U.S. OFFICE OF SPECIAL COUNSEL SEEKS DISMISSAL OF TWO NATIONAL CREDIT UNION ADMINISTRATION EXECUTIVES

FOR IMMEDIATE RELEASE - 10/19/99
CONTACT: JANE MCFARLAND
(202) 653-7984      

    The U.S. Office of Special Counsel (OSC) today filed petitions with the Merit Systems Protection Board (MSPB) seeking the dismissal of two high-level employees of the National Credit Union Association (NCUA) on the grounds that they initiated and/or approved illegal hiring schemes that involved the extensive use of false duty stations to hire pre-selected applicants. The employees named in the petitions are Mr. Russell C. White, who serves as the Associate Regional Director for Programs (ARDP) in NCUA’s Region V (with offices in Dallas, Texas), and Ms. Dorothy W. Foster, who was NCUA’s Director of Human Resources (chief personnel officer). Both individuals are currently employed at NCUA in senior staff positions equivalent in rank to a position in the Senior Executive Service.

    OSC began its investigation into NCUA’s hiring practices at the request of the Office of Personnel Management (OPM). According to the petition filed against Mr. White, soon after his appointment as ARDP in 1996, he devised a plan to avoid the usual competitive procedures by hiring pre-selected candidates through the use of false duty locations. Under the scheme, Mr. White caused vacancy announcements to be posted for credit union examiners in a number of remote or otherwise low applicant pool locations, including Minot, North Dakota; Lubbock, Texas; Amarillo, Texas; and Witchita, Kansas. Mr. White never intended that the selectees would actually work in these duty stations. Instead, he arranged in advance—either directly, or through an intermediary—for preferred candidates to apply to these false duty stations with the intention that they would actually be assigned to duty stations in major cities, including Tulsa, Oklahoma; San Antonio, Texas; Phoenix, Arizona; and Minneapolis, Minnesota.

    As a result of the scheme, candidates who would otherwise have competed for these positions, never applied. According to the petition, in order to cover up the scheme, a false paper trail was established which included pay documents with starting salaries based on false duty stations, job offer letters containing the false duty stations, and false documents resulting in the withholding of state income taxes based upon the false duty station, rather than the actual one.

    Within months after Region V’s program began, other NCUA regions began to use false duty stations. Thus, according to OSC’s petition in the Foster case, in October 1996, NCUA’s Region III (Atlanta, Georgia)—which was then under pressure to increase the hiring of women and minorities in credit union examiner positions—decided to emulate the Region V plan. It created false duty stations in Hazard, Kentucky; Winnsboro, Louisiana; Jackson, Tennessee; and Bristol, Tennessee, and had pre-selected minority and female candidates apply for positions. Upon their hiring, these candidates were actually assigned to Atlanta, Georgia; Miami, Florida; Fayetteville, North Carolina; Jackson, Mississippi; and Mobile, Alabama. The practice eventually spread to Region II (Alexandria, Virginia) and Region IV (Chicago, Illinois).

    According to OSC’s petition, by no later than January 1997, Ms. Foster—the NCUA official responsible for ensuring its compliance with federal hiring laws—was aware of Region III’s plans and she actively participated in the appointment process. OSC’s petition alleges that over a seven-month period, from January through July of 1997, Ms. Foster permitted the use of false duty stations in Regions II, III, and IV, without regard to applicable laws, rules, and regulations, knowingly signed false appointment documents, and permitted the preparation and processing of other personnel and payroll documents containing materially false statements.

    OSC’s petition charges both Mr. White and Ms. Foster with multiple prohibited personnel practices, including the granting of unauthorized preferences, the obstruction of candidates’ rights to compete for federal jobs, and the violation of various hiring rules including the so-called “rule of three,” veterans’ preference, and rules creating a 90-day restriction on changes in geographic locations of duty stations. Because of the seriousness of the offenses, their notoriety, and their impact on NCUA’s reputation, OSC has asked for a penalty of removal.

    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 MSPB; allegations of prohibited personnel practices. It is a violation of title 5 to grant an unauthorized hiring preference, to obstruct the right to compete, and to violate rules and regulations such as veterans’ preference and the 90-day restriction on changes in geographic duty areas.

***