ALEXANDRIA, Va.–The travel and entertainment expenses of NCUA’s chairman and his chief of staff have again come under scrutiny in the Washington Post.
The expenses, which were the subject of recent reports by the agency’s Inspector General, were examined as part of a Freedom of Information Act request by the Washington Post, which said it obtained other “internal documents,” as well.
McWatters’ expenses were originally the subject of an anonymous whistleblower’s complaint in 2016. That complaint led to the IG’s investigation.
“They are federal financial regulators who filed for expenses like corporate CEOs, seeking reimbursement for limos, deluxe air travel and meals in posh restaurants,” the Washington Post reported.
$11,000 Plane Tickets
Among the expenses cited by the Washington Post:
- An UberBlack ride from the District to neighboring Alexandria, Va., for $250.
- Two airline tickets to a meeting in Vienna came in at more than $11,000 each, “even as a staffer found a way to the same event for a fraction of the price.”
- A meal for three at Joe’s Seafood near the White House that cost $450 — including $45 for a dish of Dover sole and $43 for halibut, according to receipts for the meal, the Post reported.
‘Fondness for Top Shelf’
“(McWatters) and his chief of staff, Sarah Vega, and their guests also showed a fondness for wine and top-shelf liquor, including, in one instance, a $45 glass of 18-year-old single-malt whiskey, records show,” according to the Post. “In 2016 and 2017, they expensed more than $2,500 worth of alcoholic beverages — most of it under Vega’s account — despite a written policy prohibiting reimbursement for the purchase of alcohol.”
The Post quoted John Kutchey, deputy executive director at NCUA, as telling investigators in 2018, “They have expensive taste.”
“The investigation, which has not been previously reported, offers an unusually detailed look at a federal regulator’s expense account and serves as a reminder that perquisites far beyond the reach of most Americans are an accepted part of governance in some quarters of the nation’s capital,” the Post reported.
But the Post also noted, “Lavish as it appears on paper, most of the spending by McWatters and Vega appears to be permitted under its rules, according to agency officials and the inspector general’s probe. That includes more than $60,000 in additional funding that was moved from one account to another in 2017 to cover McWatters’ travel, lodging and per-diem expenses, the records show.”
In response, NCUA issued a statement to the Post that read, “The claims for reimbursement were within the parameters of agency policy. There being no violation of the law, rule or regulation, no disciplinary action was warranted.”
The Post said McWatters, Vega, Kutchey and other NCUA officials did not respond to interview requests.
“But the IG investigators raised serious questions about the reimbursements for alcoholic beverages,” the Post reported. It quoted the IG’s report, which stated, “Kutchey said that he has told McWatters and Vega and prior board chairs and their staff at different times that the NCUA cannot pay for alcohol, and that they should make sure not to claim for alcohol.”
The Post noted that in March 2018, the Inspector General passed on the findings about McWatters to the White House for review and referred both cases to the
Justice Department’s U.S. attorney for the Eastern District of Virginia, alleging “unauthorized receipt of expenses,” according to the investigative reports.
The Justice Department declined to prosecute but did not elaborate on the reasons, according to the IG reports, the Post reported.
Talking About ‘Business’
According to the Post, in an interview with investigators, McWatters defended himself, saying he has meals with industry officials and lobbyists “that are two to three hours long, so they can have meaningful discussions about business. McWatters said that the only thing he does during the meals is talk business.”
In addition, the Post further reported McWatters told investigators he “knew that he could not be reimbursed for alcohol expenses,” saying at one point that the failure to exclude those expenses ‘was his fault,’ the inspector general’s report says. He also said he relied on an assistant and other agency officials ‘to make sure that he is abiding by the rules.’”
The Post said McWatters, who resides in Texas and commutes to NCUA for board meetings and other business when needed, “lamented an agency decision to disallow the use of the luxury UberBlack, telling investigators that it has forced him to use the regular Uber car service. ‘I’m schlepping around in somebody’s Civic,’ he said, according to the investigative reports.”
The Post reported Vega had taken the position that “if something was not expressly prohibited, then she assumed it was acceptable,” according to investigators, and further said her failure to deduct alcohol was an “oversight,” the Inspector General found.
The Post reported that in its statement NCUA said its IG investigators did not understand NCUA policies and that investigators did not include details from the agency showing the inconsistencies in agency directives that technically left open the question about alcohol purchases with agency funds.
NCUA Says Other Agencies Have it Better
The OIG report further stated any alleged excess spending on the part of the Chairman’s office is a subjective standard.
“The NCUA statements noted that the agency does not have some of the services enjoyed by more-prominent regulators, such as the Federal Deposit Insurance Corp, the Post reported.
Among the NCUA statements cited by the Post: “Most agencies have full-time, dedicated drivers and cars, with some having fleets, dedicated to transporting the executives. The costs for this type of structure far exceed any cost the NCUA has incurred for car services.
“Senior officials holding business meetings over meals is considered a regular course of operation for many agencies,” the statement continued. “In some of these agencies, it includes dedicated dining facilities and staffed cafeteria services, which the NCUA does not have. From a cost comparison and efficiency perspective, the NCUA would compare very favorably.”
‘Rarely Used’ Furniture
“From the beginning of his tenure, McWatters spent money in the style of a corporate executive, including the use of hired limousines and the purchase of nearly $22,000 worth of furniture for a headquarters office he rarely used,” the Post reported, citing receipts it had obtained.
The Post quoted one of the IG investigators involved in the probe of McWatters and Vega as saying during an interview that she had been struck by the “sheer extravagance” of their spending. “There was a sense of entitlement,” the Post quoted Sharon Separ, who retired as assistant inspector general for investigations early last year, as saying.
Among other expenses cited by the Post:
- McWatters had sought and received reimbursement for $156 in alcohol purchases during three meals in 2016 and 2017. McWatters said it was their practice for Vega to pick up the tab, the report said.
- The IG report found McWatters had participated in 14 other meals with Vega “for which his chief of staff was reimbursed $1,737 in alcohol expenses.”
- Receipts show they “frequented expensive restaurants, including Joe’s Seafood, RPM Italian and Bistro Bis in the District and RPM Steak in Chicago.
- “On April 6, 2017, McWatters hosted a dinner at the Chicago RPM, where steaks start at $43. He and his guest, former NCUA chairman Michael Fryzel, dined for nearly four hours, according to the receipt. The $276 tab included a $10 order of doughnuts and eight glasses of wine,” the Post reported.
- According to the Post, Vega expensed $379.84 — half of the $759.69 total bill — for an elaborate meal at Bistro Bis on Jan. 19, 2017. “The foursome at the table had six glasses of 12-year-old scotch at $21 each, two bottles of wine at $60 each, two martinis, rabbit salad and Basque-style octopus, along with dishes of trout, salmon, scallops, beef bourguignon and opera cake, the receipt shows.”