Federal Mediation and Conciliation Service Director George Cohen is resigning only days after learning he is a target of a congressional inquiry spurred by a Washington Examiner series.
The Examiner series reported that FMCS employees spent hundreds of thousands of dollars on luxuries and that top officials retaliated against employees who questioned the spending.
“I have notified President Obama that I intend to resign as Director, effective December 31, 2013,” Cohen told employees in a memo obtained by the Examiner.
“I am happy to report that I leave the agency in very good shape with the admiration and respect coming from private parties, federal government agencies, and public sector organizations and their respective union representatives.
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Federal Workers Max Out at Taxpayer ExpenseA five-part series by the Washington Examiner watchdog team
Tuesday: Bureaucrats at tiny agency buy legions of luxuries with purchase cards
Wednesday: Reckless FMCS spending goes straight to the top
Thursday: Implicated top officials forced whistleblower to retract complaint on purchase card fraud
Friday: At federal agency, officials cede authority to outsiders who write their own contracts
Monday: FMCS fired wounded warrior whistleblower after ICU stay
Data: FMCS salaries and bonuses
View the whole series
Got tips?Do you know more about what's going on at the FMCS -- or any other federal agency? Contact Luke Rosiak at email@example.com.
“I also gave Scot and Allison special thanks for their untiring efforts and the superb quality of their performances,” he said, referring to his deputies.
Allison Beck-Chernikoff and her sister-in-law, Bonnie Chernikoff, who is Cohen’s administrative assistant, participated in no-bid contracting and spending on luxury items, emails reviewed by the Washington Examiner showed. Scot L. Beckenbaugh is another deputy of Cohen's.
Asked whether Obama White House officials pressured Cohen to resign, FMCS spokesman John Arnold would say only that “we are in contact with the committee. Director Cohen has no further comment.”
Cohen is a union man who is receiving a pension from the United Steelworkers of America and held a position with the National Hockey League Players' Association at the time President Obama appointed him in 2009.
At a salary of $165,000, he oversaw the 230-person agency with a budget of $50 million that provides non-binding, voluntary arbitration between private companies’ and governments’ managers and unions.
"Let me give you the honest truth: A lot of FMCS employees don't do a hell of a lot, including myself. Personally, the reason that I've stayed is that I just don't feel like working that hard, plus the location on K Street is great, plus we all have these oversized offices with windows, plus management doesn't seem to care if we stay out at lunch a long time. Can you blame me?" said an FMCS employee who asked for anonymity.
"The agency really needs to be incorporated back into the Department of Labor, the way it was back in the early days, or totally eliminated," the employee said.
House Committee on Oversight and Government Reform Chairman Darrell Issa said in a Nov. 13 letter to Cohen that the panel "is conducting an investigation into allegations of excessive spending, improper use of government purchase cards, conflicts of interest, contracting irregularities, and retaliation against whistleblowers at the Federal Mediation and Conciliation Service. Beginning on Oct. 1, 2013, the Washington Examiner published a five-part series of articles" uncovering them.
Among the problems were incidents in which FMCS employees paid $85,000 to an apparently non-existent company established by a just-retired FMCS colleague, Charles Burton, with no one able to say why it was chosen or what services were provided. In another incident, a former top employee, Dan W. Funkhouser, billed multiple personal expenses such as cellphone lines for family members, and continued having the agency pay for items such as a storage facility full of photo albums, an old bed, and a lawn mower after he had retired.
Employees at FMCS who had billed hundreds of thousands of dollars to taxpayers — Funkhouser spent some $30,000 on picture frames mostly purchased at a jewelry store — appeared to get off scot-free merely by retiring.
FMCS never pursued criminal or civil actions to recoup the money.
"I did not discuss disciplinary action ... because the employees who appeared to be responsible for the purchase card misuse were no longer with FMCS," an inspector general who confirmed the allegations wrote in turning over his findings to Cohen for action. Cohen subsequently took only perfunctory actions.
When FMCS accountant Carol Booth became so concerned with the agency’s books that she went to the General Services Administration, Cohen wrote a retraction and forced her to send it from her email address, thus waving off outside eyes on the agency.
Cohen himself used federal funds to buy artwork produced by his wife, and he used a “recreation and reception fund” to order a $1,277 "navy blue leather chair," $208 wooden coasters for his office, and bottles of champagne.