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U.S. Office of Special Counsel

1730 M Street, N.W., Suite 300

Washington, D.C. 20036-4505


(202) 653-7984  

        The U.S. Office of Special Counsel (OSC) today announced the settlement of disciplinary action cases it brought against two senior officials of the National Credit Union Administration (NCUA). These settlements in Special Counsel v. Foster and Special Counsel v. White culminate a two-year investigation by OSC of illegal hiring practices at NCUA. 

    Under the settlement, the officials -- the former director of human resources and the associate regional director for programs in Texas -- have agreed to accept significant reductions in their salary -- currently equivalent to Senior Executive Service pay grades -- to grades 9 and 14, respectively. According to the agreements, the reductions will be accompanied by lengthy suspensions (120 days for Ms. Foster, 30 days for Mr. White).

    The settlements, filed with the Merit Systems Protection Board (MSPB), will bring an end to the current MSPB proceedings that originated in disciplinary complaints filed by OSC on October 19, 1999. In those complaints, OSC had charged the two officials with participating in an illegal scheme to appoint pre-selected applicants to credit union examiner positions at bogus duty stations, which had been strategically placed in remote, sparsely populated cities -- like Minot, North Dakota and Hazard, Kentucky--in order to eliminate competition for the jobs. According to OSC’s complaints, the scheme involved the creation of a false trail of personnel documents that concealed the fact that the newly hired employees were being assigned to positions in major metropolitan cities like San Antonio, Atlanta, Detroit and Washington, D.C. OSC charged that the scheme granted an illegal preference to the pre-selected applicants, obstructed the public’s right to compete for the jobs, and violated assorted laws, rules and regulations -- including, the “rule of three” and “90-day rule” -- designed to ensure fair and open competition in the federal civil service. The scheme also adversely affected the rights of veterans to preference in civil service examinations. 

    These settlements were achieved with the full cooperation of NCUA’s Board, who joined in the settlements. With OSC’s consent, NCUA has also taken significant disciplinary action against six senior officials and two junior officials, who had been implicated in the scheme by OSC’s investigation but not prosecuted before the MSPB. Those actions range from 15-45 day suspensions, accompanied by significant salary reductions.
Each of the individuals disciplined by the NCUA Board has a right to appeal the discipline to the Merit Systems Protection Board. The actions taken against Mr. White and Ms. Foster, however, are final.

    With these ten disciplinary actions, OSC will close its investigation of NCUA’s illegal hiring practices, which it began at the request of the Office of Personnel Management (OPM), the agency that has authority over all civil service appointments. In separate actions, OPM temporarily suspended NCUA’s appointment authority, corrected the illegal appointments, and supervised institutional changes in NCUA’s personnel practices. 

    Special Counsel Elaine Kaplan expressed her appreciation to the NCUA Board for its cooperation in OSC’s investigation. She also expressed “satisfaction that OSC’s petitions for disciplinary action resulted in significant penalties, which should serve as a deterrent to others who might consider employing similar illegal hiring schemes that violate basic merit system principles.” 

    The U.S. Office of Special Counsel provides an independent avenue to protect merit system principles in the federal government. OSC receives, investigates and prosecutes before the MSPB allegations of prohibited personnel practices. It is a violation of title 5 to grant an unauthorized hiring preference to an applicant, to obstruct the right of an applicant to compete for employment, and to violate laws, rules and regulations such as veterans preference, the “rule of three” and the 90-day restriction on reassignments after appointment.