out of the process. He was more than miffed that an issue of such importance did not receive the input of all three members of the board. Why was Dollar left in the dark? Arriving at its recommendation, the OSC used as consideration a precedent-setting case called the Douglas case. In matters concerning federal employees accused or found guilty of wrongdoing, a number of factors are to be taken into account to arrive at a just punishment. Among those factors are the employee's previous years of service, their service history, the extent to which they knew or did not know what they were doing is wrong, etc. In all there are close to one-dozen factors to consider. So after due consideration, the OSC arrived at, then the ERB seconded, the suggested punishment, which the board ignored. Reportedly, it was stated that both Walters and Veghts had never received any personnel training. It was also stated that when they sought the advice of agency personnel specialists, they were told they were within the law and that such procedures had been done before. In essence, they were given the green light. Were D'Amours and Wheat directly or indirectly seeking the appointment of minorities and women, as many have maintained? Despite both being Democrats, Wheat and D'Amours have had a long history of rancor and disagreement, yet have voted together on many occasions. Might their voting together on this issue be purposeful to both of them? What might be the reasons? Sources inform Credit Union Times that there is a widespread impression throughout the agency that D'Amours, angry that his friend and colleague Karl Hoyle was the early scapegoat in the matter and was terminated over it, was determined to see that others be severely punished. Whatever Wheat's reasons might be are purely speculative, said a number of contacts, but the aspect of diversion was mentioned by more than one person as a likely possibility. Couple that with the propensity of both D'Amours and Wheat to take an active interest in the agency's personnel issues and a picture forms of an effort to cut off blame beneath the board level. Yet unresolved are the fates of Dottie Foster, presently a special assistant to the board and former personnel director and current Region V associate regional director of programs Russell White. OSC recommended their dismissal. The Board has so far deferred consideration of their status. Still pending too, is the case of former Region III Director Alan Carver, who secured a finding by the Office of Civil Rights for the U.S Department of Commerce (asked to investigate as a disinterested third party) that NCUA had in fact discriminated against him on the basis of race (Carver is white). Carver also claimed he was discriminated against on the basis of age, but lost on that count. The case was appealed and is soon to be scheduled. If the penalties meted out by the board are disproportionate, the NCUA Board still has a chance to reconsider, given the reaction among NCUA rank and file employees. One source said that while safety and soundness is not an issue and that business as usual is taking place, there is widespread disenfranchisement. How will upper level positions be filled when qualified persons are reluctant to seek those posts, given how these career people have been treated? The NCUA has broad powers over such personnel matters, and many staffers are now wondering if that's such a good idea. Should career government service employees be subject to the whims of political appointees who may have an agenda to fill? There are rumblings now that it may have been a mistake that OSC did not conduct a fuller investigation following Hoyle's termination. There is a feeling also, that several employees involved in the hiring scheme have been left untouched, and that the full story may never come out. -
caburger@cutimes.com
