P loseout age 1 o f 4 MEMORANDUM Date: 6 1 9 9 8 To: File No. fi@fm< From: Audit ~dvisors,Audit Section Through: ent-in-Charge, Investigations Section Re: Background Informal Notification I While at reviews, #spoke related that operation in & a n August 1998 articipating in the South Pole Station Modernization with Quality Assurance Manager, had received an allegation (he did not say who made the a egation) regarding one of its employees, the "second in command" at its shippinglreceiving He The allegation was that this employee had received gifts from a freight forwarding company with whichv s business at some of the examples he gave were color TV,satellite dish, and tic ets to sporting events. Apparently, though, the employee is not directly involved in awarding contracts to the I company in question. tated that he and nternal auditor and that they extent of the investigation - i.e., with whom they spoke or what evidence they uncovered). The allegation was disclosed to -contracting Officer, NSFICPO). l o stated that the employee in question had been put on administrative leave very soon after the allegation was made, and he believed that the employee would be terminated. Formal Notification m : ; y ; t o add information re: conversations with CPO and 0 Initial Steps We requested and received documentation from_ 1. Copies of trip reports written by d- Human Resou h , Internal Audit s contained notes om interviews conducted with: the employee alleg ays-* the vendor alleged -- - ---_- to have - - gifts. given the ted _ _ _--There Manager, - - were d- gifts from a ven or; -_ -_-- _ from also -notes _-- _ - - visits to some ofo t h e r transportation vendors. -- 2. Vendor payment histories for all vendors with w h i c h d o e s business at its location. After reviewing the documentation provided in Item 1 above, we briefed OIG Legal on the facts of the case. the applicable law and -Kickback Act of 1986,41 to the facts of our case and we determined that an OIG investigation was warranted. - Investigation steps after we had been notified traveled to nd secured all files. He also, along with a . At various times throughout the day we also met with the following individuals - Manager, Finance Quality Assurance and Manager, Human with these personnel did not reveal anything not At our request, O p r o v i d e d copies of invoices selected from the vendor payment histories referenced in Item 2 above. We reviewed these and other invoices, but the invoice review process was not an efficient use of time as all back-up documentation remains at w d is not forwarded with the invoices for payment; we noted that some invoices were not approved payment, but did not see anything else of significance. Interviews Yage 3 of 4 ember 1998 we met with bout the m e r a t i o and job duties, with and Other than using edEx account for a s any improprieties and no evidence t h a k n e w of or approved of w l l e g e d activities with -il r e i m b u r s e o r personal use of the account.) - -- - We reviewed the flow o f goods and documentation throughout the receiving/shipping operation and concluded that there are sufficient controls in place to make it highly unlikely that paying more for services received than it should, that for services not received, or that u s i n e s s was inappropriately We did note some administrative weaknesses in t h e e p e r a t i o n : freight forwarding services are procured without having been subject to a competitive bid process; freight . . forwarding invoices are approved for payment without having been verified against back- up documentation, and employees may not have been aware of policy re: accepting gifts. These were discussed with - d o handled by OIG Audit. Distribution Services, Inc. O n 2 September 1998 we interviewed the princi als of s, regarding their relationship w i t h e ) and w for freigbt forwarding, and his biggest customer is handles s' domestic triicking and has little or no relationship with It is common practice in the transportation industry for vendors to give gifts to their - customers (e.g., hats and t-shirts, notepads and pens, Christmas gifts). Both partners admitted that they had given gifts to they had received gifts in return. ifts a l h y s nd were of relatively minor value. Christmas gifts to years; each gift was worth evidenced a great deal of interest in the USAP and a high its needs, he claimed that he did not know that his company had violated any federal laws by giving gifts in excess of allowable amounts to an employee of a government contractor. Based on what we learned in our interview h'w ti and our review of t h e m operation, we did not believe that from the giving of gifts. Rather, it was our impression got "carried away" in his efforts to i acknowledge the amount of business gave his company, and that he lacked any intent to influence - rage 4 or 4 On 3 September 1998 we interviewed We discussed b responsibilities a t h e influence he had over the selection of vendors, and the allegations regarding soliciting/accepting gifts from and personal use of- assets and accounts. e o n f i r m e d that he had no influence over vendor selection. He denied that he had ever solicited gifts, but was fairly forthcoming regarding the gifts he received. - - - - -- ----scaated-chat-he-knew-he-was characterized his relationship with a gift exchange, which he did gift policy. We did not believe that a s being completely truthful, and thought that his I consequences of his actions. d characterization of the relations of the events and his interpretation o-fit and the gifts was an attempt to deflect the legal greed to swear out an affidavit describing his version policy. I Findings We referred our investigative findings to the AUSA, which declined the case. We are in agreement with the AUSA because: k i d not incur additional costs on account of the actions we do not believe that was acting with the . intent to influ and- no longer employed by 0' This case is closed.
Published by the National Science Foundation, Office of Inspector General on 1998-10-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)