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C Whistleblowers raise suspicion that the delay of a federal audit of the state plan was tied to Gov. Bush's re-election campaign. By ALISA ULFERTS and MARY JACOBY

St. Petersburg Times, published November 13, 2002

Whistleblowers raise suspicion that the delay of a federal audit of the state plan was tied to Gov. Bush's re-election campaign.

TALLAHASSEE -- A congressional committee wants to know whether politics are behind the delay of a federal audit of the state employees' pension fund.

Gov. Jeb Bush's administration asked for a delay because of recent staff changes, a spokeswoman said Tuesday, not to avoid damaging his re-election effort.

But Iowa Sen. Charles Grassley, the top Republican on the Senate Finance Committee, isn't so sure.

He has asked for an investigation into whether Health and Human Services inspector general Janet Rehnquist delayed the audit to avoid possible embarrassment to Bush, who was in a spirited re-election fight.

Grassley said Tuesday the audit delay is just one part of a federal inquiry into whether Rehnquist, daughter of U.S. Supreme Court Chief Justice William Rehnquist, has improperly infused politics into her administrative duties.

Bush spokeswoman Elizabeth Hirst said the governor's staff requested the delay because the director of the state agency that oversees pension funds was about to retire.

"It was appropriate that we had a delay," Hirst said. Grassley asked the General Accounting Office to look into Rehnquist's operation in October after learning that she made 19 senior-level staff changes at HHS. Grassley called that number "exceptionally high."

In talking with the whistleblowers from HHS, Grassley learned of suspicions that Rehnquist had delayed the Florida audit to avoid the possibility of damaging Bush's re-election campaign. "These allegations are very serious. They accuse the inspector general of a failure to perform her duties independently. I'm looking into these allegations to try to determine their accuracy," Grassley said in a statement Tuesday.

He asked the GAO, the investigative arm of Congress, to determine whether the HHS staff changes eroded the office's mission to root out waste, fraud and abuse in federal health care programs. Grassley, author of a federal whistleblower protection statute, is a longtime advocate of aggressive fraud investigation.

Judy Holtz, a spokeswoman for Rehnquist, said HHS employees triggered the audit by raising questions about the size of federal payments to the Florida pension fund. Washington contributes to the roughly $90-billion fund whenever state or local employees do work for the federal government, such as projects funded through federal grants.

The audit was to begin in April but was delayed until August at the request of Florida officials, Holtz said. At issue were staff changes in Florida and a death in the family of a state employee who was critical to the audit, she said.

Holtz declined to identify the Florida state employee or the officials who asked for the delay. She said politics played no role in the decision to delay.

"The audit would not have been completed prior to the election even if it had started on time," Holtz said.

Pension fund audits take about nine months, she said. Asked if Bush chief of staff Kathleen Shanahan, a former aide to Vice President Dick Cheney, had asked Rehnquist for the delay, Holtz said, "We have no knowledge of that."

Hirst also was unable to say whether Shanahan actually asked for the delay. Coleman Stipanovich, director of the agency that oversees the pension fund, said he began working with federal auditors in September. He said his board didn't request a delay, and no one in his office thought the audit unusual. "There were no yellow flags, no red flags. He didn't seem alarmed," Stipanovich recalled of his Sept. 20 interview with the HHS auditor. "He said, 'We may come back and visit you and we may not,"' Stipanovich said. News of the federal audit came as no surprise to the state's main employee union, which earlier this year hired its own experts to review the state pension fund after it lost about $300-million in Enron stock. The union then wrote a report calling for additional, outside oversight of the pension fund. Union spokesman Doug Martin doubted explanations that the delay was caused by personnel, not political, issues. "There are few things in either Bush administration that are not of a political nature," Martin said.

In addition to the federal audit, the state pension fund is still involved in litigation with Alliance Capital, the fund manager that continued to purchase Enron stock for the state even after it became evident the company was faltering. The state sued, hoping to recoup some of its losses. The suit is ongoing.


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